Freek van Til (VBDO): Biodiversity credits: final step towards nature restoration or make-believe solution?
Freek van Til (VBDO): Biodiversity credits: final step towards nature restoration or make-believe solution?
This column was originally written in Dutch. This is an English translation.
By Freek van Til, Projectmanager Sustainability & Responsible Investment, VBDO
Biodiversity conservation is essential, but how companies should manage their impact on nature remains a matter of debate. One of the options discussed is the purchase and sale of certificates, so-called biodiversity credits, similar to the voluntary carbon credits market. These credits promise companies the opportunity to offset their negative impact on ecosystems by contributing to nature conservation elsewhere. But to what extent do they form a legitimate strategy? And what do they mean for the reliability of sustainability claims?
Late last month, it was reported that between $325,000 and $1.87 mln worth of such credits have now been sold. The Global Biodiversity Framework (GBF) as part of the Kunming-Montreal Agreement cites biodiversity credits as one of the mechanisms to get private financial flows going. As a concept, it sounds attractive, but there are fundamental challenges that should not be overlooked. First, the market for biodiversity credits is still developing and relatively unregulated. This poses the risk that companies shrug off their responsibility by simply buying credits, without actually adjusting their activities to minimise their impact.
Not comparable
Also remember: one ecosystem is not the other. For example, destroying part of the Amazon - a "biodiversity hotspot" - is not effectively compensated by planting trees elsewhere in the world. Finally, another well-known problem is land grabbing. When land is acquired or leased, it is often done without the consent or notification of the local communities that depend on that land for their livelihoods. Try buying that off with some credits.
Financial compensation is band-aiding
So a robust biodiversity strategy really requires a lot more than just buying credits. The mitigation hierarchy, as set out by the International Finance Corporation (IFC), provides a clear framework for companies: avoid harmful activities first, minimise unavoidable impacts, restore where possible, and only use offsets (such as biodiversity credits) as a very last resort.
From passive to proactive
The focus should therefore be on proactively reducing impacts on biodiversity. Not on band-aids through passive, financial compensation. If companies really want to do something, they have to roll up their sleeves. Many will eventually have to, because of their own high dependence on biodiversity. Buying some credits really won't get them out of that.