At OneStop ESG, our Thought Leadership Series highlights leaders shaping the future of nature and sustainability. In this edition, we feature Marianne Haahr, who leads the International Advisory Panel on Biodiversity Credits and supports countries and companies in investing in nature through credible, well-designed biodiversity credit markets.

The world gathers for COP30 in Belém, deep in the Amazon rainforest, where carbon markets are taking centre stage. Nature-based carbon credits now make up 46 percent of all transactions in voluntary carbon markets. These credits assign a monetary value to one of nature’s most vital functions: capturing and storing carbon across wetlands, forests, grasslands, and other ecosystems worldwide.

But nature’s contributions go far beyond supporting national and corporate climate targets. They provide a wide array of ecosystem services that sustain economies, communities, and businesses alike. Nature credits are designed to recognise and monetise these benefits.

A nature credit is a “certificate that represents a measured and evidence-based unit of positive biodiversity outcome that is durable and additional to what would have otherwise occurred.” They are explicitly listed as an innovative financial instrument that can help achieve Target 19 of the Kunming-Montreal Global Biodiversity Framework (GBF), which focuses on mobilising financial resources for biodiversity.

 

A Global Agreement on Nature

 

In the middle of the cold Canadian winter at the end of 2022, the Kunming-Montreal agreement was adopted as a nature equivalent to the Paris agreement with the ambition to stop nature loss by 2030 and accelerate the transition to a nature-positive world by 2050. Regulation is starting to emerge as a result of this global agreement on nature.

On 19 November, the International Advisory Panel on Biodiversity Credits (IAPB) launched a global baseline of nature credit regulations and policies in jurisdictions around the world. Just as with carbon markets, nature credit markets are taking off in some jurisdictions quicker than in others. Currently 19 nature credit policy and regulatory frameworks are in place, with several others in development in both Global North and Global South.

READ MORE: EU Reaches Landmark Deal on 2040 Climate Targets, Expands Role of Carbon Credits

 

Current Nature Credit Regulations and Policies

 

One of the most well-known is the UK’s Biodiversity Net Gain (BNG) regulation, which requires all infrastructure developers to generate a ten percent improvement in nature after the construction of the infrastructure asset; what cannot be generated as nature uplift inside the development area needs to be bought via nature units issued elsewhere in the country.

In Brazil, the Forest Code requires landowners to maintain a certain percentage of their property as native vegetation that must be preserved. Not all landowners can maintain this vegetation on-site due to agricultural or economic constraints. The Forest Code therefore introduced ‘Forest Reserve Credits’, known nationally as CRA (Cota de Reserva Ambiental), which represent one hectare of native vegetation, either standing or under restoration. Credits can be traded to offset Legal Reserve deficits in other properties or corporate projects. Hence, the CRA is a tradable credit that allows landowners who exceed their legal reserve requirements to sell credits to those who are deficient. The first CRA transaction happened just ahead of COP30 in Belém.

Other jurisdictions with policy and regulatory nature credit markets in place include, but are not limited to, Australia, Colombia, Finland, France, South Africa, and the US.

READ MORE: Singapore Secures Over 2 Million Tonnes of Nature-Based Carbon Credits to Advance Climate Goals

 

Corporate Nature Dependencies and Financial Implications 

 

An estimated 85% of the world’s largest companies have a significant dependency on nature across their direct operations. These dependencies can relate to water, healthy soils, or pollination as essential inputs for production. When these ecosystem services are compromised such as water sources drying up during droughts or degraded soils reducing crop yields and raising raw material costs (e.g., cocoa); companies face potentially significant risks. Mismanagement of nature-related risks can result in substantial financial losses. For example, ten company case studies by Bloomberg suggest total losses of 83.2 USD billion collectively for the companies.

Companies disclosing under the TNFD framework need to identify their nature-related dependencies and assess which may translate into risks over different time horizons. This information is critical for financial institutions to make informed investment decisions. Corporates can signal to investors that they are actively managing nature-related risks by including clear responses in their TNFD disclosures (in line with Strategy B and C recommendations) or within their corporate nature transition plans. Nature credits can serve as a key tool in these disclosures to demonstrate effective risk management.

 

Nature Credits in Corporate Supply Chains

 

Nature credits can be integrated into supplier programmes, for example, by incentivising regenerative agriculture, supporting forest protection near supplier sites, or financing landscape-level restoration in sourcing regions. These programmes help companies achieve supply chain nature goals and reduce exposure to nature-related risks. One advantage of using nature credits for supply chain resilience is that the outcomes are independently verified and structured as payments-for-results, making them a scalable solution for managing supply chain risks.

Nature credits simplify the otherwise complex task of investing in nature restoration or conservation within supply chains. By including evidence of nature credit investments in corporate reporting, companies can substantiate claims of nature-related risk management and signal to financial markets that these risks are being responsibly addressed.

READ MORE: Biodiversity Credits: Changing How We Protect Nature

 

Nest steps – Accelerating High Integrity Markets

 

In the Indonesia Pavilion in Belém, the International Advisory Panel on Biodiversity Credits launched its Nature Credit Policy Forum, a coalition of governments coming together to move these markets forward. Over the coming year building towards CBD COP17 in Armenia this coalition will work to identify ways to build high integrity nature credit markets.

IAPB will leverage its Community of Practice of nature credit developers and issuers to test technical guidelines and nature credit market design recommendations coming out of the Policy Forum to make sure that these are practical to implement by market participants. We are also starting up work to document corporate nature credit use cases to further clarify demand drivers. Nature credits are one solution in the toolbox of corporates to improve business resilience while simultaneously delivering on public policy goals and objectives.

 

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