The UK-French led international initiative on biodiversity credits established earlier this year will launch a public consultation process on the framework next week, according to one of the co-chairs.

The call for views, launching around Nov. 23, will reveal “the kind of questions we’re thinking about”, Amelia Fawcett, co-chair of the biodiversity credit-focused group, said in response to a question from Carbon Pulse at the Natural Capital Summit in London.

In June, the UK and France announced they were planning a panel that would present a concept of a global biodiversity credit markets at the COP28 climate summit in Dubai in November/December, ahead of a final set of recommendations to be presented at the biodiversity COP16 next year.

Given the government involvement and backing from powerful multinational financial institutions, many observers expect the outcome of the process to provide the foundation for a future international biodiversity credit market.

The International Advisory Panel on Biodiversity Credits (IAPB) will have five working groups focusing on demand, supply, measurements, governance, and benefits, Fawcett told the conference.

The groups are chaired by men and women from the Global South and the Global North, she said. In addition to the working groups, the panel has 21 members from across finance, non-profits, and NGOs.

“A point that we are discussing with the advisory panel is sandboxing, innovating, trying, even fail in some areas, picking out what works, learning from it and moving on,” said Fawcett, who is also chair of Royal Botanic Gardens, Kew and a non-executive director at State Street Corporation.

“This is absolutely fundamental to how we create these markets, and we have to avoid at all costs perfection being the enemy of the good,” she said.

Biodiversity credit markets are “critical for the delivery of the transformative changes needed” to reverse biodiversity loss, she said.

TYPOLOGY OF CLAIMS

UK-based The Biodiversity Consultancy’s strategic director of nature finance, Sam Lacey, agreed that innovation was crucial for the development of biodiversity credit markets.

“We need to recognise that the market will evolve and iterate. We probably won’t get it right first time, and we have to expect that – to allow that iteration to happen,” Lacey told the conference.

One area requiring innovation is how the market deals with additionality, she said. Additionality in biodiversity credits means they represent increased nature-related value, rather than coming from assets with static natural worth like old-growth forests.

Lacey suggested different grades of biodiversity credits with a “typology of claims”, to answer the additionality question.

The range of claims has been applied by the Forest Stewardship Council (FSC) to toilet roll with three gradings on packaging showing whether the paper comes from FSC-certified forests, recycled materials or a mixture, she told Carbon Pulse on the sidelines of the conference.

“Let’s just clarify the biodiversity credit claims around which one is which and let the market decide – as long as they’re all underpinned by robust methodologies that genuinely drive benefits for nature.”

The debate on trade-offs is “stalling progress somewhat”, she said.

“We could get lost for the next couple of years in debating many of the trade-offs that exist in this market. Everyone will have their own view and there is no single right answer,” she said.

“There is no perfect way to build a credit. What we need to do is to recognise those trade-offs and have clarity around the claims that can be made around different solutions, so that people know what they can claim as a result of that purchase.”

She stressed the need for investors in biodiversity credits to do due diligence checking claims about project benefits.

NEED FOR ADDITIONALITY

Meanwhile, Tim Coles, founder of research company Operation Wallacea, said a different approach was needed for sites with no additionality.

“I thought Verra came up with a really neat solution. They have nature credits, which are the ones with additionality, and they have nature stewardship credits, which don’t have the additionality,” Coles said. Standard-setter Verra has said it aims to launch its framework on these credits next year.

However, starting the biodiversity credits market without requiring additionality at all would be “foolish”, following the collapse of the additionality-lacking REDD+ carbon credit scheme, Coles said.

“It’s not difficult finding additionality in Indonesia – in terms of management of coral reefs or forests, there are huge threats.”

“That’s not true in other places like Gabon, where they have managed their forests generally pretty well.”

But Anna Lehmann, global director of policy and external affairs at California-headquartered conservation company Wildlife Works, stressed the need for a fresh approach to additionality in the market.

“Proving additionality and providing information that is auditable is a really lengthy and costly process,” Lehmann said.

“It often creates perverse incentives on the ground, because people will just wait until they’ve lost more forest so that they have additionality.”

By Thomas Cox – t.cox@carbon-pulse.com

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