Corporations will use biodiversity credits to “counterbalance” the harm they inflict on nature throughout their supply chains, but the practice should not be called offsetting, a data expert has predicted.
Rules should establish when the positive impact on nature of biodiversity credits is equivalent to negative corporate impacts, in the “ecological equivalency” of biodiversity credits, said Joshua Berger, CEO of the Biodiversity Footprint Intelligence Company (BioInt).
“Biodiversity credits will be used to counterbalance negative impacts, especially in the value chain. This does not enable damage to nature, the damages are already occurring,” Berger told Carbon Pulse.
“Pushing companies to pay for biodiversity credits, after they have properly tackled their existing impacts … means they will be encouraged to further avoid and reduce them, in particular if it is less costly than biodiversity credits,” he said.
Biodiversity credits can reduce negative impacts on nature, compared to the current situation, while creating a new restoration industry, he said.
Berger suggested not calling these units biodiversity offsets as the term has a specific regulatory meaning.
BioInt said credits should be defined as a “unit of biodiversity that finances nature conservation and restoration, and provide funds for local communities living in and among nature”.
Biodiversity offsetting refers to measures taken outside a licensed location to cancel out the environmental impact that the company and licensing agency consider unavoidable. Such markets have been implemented in numerous jurisdictions around the world, but remain controversial.
As the global voluntary biodiversity credit market emerges, many participants have stressed that the credits should not be used for offsetting purposes.
THE CRITICAL QUESTION
Corporate funding for nature “cannot be scaled up” without a working incentivisation system, consultancy BioInt argued in a report published last week.
Counterbalancing harm to nature could provide such an incentive for companies, but the “critical” question of whether positive impacts of biodiversity credits equal the negative effects of a company’s supply chain would need to be answered, BioInt said.
“One central question is currently eluded in the debate about biodiversity credits: how can the associated gains be equivalent to biodiversity losses caused by businesses?”
Berger acknowledged that the ecological equivalency question might “lead to losses of some important ecosystems due to loopholes”.
In addition, some stakeholders might misuse biodiversity credits by using them before avoiding or reducing their impacts on nature, Berger said. However, these risks could be mitigated through carefully working out ecological equivalency, he said.
Without rules to determine when a positive and negative impact are equivalent, the risks to nature would be “worse” because companies would use non-equivalent biodiversity credits, he said.
The UK has introduced mandatory rules that will require developers to purchase statutory biodiversity credits as a last resort to reach net gain for biodiversity of 10% for a site from next week.
However, the UK system “does not really answer the question of how to deal with supply chain impacts”, Berger said.
Voluntary biodiversity gains should occur in the “same ecoregion” as the one where the losses occur, even if the requirements are not as strict as regulated ones, to balance out the needs to manage impacts while achieving biodiversity outcomes, BioInt concluded in its report.
By Thomas Cox – t.cox@carbon-pulse.com
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