Four organisations in the UK and Peru have partnered with the aim to facilitate one or more pilot biodiversity stewardship credit (BSC) transactions in a bid to create a model for future growth of a biodiversity market.
UK-headquartered Botanic Gardens Conservation International (BGCI), environmental investment consultants Eco Systems Services (ESS), conservation firm Green Gold Forestry (GGF) in Peru, and the Queen Mary University of London will work together to provide an auditable mechanism for linking biodiversity projects and investors.
“We envisage that a market for BSCs will stimulate investments from banks, asset managers, corporations, and others to support the regeneration of populations of endangered species in the wild,” BGCI said in a job ad as the group is now looking to hire a manager for the project.
The project is based on the assumption that the increasing obligation for large corporations to account for their impact on nature through initiatives such as the Taskforce on Nature-related Financial Disclosures and the European Central Bank Prudential Framework will stimulate demand for biodiversity outcomes from the private sector.
“Based on ongoing and already planned conservation projects by BGCI and GGF, distinct ready-to-market BSC generation units will be developed that have led, or will lead, to verifiable and legally transferable gains in BSCs,” the UK-based group said.
“The main output of this work package will be: sales prospectuses describing projects and addressing how they implement BSC principles, rules, and recommendations.”
Through the involvement of ESS, a financial industry consultancy that is specialising in biodiversity, the partners hope to be able to package the credits in a way that makes sense for private-sector decision makers.
The fledgling biodiversity credit market has yet to unite around a single approach to measuring outcomes and issuing credits.
The ‘biodiversity stewardship credits’ concept that this partnership is based around was put forward in a study published in Nov. 2021 by researchers at Queen Mary University, which proposed basing biodiversity credits around WWF’s Living Planet Index.
BSCs can be understood as “measuring how many species the associated area effectively sustains, while accounting for extinction risks”, the paper said.
“In view of these properties we envision that organisations can usefully include regular BSC accounts in their environmental impact reporting. The fact that BSC are always positive encourages accounting as complete as logistically possible,” the Queen Mary researchers wrote.
“Bonuses that environmentally friendly assets are nowadays attracting on markets then imply that BSC on their own have monetary value. For example, an asset classification scheme based on BSC per hectare of land held would encourage organisations to acquire high-BSC land and to increase BSC on the land they hold.”
One of the researchers behind that study, Axel Rossberg, was last month awarded £150,000 in funding by the UK’s Natural Environment Research Council (NERC) to pursue the first pilot transactions of BSCs, and those funds will underpin the new partnership.
“This project will demonstrate the practical implementation of BSCs by facilitating one or more pilot projects. It will allow us to identify barriers and ways to overcome them and support a model for future growth of a BSC market. This is a beginning of a new era for us,” Rossberg said, according to the university’s website.
The Queen Mary project was only one of 12 to obtain UK government funding in December, all of which will focus on how biodiversity can be integrated into finance.
“The finance sector and businesses want better information and ‘decision grade’ data to help them incorporate biodiversity-related risks and opportunity into their strategic planning, risk management, and investment decisions,” UK Research and Innovation said when awarding the funds.
“They also want to understand how biodiversity contributes to and is impacted by activities including along global supply chains.”
Each of the 12 projects will kick off this year with an academic organisation in a lead role, but with a wide range of financial sector and business partners.
By Stian Reklev – stian@carbon-pulse.com
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