Advancements in Voluntary Carbon Markets
With increasing pressure on the private sector to actively participate in a “net-zero” future, the role of collaborative …
Given how challenged we are with tackling climate change, addressing a second challenge may feel overwhelming - but in fact, it’s not. While climate change and biodiversity loss are not the same, they are strongly interlinked and in fact, addressing both will allow us to accelerate the positive impact we are aiming for.
“If we solve the climate crises but don’t address biodiversity, we’re toast” - Oliver Bolton Blue Earth Summit 2022
What is Biodiversity?
Biodiversity is the enormous variety of life on Earth. It’s every living thing, including plants, bacteria, animals, humans, and more.
Biodiversity is synonymous with the health of our environment, because biodiversity represents the potential of nature. The potential to:
Healthy ecosystems are full of organisms carrying out daily activities that create these goods and services - whether they are diverse microorganisms helping form soil; insects, birds and mammals pollinating plants; or trees exchanging sequestering carbon and releasing oxygen. When these organisms start to disappear, so do the outputs. Ecosystems lose their ability to function and the goods and services become scarce.
The Biodiversity Crisis
From the intricate interconnectedness of species to the potential loss of life-saving medicines, the impact of biodiversity loss reaches far beyond what meets the eye. And while evolution naturally changes biodiversity, the current rate of loss caused by human activity is staggering. Simply put, Mother Nature can’t keep up with it.
Current pressure on nature by human activity is not only depriving future generations of the beauty of the diversity of life on earth, they also have drastic effects on our people and economy depriving us of essential ecosystem services. For example, according to a 2019 U.N. report, land degradation has reduced the productivity of 23% of the global land surface, up to US$577 billion in annual global crops are at risk from pollinator loss and 100-300 million people are at increased risk of floods and hurricanes because of loss of coastal habitats and protection.
Science has already shown that we have degraded global biodiversity well beyond a safe limit - the planetary boundaries.
But the damage is reversible through three types of actions:
To rethink their relationship with nature and take effective action, businesses must first understand their impact and dependencies - how are you causing harm to biodiversity in your current investments and operations, and how are those activities dependent on biodiversity?
The Current State of Biodiversity Credits
The evolution of
and markets came about to increase funding allocation of projects that prevent and reverse biodiversity loss. In many cases there are regulations requiring businesses to integrate biodiversity net gain into their development processes necessitate the sourcing of appropriate offsite units.
Since the 1980s, the idea of mitigating businesses' biodiversity impacts by investing in biodiversity preservation or restoration elsewhere has gained traction. Compliance schemes, such as "mitigation banks" in the USA, have allowed companies to invest in "compensatory mitigation credits" to offset their negative environmental impacts.
Similar schemes, such as "habitat banks" and "biodiversity net gain" credits, have been adopted by countries like Colombia, Australia, the UK, and Singapore. These schemes incentivize businesses to quantify their biodiversity impact and compensate for environmental degradation. However, risks such as development in previously protected areas and weak oversight need to be addressed through a proper
of projects before investing.
While governments are taking action to revert these alarming trends of nature loss, current incentives for biodiversity conservation are not alone sufficient to tackle this crisis with the urgency required, and the private sector has been called upon to play its role, both via compliance to upcoming regulations and voluntarily.
There is a growing shift towards voluntary compensation, where businesses contribute to nature recovery. These voluntary schemes can complement compliance-oriented investments and align with national biodiversity targets and wider ESG strategies. Leading voluntary schemes today include Wallacea, ValueNature, Plan Vivo Nature, EKOS and many more.
Why Businesses Are Considering Biodiversity Credits
There are several reasons why businesses may want to invest in biodiversity credits. The first is the adoption of new regulations that may require businesses to integrate biodiversity net gain into their development processes. In the UK, for example, the Environment Act of 2021 will require nearly all planning permissions granted in England to deliver at least 10% biodiversity net gain. If businesses have limited onsite potential for such biodiversity net gain, they will need to source appropriate off site units.
Second, businesses may want to de-risk carbon credits used to offset their emissions. While
, we do know that there is a positive relationship between biodiversity and the functioning of ecosystems. In other words, as biodiversity improves so too does the resilience of habitats. Thus, if a company invests in a project with strong biodiversity benefits, it is less likely that other project benefits (including carbon credits) will be invalidated by threats such as pests, fire, and longer-term climate change. One example of this de-risking is to “stack” carbon credits with biodiversity credits from the same site.
Lastly, biodiversity credits offer businesses the opportunity to contribute to national and/or international business efforts, mitigate their biodiversity impact and demonstrate their biodiversity commitment to consumers.
Earthly’s Position and Guidance to Businesses
Just as with carbon credits, not all biodiversity credits are created the same. Different units, methodologies, and monitoring protocols exist for biodiversity credits, so having a partner like Earthly that supports the highest quality projects under these protocols is crucial for businesses looking to invest in the most suitable projects.
No matter what the scheme or final unit of measure is - all projects should be looking at the ecosystem holistically. At Earthly, we take a holistic approach to assessing carbon credit projects by also investigating the biodiversity and social impacts of carbon projects. The same is true for biodiversity projects - the best project should address not just biodiversity but also carbon and social issues.
We also know that the biodiversity credit market is evolving rapidly. As such, part of our role is to monitor the progress of the market and guide projects to meet best practices. To do so, we rely on our years of technical experience guiding best practices in the voluntary carbon market and our team of Scientific Advisors who are experts in ecology and biodiversity to help guide our understanding of best-practices for biodiversity projects.
We encourage all businesses who wish to make a positive impact on biodiversity to join us in this mission. Please
to learn more.