Mining companies want biodiversity credits to enable them to go beyond offsetting to make nature positive claims, according to an executive at UK-headquartered The Biodiversity Consultancy (TBC).

TBC has been advising corporations and investors who are considering engaging with nature-based projects that could generate biodiversity credits, according to Sam Lacey, TBC’s strategic director of nature finance.

Companies in the mining sector are “quite active” around nature-based solutions that could translate into credits following years of biodiversity offsets in emerging markets, Lacey said.

“We provide project feasibility and due diligence, and advice on the market and how credits can fit into an overall nature positive approach. We contribute lessons we’ve learnt through the years of developing biodiversity offset projects,” she told Carbon Pulse.

Biodiversity credits differ from biodiversity offsets in that the former should be used to measurably improve nature without permitting harm elsewhere, nascent definitions have said.

In theory, these credits could be traded in a voluntary marketplace in the future, unlike offsets, in a concept that has seen a flurry of activity recently despite few transactions having occurred.

HUGE DIVERSITY OF PROJECTS

Biodiversity credits could help mining companies go beyond nature neutrality through offsetting, to become nature positive, Lacey said.

“That’s where you don’t need it to be localised and exactly equivalent – it doesn’t have to benefit exactly the same species because you’re not offsetting a negative impact, you’re just saying: ‘This is a benefit for biodiversity.’”

Some companies in general could be looking to trade biodiversity credits in the future, she said.

“Some will use them as part of their own corporate claims. And some of them will see them as a kind of investment that they might want to trade later. It depends how the market works out.”

Many of the projects TBC engages with are led by carbon credit projects with the potential for biodiversity credits, according to Lacey.

“The diversity of projects we see is huge, from tens to thousands of hectares, from Europe to Latin America and Africa. Many are focused on forests, but there are increasing numbers of marine and mangrove projects too,” she said.

Alongside corporates, private equity impact investors are also interested in gleaning revenue from conservation via biodiversity credits.

“Mostly they are investing in traditional businesses with a traditional revenue model, like an agriculture or a forestry company, and then they’re trying to layer in carbon credits, and to make sure they’re ready for biodiversity credits as they develop,” Lacey said.

“A lot of them are trying to [create] a robust biodiversity baseline, not knowing what the frameworks are going to look like, but they’re saying: ‘We made this investment because we want to achieve positive biodiversity outcomes’.”

With a baseline, a year of metrics against which future changes in nature can be compared, projects can prepare for selling premium carbon credits with co-benefits for biodiversity, or stacking biodiversity credits on top of carbon credits.

CREDIT DANGERS

Biodiversity credits could only ever be one part of the solution to tackling the biodiversity crisis, Lacey stressed.

“They will become a distraction if we forget about the mitigation hierarchy being the first priority,” she said.

The guiding principles of the mitigation hierarchy mean prioritising avoiding impacts, before minimising them, and turning to offsets or credits as a last resort.

One danger of avoiding the mitigation hierarchy can be seen in recycling, which could lead to the mistaken assumption that consumption of the material does not need to be reduced, she pointed out.

“Existing natural habitat is more valuable than restored habitat because of the time it takes to reach maturity. First, reduce your biodiversity footprint, figure out where the biodiversity is in your site, and minimise your impact upon it,” she said.

“And then restore locally in the immediate vicinity as much as you can – it’s increase in soil erosion, flooding, lack of access to timber, and traditional medicines for that community.”

To effectively restore nature, market actors must work with local communities if they are affecting their practices through credits by finding alternative activities, she said.

Credits will not fix all the impacts of biodiversity loss for a community, though they might help towards the COP15 target of conserving 30% of land and sea by 2030, she said.

In November, Pollination Foundation launched a voluntary nature credit development framework led by Indigenous Peoples and local communities.

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

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