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A close up of a green and yellow frog with red eyes.
Red-eyed Tree Frog The Red-eyed Tree Frog (Agalychnis callidryas) calls at night around water ponds after rainy days.

 La Milpa Lodge, Rio Bravo Conservation Area, Orange Walk District, Belize. © Lucas Bustamante
Biodiversity

The Role of Biodiversity Credits in Promoting Conservation Outcomes

How can we ensure that biodiversity credits truly contribute to meaningful and sustainable conservation outcomes?

October 16, 2024

Biodiversity credits are a market-based mechanism designed to incentivize the protection and restoration of natural environments. The Biodiversity Credit Alliance defines a biodiversity credit as “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.” By creating a financial value for biodiversity, these credits can align economic activities with conservation and restoration, and drive investment into projects that restore, enhance and safeguard biodiversity, which can provide support to local stewards.

TNC View: Biodiversity Credits

Read more about TNC's position on biodiversity credits.

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Biodiversity crediting mechanisms have long had a place within regulated mitigation compliance systems. And while the new attention to voluntary biodiversity credit markets represents a novel approach to conservation, there are challenges toward implementation. Nature is dynamic and multifaceted, so, accurately measuring and verifying biodiversity gains is complex.

Establishing globally standardized monitoring systems is essential but difficult, leading to concerns about the reliability and effectiveness of credits.

Ensuring that biodiversity credits truly contribute to meaningful and sustainable conservation outcomes requires ongoing refinement of methodologies, robust regulatory frameworks and transparent reporting practices.

Sufficient safeguards are required to ensure equitable benefits for Indigenous Peoples and local communities. And, there is real risk of greenwashing by companies that may purchase biodiversity credits to make claims of supporting nature without taking sufficient credible action to address negative impacts.

Nature Positive

Nature Positive is a societal goal that companies must contribute towards by:

  1. Assessing their nature-related impacts, dependencies, risks and opportunities;

  2. Committing to act by setting science-driven targets;

  3. Taking action across operations and value chains to avoid and reduce negative impacts, restore and regenerate and contribute to the transformation of global systems; and,

  4. Disclosing progress annually.

Additionally, companies should contribute to the conservation and restoration of nature outside of value chains to support global nature goals.

Taking this into account, The Nature Conservancy’s (TNC) position on biodiversity credits reflects our dedication to preserving and restoring biodiversity while ensuring responsible private sector engagement.

Our Position

Small blue fish float above a coral reef.
Belize Coral Reefs Coral reefs at the Aquarium dive site, off of Lighthouse Reef Atoll, Belize. June 2022. © Shireen Rahimi

Government -Administered and Regulated- Frameworks

TNC supports the establishment of government-administered, government-regulated mandatory and voluntary biodiversity crediting frameworks to scale up private sector investment in biodiversity conservation. 

These frameworks should adhere to TNC’s Mitigation Principles and align with National Targets set by governments under the Kunming-Montreal Global Biodiversity Framework (GBF). Scalability will depend on regulatory requirements and government-led incentives to drive demand.

  • Mitigation and Offset Programs

TNC endorses biodiversity credit use for compensatory mitigation and offsetting within regulatory frameworks. Credit-based offset programs must be government-administered, consistent with TNC’s Mitigation Principles and follow best practice recommendations and lessons learned from the establishment of these programs over many decades. Companies should prioritize avoiding, minimizing and restoring impacts, using offsets only as a last resort.

  • Strategic Biodiversity Certificates

TNC recognizes the need for a novel global framework for publicly-managed “strategic biodiversity certificate” programs that that implement defined and measurable National Targets adopted by governments as their national contributions to the GBF. These certificates would incentivize private sector investment in conservation, and would be structured to contribute to the national and global objectives of the GBF. Certificates would be designed to enable companies to make claims about contributing to a nature positive future, and would not be designed to compensate for corporate impacts. 

This type of framework would strike a balance between regulatory complexity and flexibility, supporting actual costs of restoration and protection while enabling conservation benefits that would not have happened otherwise. These certificates should complement, not substitute for, core government funding for conservation. TNC believes strategic biodiversity certificates would be a suitable area for exploration and policy development.

A hummingbird and bees drink from a bird fountain.
Sharing Water A hummingbird and bees share a drink of water. © Miguel angel Fernandez/TNC Photo Contest 2019

Unregulated Biodiversity Credits

TNC does not support biodiversity crediting frameworks that are not government-administered and not government regulated. 

Looking up into the canopy of a stand of trees.
Oak Woodlands TNC's Dangermond Preserve, California. Oak woodlands in and near Black Brush pasture. TNC biologist Larry Serpa and photographer David Liittschwager collected species here for a photographic biodiversity survey. © Bill Marr/The Nature Conservancy

Global Trading of Biodiversity Credits 

Given that, unlike carbon credit markets, biodiversity values are localized, non-fungible and irreplaceable, TNC does not support global trading of biodiversity credits. However, TNC does support the integration of biodiversity co-benefits within carbon credit markets.   

Aerial view of wide channels of water flowing into the Gulf of Mexico.
Wax Lake Delta Aerial photo of the view looking south toward the Gulf of Mexico down the Wax Lake Delta, Louisiana. © Carlton Ward Jr.

Measurement Challenges

Measuring biodiversity is complex. Unlike carbon, biodiversity is complex and diffuse; there is no single metric that captures its full range of characteristics and values. Crediting frameworks aligned with the National Targets and reporting mechanisms aligned with the GBF can enable the accurate tracking of biodiversity outcomes across landscapes, jurisdictions and globally.

Use of Biodiversity Credits - Guidance and Safeguards 

TNC encourages clear guidance on the use of biodiversity credits. If biodiversity credits are created through a regulated compensatory mitigation or offset program, a purchaser can make claims in relation to specific impacts. Otherwise, purchasers should claims related to “contributing to” or “supporting” societal biodiversity outcomes, when appropriate—rather than claiming outcomes related to purchaser-level biodiversity impacts. Safeguards are essential to prevent misuse and greenwashing. To do their part in ensuring a nature positive future, companies can support societal biodiversity targets, and must take action to address their own negative impacts across operations and value chains, which may involve substantial changes to business models. 

In summary, TNC advocates for responsible development of biodiversity markets in the form of government-administered frameworks for offsetting biodiversity impacts and issuance of strategic biodiversity certificates for contributing to societal biodiversity targets. Biodiversity credits and certificates are only one piece of the puzzle of meeting the biodiversity financing gap. By working collaboratively and considering all levers needed to achieve the goals and targets of the GBF, we can halt and reverse biodiversity loss and protect our planet for generations to come.

Aerial of dense forest carved by a curving blue river.
Crooked Creek Mukwonago River, also known as Crooked Creek, winds through Lulu Lake Preserve and connects many of the lakes within the area. © Fauna Creative

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