Biodiversity credits
Description
There is no agreed definition of biodiversity credits. Sometimes known as ‘biocredits’, they are generally considered as representing tradeable units of biodiversity being protected or restored that can be bought and sold on a voluntary credit market. 1 2 The Biodiversity Credit Alliance provides the following working definition: “A biodiversity credit is a certificate that represents a measured and evidence-based unit of positive biodiversity outcome that is durable and additional to what otherwise would have occurred”. 3
Ducros and Steele (2022) 1
BBOP (2012) 2
The Biodiversity Credit Alliance (2024) 3
Business relevance
Principles and standards relating to biodiversity credits are still in development. This means that the distinction between biodiversity credits and biodiversity offsets remains to be clarified. Offsets are linked to specific biodiversity losses at a location that must be met by equivalent reparations to achieve a no-net loss outcome. Biodiversity credits are a voluntary way of investing in biodiversity. While there is no consensus on whether or not a company could use them to compensate for specific damages to biodiversity, expert opinion is converging on this being an inviable use case. 4 Biodiversity credits should not be a substitute for transformation towards nature-positive business models, 4 however, it is possible that biodiversity credits could be used by companies to implement nature-positive targets and commitments. Under Target 19 in the Kunming-Montreal Global Biodiversity Framework, biodiversity credits (with appropriate environmental and social safeguards in place) are suggested as a possible means for increasing financial flows to implement national biodiversity strategies and action plans. 5
As well as providing potential benefits to nature, the improper use of biodiversity credits may cause harm to nature and Indigenous Peoples and local communities. They can also expose buyers to risk. For example, ‘greenwashing’ can occur where low-integrity biodiversity credits replace meaningful actions towards nature. Low integrity credits may not achieve positive outcomes for nature, support Indigenous People and local communities or create long-term value. False or misleading claims to stakeholders about the biodiversity credits may expose companies to substantial risks. 4
World Economic Forum (2023) 4
Convention on Biological Diversity (CBD) (2022) 5