Many companies believe mandatory offsetting requirements would be critical for the biodiversity market to scale, according to submissions to the International Advisory Panel on Biodiversity Credits’ (IAPB) second round of consultation with market participants.

The consultation ran from Apr. 18 to May 29 and involved 82 respondents from 27 countries representing a number of sectors, mostly NGOs and nature monitoring initiatives, as well as specialists and corporations.

The survey included a range of possible market models – dubbed ‘archetypes’ – to scale up high-integrity investment for nature and its stewards.

IAPB identified a set of core archetypes for how biodiversity credit markets could operate, based on whether they are voluntary or compliance, and whether they aim to compensate or to make evidence-based contributions to improving nature.

SCALABILITY

According to the IAPB’s newly released report, feedback indicated that market actors recognised potential both in contributions related to Corporate Social Responsibility (CSR) – separate from one’s own impacts – and compensation models to deliver positive outcomes.

Notably, when asked to rate the ability of each archetype to scale demand, respondents on behalf of corporate/industry and organisations issuing biodiversity credits gave compliance offsetting the largest proportion of ‘high’ ratings.

Respondents representing specialists, government/intergovernmental, and NGOs rated compliance offsetting and regulatory-driven CSR as equally ‘high’.

Overall, regulation and compliance are seen as key drivers of demand, with the use of reporting frameworks also regarded as an incentive.

As for scaling supply, both project developers and organisations involved in biodiversity credits gave compliance offsetting the highest proportion of ‘high’ scores.

“Question 9: How would you rate the ability of each archetype to scale demand at speed and quantum?”. Source: IAPB

“Responses about compensation approaches suggested a significant opportunity for scale and impact, and emphasised the importance of strong assurance mechanisms, local compensation, and the mitigation hierarchy to achieve this,” the report said.

On the other hand, feedback about contribution approaches suggested “real potential for positive impact”, though with less certainty about how to achieve scale and robust accountability in less-proven market models, IAPB said.

“This consultation has shown us how the range of different models for biodiversity credits can co-exist and complement each other, how these models could bring nature into companies’ business-as-usual, and how ‘high integrity’ is non-negotiable,” IAPB Co-chair Dame Amelia Fawcett said, referring to the fact that respondents also valued high integrity through strict rules, standards, guidelines, and independent third-party verification.

“Our mission is not to find one perfect solution for biodiversity credits but instead to explore the different options, and demonstrate what high integrity means in each and every case.”

The UK-France led initiative is being closely monitored ahead of the COP16 UN biodiversity summit in Cali, Colombia, where IAPB is expected to release a set of final recommendations with practical and actionable outcomes for the emerging market.

Last month, panel co-chair Sylvie Goulard told Carbon Pulse that one of the outcomes of the IAPB’s initiative appears to be that – at least for a moment – several markets will co-exist and develop, reflecting the diversity of ecosystems, jurisdictions, and solutions.

The report also highlighted how projects could be enhanced by involving Indigenous Peoples and local communities. The consultation itself included views from three Indigenous Peoples or local community members.

Respondents emphasised poor corporate behaviour in the past, risks of land grabbing, and concerns that corporate initiatives may prioritise specific zones over larger environmentally important areas.

In April, the Indigenous led Community Advisory Panel (CAP) of the UN-backed Biodiversity Credit Alliance (BCA) proposed a separate set of recommendations, warning that biodiversity credits might be incompatible with the priorities of Indigenous Peoples.

By Giada Ferraglioni – giada@carbon-pulse.com

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