Straight to content

Why there is “no compelling business case” for biodiversity credits

Written by:
Published: 5 December 2023

Will the market for biodiversity credits explode in the coming years, as some predict? Dr Michael Burgass, co-founder and director of consultancy firm Biodiversify, is sceptical. “We don’t need another market, let’s improve the carbon market”

“We’ve seen the challenges in the carbon market. In biodiversity it will be even harder to get positive results,” says Burgass| Photo by Jenna Lee on Unsplash

Is there a chance of biodiversity credits becoming a global market, larger than the voluntary carbon market? According to some predictions, the sky is the limit. For example, non-profit Inevitable Policy Response (IPR) earlier this year released a policy-scenario for investors, predicting that a biodiversity credit market is set to emerge that could be worth $18-43bn by mid-century. To be clear: that is on top of the already existing nature-based carbon projects.

IPR says its prediction is based on actual policy trends, in reaction to an increased focus on the global nature crisis, which led to the Post-2020 Global Biodiversity Framework being agreed at the UN Biodiversity Conference (COP15) in Montreal at the end of last year.

Burgass, a co-founder and director of Biodiversify, a consultancy which supports its clients to understand and improve their relationship with nature, has no doubt that there is a strong nature positive movement underway.

“When we started Biodiversify over five years ago we had to do a lot of education: telling clients about biodiversity, why is it relevant,” he tells Impact Investor. “Now there’s no need of that anymore. Our customers, mostly corporates, are well aware of these things now.”

But it’s unclear how big the willingness of the market is to follow through with investment.

Demand for biodiversity credits has yet to be proven, despite all the attention. Management of expectations is needed, Burgass argues. “There’s quite a lot of excitement, also due to the Global Biodiversity Framework, which includes exploring the use of credits within one of its targets. There are good efforts, trying to make it work. But I still don’t see anything that is concrete enough.”

A main reason for this is the complexity of a market for biodiversity credits. “We’ve seen the challenges in the carbon market. In biodiversity it will be even harder to get positive results.”


Biodiversity credits are much more complex than carbon credits because biodiversity differs by location. No two ecosystems are the same. At least carbon has a theoretical basis for a credit. With a net zero target, looking to reduce emissions, credits can effectively make up that gap. There isn’t that equivalent with biodiversity.

Credits also differ from biodiversity offsets, which are payments made to compensate for residual biodiversity impacts. On the contrary, biodiversity credits would allow companies and investors to invest directly in projects that have a positive impact on nature, either by enriching or by restoring biodiversity.

Dr Michael Burgass | Biodiversify

For investors the scaling of biodiversity projects poses a real challenge. There are limited business and product developers who know how to do this with usually small nature projects. For most investors the low potential returns doesn’t make them attractive either.  A long-term vision is needed.

“I really don’t see how we will have a functioning biodiversity market that is genuinely going to improve the state of nature within a couple of years,” says Burgass. “That is too ambitious. Of course you might generate some biodiversity outcomes somewhere, but maybe at the cost of loss of other things elsewhere. Or having long-term negative effects. It’s the risk of oversimplifying really complex problems.”

A lot of hard lessons have been learned in the past years on how to really restore biodiversity. A social focus is needed, towards local communities. It’s about livelihoods, but also about gender. “Do people who want to sell or buy credits take these lessons seriously?” says Burgass.

Greenwashing risk

Without a clear and meaningful overarching framework for biodiversity, as well as a harmonised biodiversity metric, funding risks becoming merely greenwashing.

“My fear is that in a rush to bring this finance in we may set something in motion that is potentially damaging in the long run,” Burgass says. A variety of approaches will likely emerge from a rush to bring biodiversity credits to the market. “This could be hugely problematic.”

Allowing the private sector to regulate itself will be a mistake. Burgass has actively led and participated in the Science Based Targets Network, a framework that is actively pushing companies to work on their own operations and value chains. However, for a voluntary biodiversity credit market to be credible, it needs “a clear and meaningful overarching framework”. A high level of governance is required, and this will take years to develop.

The best way for companies to address biodiversity is to first and foremost reduce their own impact through their supply chains in cooperation with others. “Nature conservation requires governments, nature organisations, civil society as well as the private sector. Improved collaboration is really required to accelerate nature restoration at scale,” he says.

Biodiversity funds

Instead of investing in biodiversity credits impact investors would be better off investing in companies tackling nature in a holistic sense across all of its operations, including things like helping to accelerate regenerative agriculture.

The growing number of biodiversity funds is potentially interesting, Burgass says. “I do see how investing in project-based nature development can get a return. If you’re improving the management, or investing in sustainable forestry or fishing, over time the value of these will grow. If you’ve got a long-term mindset, this is absolutely a great way to deal with biodiversity.”

Instead of efforts to create a new market for biodiversity credits, it would be better to invest in a better functioning carbon market, Burgass says. “We don’t need a new market. Let’s make sure that carbon offsets are really benefitting biodiversity, and people.” Given the fact that there is already a foundation and a framework for carbon, that would be a much better way to go, he concludes.

Share on social media

Latest articles