Climate Biodiversity Nexus

The 2022 Kunming-Montreal Global Biodiversity Framework (GBF) is setting the course for halting and reversing biodiversity loss and putting nature on a path to recovery by 2030 with a set of globally agreed goals and action-oriented targets. Target 19 of the GBF requires actions to close the significant global biodiversity finance gap, mobilizing $200 billion per year by 2030 through financing from all sources, which include innovative financing schemes and increasing flows of private finance.

Challenge

Biodiversity credits have been explicitly recognized in Target 19 as one of the nascent innovative schemes capable of channeling private sector investment into biodiversity. Alongside biodiversity credits, the market also saw the emergence of carbon credits that have additional and specific management actions linked to the enhancement, conservation, or restoration of biodiversity. These carbon credits can be referred to as biodiversity-linked carbon credits.

Although biodiversity credits and biodiversity-linked carbon credits have great potential, they also face challenges that must be carefully addressed in consultation with stakeholders. These include:

• Difficulty to define the baseline to measure the additionality of the project generating the credit.
• Challenges associated with biodiversity outcomes measurement, reporting and verification.
• Risks linked to accounting, additionality, and integrity associated with the bundling of multiple dimensions in a single credit.
• Ensuring a fair share of the revenue reaches indigenous people and local communities, as well as ensuring their participation in the design and implementation of projects, including through the incorporation of indigenous, local or traditional ecological knowledge.
• Uncertainty in market demand.

Solution

The project seeks to identify the potential for the voluntary carbon market to contribute to biodiversity objectives through implementing high-integrity requirements for biodiversity-neutral and biodiversity-positive carbon standards.

It will also investigate the potential development of standalone biodiversity credits, with a special focus on the demand side of these markets and the types of policies and measures that could be put in place to shape and enhance their size and quality.

We started by performing an extensive review of the existing evidence base, and then creating a structured consultation strategy. The initial components include:

1. Suggesting high-integrity requirements for “biodiversity-positive” voluntary carbon standards and safeguards for “nature-neutral” voluntary carbon standards.

2. Suggesting high-integrity requirements for pureplay biodiversity credits and associated claims.

3. Recommend demand-side measures to enhance the uptake of biodiversity credits.

Where we are now

The project started in January 2024 and will culminate with the submission of its final report and the organization of public webinars in October 2024.

Acknowledging the existence of various stakeholder groups, different interests, and arguments—critics and supporters—for biodiversity credits, the project will seek to engage with a broad stakeholder group to accurately reflect the state of the discussion in a balanced way.

Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union. The European Union cannot be held responsible for them.