An alliance set up to bring clarity and scale a biodiversity crediting market, supported by the United Nations Development Programme (UNDP) and International Institute for Environment and Development (IIED), will formally launch at a side event at the UN’s biodiversity summit in Montreal on Friday, a member told Carbon Pulse.
The website for the Biodiversity Credit Alliance (BCA) went live on Tuesday and features 26 members and partners that also include established carbon investors Climate Impact Partners and Pollination, as well as academic institutions and climate and sustainability organisations, in addition to the UNDP and UK-based think-tank the IIED.
The BCA aims to mobilise financial flows towards biodiversity outcomes while recognising local knowledge and contexts, and outlines its vision for how voluntary biodiversity credits (VBCs) should operate in a global market space, separating their treatment from compliance usage.
According to its website, the BCA defines its objectives as:
- To define and categorise biodiversity credits;
- To identify ‘Global Biodiversity Credit Principles’ that all biodiversity credit methodologies should achieve;
- To develop and/or identify a model set of digital standards that can be adopted into distributed ledger technologies (DLT) to create a transparent, easily auditable, and scalable ecosystem for biodiversity credits;
- To establish a peer review mechanism to certify standards and methodologies against the BCA global principles, validate site specific metrics for application at a project site level, and verify a project’s biodiversity data analysis;
- To approve validation and verification bodies that meet BCA standards;
- Keep an index of all credits issued under the Global Principles;
- To establish a community of practice for those organisations in the quantification of biodiversity credits.
Specifically regarding the embrace of new technologies such as DLT, the BCA stated that it “aims to learn from the mistakes made in the development of the carbon credit market: many of its principles, while following science, did not plan for scalability including the design and deployment of technology”, citing specifically the need to prepare biodiversity units for compatibility with web3.
Given the current finance gap for biodiversity with many expecting that private capital will be needed to fill in, Aleksandra Holmlund, founder and CEO at forestry investment and consultancy Omorica and member of the BCA, pointed towards the key role for credits.
“Most of the financing for nature protection today is government funded, and is simply not enough. In order to channel more financing, private financing should be made possible that allow for large-scale scaling up. An example of such an initiative are the biodiversity credits that may finance various actions towards richer biodiversity,” she told Carbon Pulse.
Ahead of the launch event in Montreal, a document shared with Carbon Pulse by a member of the alliance described its view of the potential growth of the market.
“Demand for biocredits is growing amongst private investors, individuals, and governments who want to invest in the conservation and restoration of biodiversity. With increasing interest from both private and public buyers and sellers, there is a need for collaboration amongst emerging practitioners to ensure a transparent and equitable market is established,” the information seen by Carbon Pulse stated.
Other recent studies, including one from consultants McKinsey, have pointed to a potentially huge market for nature credits such as biodiversity units.
Edit Kiss, CIO at nature investors Revalue Nature told Carbon Pulse that things were really changing following the publication of the McKinsey report that had helped to bring biodiversity crediting into the “mainstream” from an investors perspective.
“We need pilots and experiences … we have enough scientific evidence but now need pilots and results,” she said.
“The fungibility element will be critical,” she continued, but suggested that this was now emerging as well.
The very fact there has been a finance day at the UN biodiversity summit in Montreal was a real signal, she added.
Up until July 2023, the BCA will function as an informal working group with a formal BCA secretariat to be established before the end of June next year, once all structures and functions are agreed upon and formalised.
Until this point midway through 2023, the BCA will utilise experts to develop concepts for each of the elements of the BCA mandate such as defining its global principles, credit categorisation, peer-reviewing structure and process, digital architecture, and credit indexing, with a review process to be established in parallel to this work.
The BCA will also work with World Economic Forum (WEF) and the Natural Capital Alliance (NCFA) in relation to their initiatives on integrity, with many BCA members also participating in WEF working groups, intending to integrate principles as part of these projects into pilots.
Members of the BCA also are involved in standard setters’ working groups on biodiversity credits.
The world’s largest voluntary carbon registry and standard body Verra, for example, is currently exploring a methodology for units.
By Roy Manuell – firstname.lastname@example.org