This article was amended on May 17 to clarify BASF is exploring creating credits for nature positive action rather than offsetting. 

The agricultural research arm of a Germany-headquartered chemical company is considering a pilot scheme at small-scale soybean farms in Brazil to create nature-positive credits.

BASF Agricultural Solutions is testing the feasibility of a nature initiative in Machadinho, Brazil through incentivising at least 20 farmers to manage their land more sustainably, in partnership with Solidaridad and consultants Wheatley Young Partners.

“We want to contribute to the current understandings of effective projects to improve biodiversity in a practical way that can be replicated and brought to scale on farms across Brazil,” said Melanie Bausen-Wiens, senior vice-president of regulatory, sustainability, and public affairs at BASF Agricultural Solutions.

Brazil has “enormous potential to deliver improved environmental outcomes” via farmers, Bausen-Wiens told Carbon Pulse.

BASF’s research centres around a year-long pilot involving small- and medium-sized soybean farmers, focused on pollinators, which started in January in collaboration with Brazilian bee monitoring company GeoApis.

The chemical company was the largest in the world by sales in 2023, according to ChemAnalyst.

A soybean field in Brazil. Credit: BASF

The idea of a long-term Brazilian nature market is to create an ecosystem scheme that rewards nature-positive practices through different streams, said Julia Pfeiffer, senior societal outreach manager at BASF Agricultural Solutions.

“This would be done through the purchase of nature-positive credits, through a system that would reimburse farmers for their activities,” Pfeiffer said.

The company’s credits would not be used for offsetting, it said. Biodiversity credits are often said to differ from biodiversity offsets, by not implying the justification of harm to nature in another location.

BASF is keen to work with potential credit buyers to understand their drivers for participation in a potential market, Bausen-Wiens said.

“Although the benefits that nature provides are fundamental to human well-being and a healthy planet, the true value of the various goods and services nature provides are not reflected in conventional market prices,” she said.

“As a result, there is substantial underinvestment in natural capital, and biodiversity and ecosystem services are in serious decline.”

High-integrity nature markets have the potential to increase the funding available for activities that restore and enhance nature, she said. Demand for biodiversity credits could reach $180 billion annually by 2050 under a radical future, the World Economic Forum said in December.

Other opportunities for nature market financing may include increased profit from products marked with a nature-positive label, Pfeiffer said.

Interest in the fledgling voluntary biodiversity market is growing quickly, but has yet to translate into many actual trades despite emerging standards and pilots.

THE PILOT

The BASF pilot aims to develop nature-positive metrics and practices accepted by stakeholders across farmers, NGOs, and industry, the company said.

Brazil, the world’s largest producer of soybeans, together with the US, accounts for about two-thirds of global soybean production, according to a UN Food and Agriculture Organization report published last year.

BASF does not yet know what metrics it would use to measure nature credits, which standards it might apply, or whether food-producing land will generate credits – rather than land set aside for nature – as the pilot is in its early stages.

Soy production plays a crucial role in the global food industry. However, nearly 60,000 hectares of forest was cleared in Brazil’s Cerrado and the Amazon in late 2023, with likely ties to the supply chains of some of the world’s largest soy exporters, a report found in March.

“Our overall aim is to find a durable way to incentivise farmers to implement nature-based solutions on their land to help solve local environmental challenges,” said Pfeiffer.

BASF’s Agricultural Solutions division spent €944 million on research and development in 2023, generating sales of €10.1 billion from products such as digital farming support and seeds.

The BASF group was ranked the third-biggest polluter of air and the ninth-largest polluter of water in 2021 in the US, according to a 2023 report published by the University of Massachusetts’ Political Economy Research Institute.

However, the company received three scores from CDP of ‘A minus’ for environmental leadership across its water, forests, and climate questionnaires in 2023.

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

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