The health of our planet sits at a pivotal moment of both crisis and opportunity. As human activity continues to ravage nature and stress our climate at alarming rates, there also are promising signs that consensus on the need to act is growing.

In 2022, 196 countries agreed on a new “Global Biodiversity Framework” to halt and reverse global nature loss, laying out a series of targets the world must hit by 2030 for a chance at success. Among these is a vast increase in funding for conservation, recognizing that the amount of money currently pledged for nature falls well short of what is needed to preserve it.

Closing this funding gap is among conservation’s most pressing needs, and will require drawing from a wide range of different sources. One such source identified in the Framework, alongside many others, are biodiversity credits.

In a nutshell, what are biodiversity credits?

In the plainest terms, voluntary biodiversity credits allow for companies and other major donors to pay for nature conservation, stewardship, or restoration and get an official measure of the positive impact.

Here’s one way to think of it: Company X wants to support nature. To do so, it purchases a biodiversity credit which funds Y conservation activity. The reward (in addition to having helped the planet) is a certificate verifying the impact that was achieved.

Importantly, in WWF’s view biodiversity credits are not the same as offsets. Meaning they don’t compensate for the buyer’s environmental harms elsewhere. 

In this sense they are about doing good, and good alone.

Why would a company want to take this approach?

First and foremost, biodiversity credits offer another way for companies to pitch in to help the planet.

As well as acknowledging their role in this shared mission, companies are also increasingly aware that biodiversity loss is a business risk. Indeed, by one estimate, more than 50% of global GDP is ‘moderately or highly dependent on nature and everything it supports.’ The World Economic Forum’s global risks report lists biodiversity loss and ecosystem collapse as one of the top four risks over the coming decade.
 
With this recognition comes an opportunity for companies to play a role in ensuring their own resilience, by contributing to the conservation and restoration of nature. There are many ways they can – and should – do this.

Biodiversity credits are one approach companies might consider as part of broader, holistic environmental strategies. They represent an opportunity to broaden companies’ direct contributions to nature, and complement measures to reduce environmental harms in their supply chains and embrace science-based targets and transition plans for nature.

So how does this look in the real world?

It is important to note that most efforts around biodiversity credits remain in their early stages, as the idea first gained significant attention with their inclusion in the recently adopted Global Biodiversity Framework.

While to date there are only a handful of fully operational biodiversity credit projects, dozens of projects are under design or pilot implementation across the globe. You can see a range of examples summarized in a 2023 report by the International Institute for Environment and Development.

How does this fit into the broader global conservation puzzle?

Hundreds of billions of dollars a year are needed to flip the trend for nature across the globe, with the Global Biodiversity Framework calling for the mobilization of at least US$200B annually. The reality is we are still well short of that amount.

The “biodiversity funding gap” is a major challenge, evident both on a global scale and in the context of local needs, including those of Indigenous and local stewards of nature, who manage biodiversity on their lands and in their waters.

Biodiversity credits could play a part in meeting these needs and helping close this gap. Yet just like other sources of funding, they should only be seen as one piece of the bigger puzzle.

Preserving biodiversity will take financial contributions from many different sources, both private and public, combining an array of funding mechanisms and approaches ranging from nature-linked bonds, loans, and credit lines to impact investment funds, bankable nature-based solutions, and debt-for-nature swaps.

Indeed, like conservation itself, conservation finance is a complex, multi-layered task, requiring inputs and innovations from a kaleidoscope of people, places, and sectors. No one approach can do the job alone.

Is there anything to be wary of?

We should always be clear-sighted about the full balance of risks and rewards with any conservation approach. Biodiversity credits are a new concept, and important questions persist regarding their use and potential.

For starters, without strong incentives for buyers, it remains unclear how a market for biodiversity credits will be sustainable, or big enough to achieve meaningful impact.

There is also currently no global consensus on how biodiversity credits should be defined, and if and how they should be regulated. A lack of agreement on these things brings risk of low-quality projects, with possibly little to no benefit to Indigenous peoples and local communities, or even negative impacts on their territories, resources, and rights.

And as with any conservation approach, treating biodiversity credits as a cure-all would risk losing urgency elsewhere. Indeed the credits would be self-defeating if companies who bought them felt absolved of any further environmental responsibility, or if governments saw a rise in biodiversity credits as a potential reason to lessen their own role and resources for nature.

Ultimately, if we hope for biodiversity credits to play the helpful role envisioned for them, these and other concerns must be settled.

What’s WWF’s approach to biodiversity credits?

WWF is involved in various initiatives working toward best outcomes for biodiversity credits, and we are piloting projects in a handful of places, including Tanzania and France.

We are at the same time careful to balance our optimism and support for biodiversity credits with serious attention to the most prevalent concerns. We likewise acknowledge that biodiversity credits are evolving rapidly, meaning our approach also may evolve.

Fundamental to our approach, nonetheless, is a conviction that biodiversity credits should work fairly for both nature and people. Biodiversity credits must respect and uphold human rights, and where possible projects should be designed by local biodiversity stewards, with Indigenous peoples and local communities receiving the majority of the credit payment.

We also firmly believe that companies must not use biodiversity credits as a substitute for improvements to their own climate, water, or nature impacts.

There are many ways to invest in nature, and we encourage companies and other donors to identify the most appropriate funding approach for each investment. If the world agrees on a smart and just path forward for biodiversity credits, we believe they can make a meaningful contribution to the end goal of reversing global nature loss.  

Download WWF’s full position on biodiversity credits below: