The biodiversity credits program will be part of the government’s dual strategy of developing land and recovering natural resources.
Biodiversity credits will come into force in Britain next week, panellists have said at investment consultancy Mercer’s first biodiversity summit.
In addition to the mandatory scheme, the statutory scheme for biodiversity credits will be introduced Biodiversity Net Gain (BNG) – a government strategy aimed at developing British land and contributing to nature’s recovery.
BNG is part of the Environmental Act 2021requiring developers to achieve a 10% net improvement in biodiversity on the land they use through on-site improvements, or purchase biodiversity units from an external land manager.
To ensure that the pace of development in England is not affected by BNG, the government has created a statutory biodiversity credit scheme as a last resort for developers to comply with the new rules.
Great Britain is also part of the International Advisory Panel on Biodiversity Credits. The panel is a joint initiative of the UK and French governments that supports the development of biodiversity credit by identifying, developing and promoting practices, norms, standards and policies to support the development of high integrity credit markets for biodiversity.
Speaking at the biodiversity summit, Leo Niesel, Senior Investment Research Specialist at Mercer, confirmed that the UK biodiversity credit scheme would come into effect next week.In a In the Q&A that followed the discussion, an audience member asked him if he thought carbon and biodiversity credits were a form of greenwashing.
“There’s so much debate about it, but I think there’s room for high-quality carbon credits,” he responded. “For example, if you plant forests on degraded land, or restore the original rainforest on land that has been used for agriculture. I think the same opportunities exist in the area of biodiversity credits.”
Hill Gaston, UK Head of Sustainability at Mercer, added that investors can take comfort in the fact that the UK’s biodiversity credits would be backed by regulation and a “huge amount of information”.
Goal 19 of the Kunming-Montreal Global Biodiversity Framework (GBF), agreed at COP15 in December 2022, has recognized biodiversity credits as an innovative mechanism to channel private sector financing towards biodiversity.
The One Forest Summit, jointly held by France and Gabon in March 2023, agreed on the use of biodiversity credits as a mechanism to provide financial incentives for countries to protect their most vital carbon and biodiversity reserves. This would be done through the establishment of a €100 million Positive Conservation Partnerships Fund reported from asset manager Pollination.
A report A report published in December by the World Economic Forum (WEF) found that with effective progress on governance, global demand for voluntary biodiversity credits could reach $2 billion by 2030 and $69 billion by 2050. However, an accompanying report shows that inappropriate use of biodiversity credits Biodiversity credits can harm nature and local communities, exposing buyers to strategic, operational and reputational risks.
Biodiversity credits are related to, but distinct from, voluntary carbon credits, the WEF explains. While the latter represent units of a carbon equivalent that is avoided or removed from the atmosphere, the former represent units of restored or preserved biodiversity, which can have a variety of distinguishing characteristics.
While carbon credits aim for a standardized unit as part of a commodity market, biodiversity credits may not lend themselves to full equivalence. The market could evolve with differentiated products, such as credits for the type of nature restored, and metrics used to track improvements.