Biodiversity credit markets risk distracting governments from their role in financing nature by taking up limited time and capacity, non-profit Campaign for Nature has claimed in a paper.

“Inflated” claims on the potential scale of voluntary biodiversity credit markets could result in governments abdicating their public responsibilities for nature, the campaign group said.

Mark Opel, conservation finance adviser at Campaign for Nature, said: “Biodiversity credits … enable magical thinking that somehow innovative finance is going to come to the rescue and meet the promises in the Global Biodiversity Framework (GBF), without any additional government changes in policy.”

“An example of this is the UK and France have convened a global advisory panel on biodiversity credits. There’s too much attention being paid to an effort that we think has very limited potential,” he said in a webinar.

The UK-France-led international initiative on biodiversity credits was established last year with the aim of presenting a final set of recommendations at biodiversity conference COP16. Its call for views on challenges in scaling the market closes on Friday.

Attention paid to biodiversity credits means organisations are spending less time directly meeting the goals of the GBF, Opel said.

The concept of a voluntary biodiversity credits market has attracted attention over the last couple of years as a potential way of closing the biodiversity financing gap.

Few actual biodiversity credit transactions have happened publicly. However, last month the World Economic Forum said demand for the market could reach $180 billion annually by 2050 under a radical future.

Opel said: “It’s important that we understand biodiversity and nature as a public good. Public goods need to be provided by governments either through funding directly, or through providing incentives that then mobilise private investment in those public goods.”

INTRODUCE 2025 TARGET

Biodiversity credits will not be able to scale fast enough to make a meaningful difference to the biodiversity crisis, Campaign for Nature argued in its report.

The GBF has targeted increasing finance for nature to $200 bln annually by 2030. In May last year, the most developed biodiversity crediting schemes had received just $8 million of pledges.

The biodiversity credit market should prove it can raise high enough levels of funding through hitting targets such as delivering $2 bln to developing countries by COP16 UN biodiversity talks in October, and $5 bln by 2025, the report said.

“There are no reports of any material corporate commitments to purchase biodiversity credits,” it said. “Potential corporate buyers have also been noticeably absent in the groups developing biodiversity credits.”

Investors have noted a ‘greenhushing’ phenomenon in nature markets with firms afraid to speak up about their initiatives due to fear of criticism following the slamming of carbon credits. The Biodiversity Consultancy has said mining companies want biodiversity credits, without naming any firms.

“Without mandated compliance, biodiversity credits are unlikely to grow to generate material funding for nature, based on the history of the voluntary carbon market,” Campaign for Nature said.

Brian O’Donnell, director of Campaign for Nature, said humanity cannot confront an immediate crisis with experimental finance. “Markets are as old as human civilisation. And yet they have not produced nature conservation finance at scale,” he said.

Private funding is crucial, but funding for nature must be driven by government policy such as taxing companies that destroy nature, redirecting harmful subsidies, and requiring investment in more sustainable practices, the report said.

PLAN VIVO RESPONSE

Last month, certifier Plan Vivo launched a standard for verifying biodiversity credits said to be the first of its kind.

In response to the Campaign for Nature report, Plan Vivo said it saw the emerging biodiversity market as an opportunity to bring together public and private funding.

Blended finance models, or multi-stakeholder collaborations, can bring social and environmental impact, mobilise resources, and align private and public agendas with global goals, a spokesperson told Carbon Pulse.

“The key is to find solutions that are context-specific, scalable, and impactful, and that balance the needs and interests of different stakeholders involved,” they said.

“Given the current funding gap for biodiversity, we need public funding as well as voluntary market solutions to channel responsible finance towards conservation and restoration.”

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

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