A global environmental NGO has released a whitepaper outlining its position on biodiversity credits, as it seeks to establish high integrity across the emerging market.

Fauna and Flora released the paper on Wednesday, contending that while biodiversity credits have the potential to drive finance into conservation and contribute to the Kunming-Montreal Global Biodiversity Framework goals, high integrity can and should be established across all parts of the market from the outset.

“It’s absolutely critical that the mechanism has high integrity front and centre from the beginning,” said Tom Stevens, head of nature markets at Fauna and Flora, in an interview with Carbon Pulse.

“A new approach enables us to test these questions and not wait for ten years, it has to happen at speed. Robust dialogue needs to happen.”

CLAIMS

The biodiversity credit market is likely to have a host of legacy challenges from the carbon market as market actors step into the emerging space. Stevens emphasised that participants shouldn’t be thinking of either biodiversity or carbon, but that learning from carbon markets can be taken through to inform the emerging biodiversity space.

“The key opportunity with biodiversity credits lies with places that sit outside of nature-based carbon, where ecosystems of high conservation areas are not eligible for existing carbon finance,” Stevens said.

Similar to the Voluntary Carbon Market Integrity initiative, the biodiversity credit market could benefit from early guidance on how and what financial institutions could claim, according to the Fauna and Flora paper, which drew a clear distinction between offsets and credits.

“Offsetting is relatively well-defined, but separate to biodiversity credits. There is the additional uplift, beyond the no-net-harm approach, which sits outside of the operational offsetting approach. That’s where we see biodiversity credits sitting to achieve global goals,” Stevens told Carbon Pulse.

“Private finance, corporations, and philanthropy have the opportunity to invest in a mechanism to help achieve those global biodiversity targets. There’s a need for global buy-in, bigger than a one-off corporate target.”

According to Stevens, companies would need to ensure they are part of the Science Based Target Network and the Taskforce on Nature-related Financial Disclosures to calculate their footprint, but they would not necessarily be able to offset that footprint through a purchase of a biodiversity credit.

There is still work to do through robust conversations with market actors ranging from Indigenous peoples to large multi-national companies, according to Stevens, to harmonise what could be claimed at the global level once credits are purchased.

Fauna and Flora said they are having those conversations with early-stage market players, and Stevens highlighted that what is emerging is that there is a significant risk that will need to be mitigated.

“We have risk from investors on one side, those coming from traditional financing approaches, and the risk to communities on biodiversity and climate, and where does the compromise happen and how do we reposition risk?” Stevens said.

INFORMING INTEGRITY

A range of credits may fit under the umbrella of what a biodiversity credit is, according to Fauna and Flora.

The paper outlined the emergence of multiple types of credits aligning with the broad definition but there may be different unit types emerging, including areas, habitat, or species-based credits. The organisation hoped that by providing multiple options for credit type, less-valued profile areas and more local groups may be able to better access biodiversity financing mechanisms.

“Our fundamental approach is locally-led conservation, which makes IPLCs decision-makers built into the process as stewards, as the market grows,” Stevens told Carbon Pulse.

“It’s broadly acknowledged that this is the right way to go in the market, but we need to make it happen from the beginning. We need to have a challenging transparent dialogue across IPLCs and buyers, without that there is no legitimacy long term and sustainability for these opportunities.”

Stevens contended that accessibility is critical: not compromising certain areas and have certain communities unable to access finance because it’s too technically complex or expensive, but still maintaining the scientific underpinning to ensure quality biodiversity outcomes.

Fauna and Flora are running pilots of biodiversity credits, including in South Africa, with more set to begin later this year.

The pilots test different metrics and stakeholder approaches that are developed in dialogue with buyers to broaden stakeholder understanding and inform global alignment, Stevens said.

The organisation aims to lead the market facilitators to better understand project needs and market development requirements, including by working with buyers to clarify how they should operate within the market.

In January it released high-integrity principles for biodiversity credit markets with Plan Vivo where it outlined a high-level direction for the market.

The group hopes that with New York Climate Week and the upcoming COP28, the complementarity of the carbon and biodiversity markets will become clear.

By Tom Woolnough – tom@carbon-pulse.com

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