An earlier version of this story said Volvo and others had already signed up to the buyers club, but according to WEF this is not the case.

The World Economic Forum (WEF) is putting together a buyers club for biodiversity credits to be launched early next year, with several major companies looking at signing up ahead of what is planned to be a pilot auction to be held at an undecided date in 2024.

Alessandro Valentini, a sustainable finance specialist with WEF, confirmed the plans to Carbon Pulse on the sidelines of the EU Business and Nature Summit in Milan Thursday.

WEF is eyeing several corporate buyers from sectors with a major impact on biodiversity, including agriculture, food and beverage, manufacturing, and automotive to join the initiative, and is expecting several to sign up before the club is formally launched at the annual WEF summit in Davos in January.

A pilot auction hosted by Singapore-based exchange Climate Impact X (CIX) will be held at some stage before Australia holds its planned Nature Positive Summit in October next year.

The move comes as interest in the fledgling voluntary biodiversity market is growing quickly, but has yet to translate to actual trades despite a plethora of credit standards and projects having emerged over the past 12 months.

Beyond mandatory schemes or initiatives targeting individual buyers, few have been willing to step up and actually buy voluntary biodiversity credits so far, despite the interest shown.

In Europe, Swedbank’s purchase of 91 credits in May from a forestry project developed by experts from the Swedish University of Agricultural Sciences remains the lone voluntary transaction to date.

WEF, working alongside consultants McKinsey on the initiative, wants the buyers club to illustrate that corporations are ready to step up and show that they are willing to fund ecosystem health.

It is also meant as an exercise to deepen trust between buyers and sellers in the market as well as to pilot transactions that market participants can learn from.

SUPPLY

There are numerous sellers in the market already, many of them organised in the UN-backed Biodiversity Credit Alliance (BCA), which on Thursday said it welcomed investor and advisory firm Pollination as its latest member.

Valentini said WEF will launch an expression of interest to suppliers within the next months, and a more advanced request for proposals will be made at Davos.

“We’re setting up an expert panel that is made up from academics and experts … that will have some selection criteria for projects to auction credits,” Valentine said.

The panel will pick the most suitable project or projects to supply credits to the CIX-hosted auction based on the transparency of the methodology and other criteria, such as how the units might be packaged separately or aggregated for purchase.

Tradability of credits is one of the elements WEF wants to test through the buyers club, given the significant differences between the units that have emerged so far.

PRICE DISCOVERY

Another important part of WEF’s initiative is to get a better sense of biodiversity credit pricing.

Early initiatives have seen prices a bit all over the place, given each credit type represents wildly different things.

Savimbo, a project developer in the Colombian Amazon, has been selling its units at a set price of $5, where each credit represents 60 days of jaguar province on a hectare of land in the rainforest – translating to a price of $30 per year to protect that hectare.

Meanwhile, Australian developer Wilderlands are offering their credits to businesses at around A$30 ($19.13) – depending on the project – but those units guarantee the protection of 10 square metres over a period of 20 years.

“How can we ensure that there is a fair price for a project on the market? This will probably be a question to be solved by putting together the product developers on the auction marketplace,” Valentini said.

He stressed that the auction would be about finding the right price, not the cheapest price.

“You don’t want a biodiversity auction with the lowest price, you want to see biodiversity actually being rewarded,” he said.

By Tom Woolnough and Stian Reklev – tom@carbon-pulse.com

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