Business & biodiversity: Going beyond compliance - the case for voluntary biodiversity investment

The state of the voluntary biodiversity market and its enormous potential to fund large-scale nature conservation and restoration efforts.

Dave Encarnation & Banashree Thapa

Dave Encarnation & Banashree Thapa

02 Apr, 2024

Business & biodiversity: Going beyond compliance - the case for voluntary biodiversity investment

Our previous article on

Biodiversity Net Gain in England

outlined the recent developments and release of the new Biodiversity Net Gain (BNG) policy in England. This policy aims to secure against biodiversity loss in the UK by mandating new developments to produce at least a 10% net increase in biodiversity. While this is a great initiative to halt the severe decline of biodiversity in the UK, we believe that there is further potential to unlock biodiversity restoration in the UK and beyond.

"Companies are increasingly facing both internal and external pressures to account for and mitigate their biodiversity impacts."

In this blog from our Biodiversity & Business series we will discuss the state of the voluntary biodiversity market and its enormous potential to fund large scale nature conservation and restoration efforts. 

The limits of biodiversity net gain

As mentioned in our previous blog post, BNG only applies to new development projects and only applies to England. It does not apply to developments that began before the rollout of BNG in early 2024. It also does not apply to any other sectors, meaning that currently sectors such as the food and beverage industry, technology, and financial services are not required to invest in biodiversity conservation unless they are building a new development. Lastly, BNG does not account for things such as value chain biodiversity impacts. 

The voluntary biodiversity market

This does not mean that these companies do not have biodiversity impacts. All companies, regardless of what sector they are in, have biodiversity impacts all along their supply chains that are not necessarily related to development projects such as building a new office park. It is crucial for all companies to quantify their biodiversity footprint much as they would quantify their biodiversity footprint. For companies that are not beholden to compliance biodiversity schemes such as BNG, once they have calculated their biodiversity footprint they can turn to the voluntary biodiversity market. 

biodiversity butterflies

Why voluntary?

Companies are increasingly facing both internal and external pressures to account for and mitigate their biodiversity impacts. Biodiversity impacts are becoming more and more important for consumers as the looming biodiversity crisis (and the role of global supply chains in creating it) become even more apparent. Biodiversity is concurrently becoming more important to companies. 

A recent study by Ermgassen

et al

(2022) illustrates the change in biodiversity commitments from the 2016 Global Fortune 100 companies. From 2016 to 2021, there was a 40% increase in the number of companies mentioning biodiversity (70/100) and a 71% increase in the number of F100 companies with specific biodiversity commitments (53/100). For example, large companies such as Verizon, Microsoft and Tesco began 2016 with no mention of biodiversity. By 2021, they had all set SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) targets for mitigating their biodiversity impact. 

How do voluntary biodiversity contributions work?

Earthly’s voluntary biodiversity units are the only voluntary biodiversity units which use exactly the same methodology and processes as the UK government-endorsed BNG units (the DEFRA metric) with the only difference being the end use: while BNG units are only used for compliance, Earthly’s units can be bought by any business to contribute voluntarily with the same level of rigour. 

biodiversity fish duck

Qualities of a high-quality biodiversity project

Once a company has decided to purchase voluntary biodiversity units, they have to decide which units to purchase. We pride ourselves on our ability to identify high-quality nature-based projects for companies to invest in. As with carbon credits, not all credits and nature-based projects are created equal. Earthly’s assessment framework helps identify and score nature-based carbon projects across a range of indicators. Our assessment has three pillars: carbon, biodiversity, and people. We have revamped our biodiversity pillar from our original assessment of carbon projects to focus on biodiversity projects used for voluntary biodiversity contributions. As with carbon projects, we believe that a high-quality biodiversity project is one that addresses the issue of biodiversity loss and habitat degradation holistically. 

This is why our new biodiversity assessment has 8 themes: Additionality, Permanence, Baseline, Suitability, Net Biodiversity Impact, Climate Benefits, Monitoring, and Transparency.

This ensures that we assess biodiversity projects from the design stage through to implementation and impacts. A high-quality biodiversity project will have many of the same qualities as a high-quality carbon project. For example, additionality: a high-quality biodiversity project must demonstrate that what it will achieve could not be achieved without the funding from biodiversity unit purchases. As another example, a project’s interventions and activities must be suitable for the project area and designed with future climate change in mind to ensure that it will provide lasting benefits. 

At Earthly, we are proud to be at the forefront of the burgeoning voluntary biodiversity market. We believe that the voluntary biodiversity market has enormous potential and we can all collectively learn from the successes and shortcomings of the voluntary carbon market to make the voluntary biodiversity market as robust as possible. We believe that our extensive assessment process and emphasis on monitoring and verifying project impacts is crucial to distinguish high-quality projects that will actually lead to a significant contribution to biodiversity conservation and/or restoration. 

To that end, we have developed the first public ledger to transparently register and transact voluntary biodiversity units with the same methodology and rigour of the compliance market. Landowners can upload their biodiversity projects on the ledger, and businesses will be able to purchase the parcel of their choice within the projects area depending on the specific habitat they want to restore. Each transaction will be connected to a unique code and location on the map, showing the area which was financed and how many biodiversity units have been purchased.

biodiversity forest stream

Stay tuned for our fourth and final biodiversity blog where we will unveil Earthly’s new biodiversity ledger and how it applies to businesses and project developers alike.