In the wake of the COP27 and with the 2022 Montreal Biodiversity Conference, COP15 in progress, along with the many calls for action by campaigners, politicians and NGOs, all eyes are on biodiversity. The collective global community has been in agreement for a long time now that biodiversity is important and that there is a global biodiversity crisis. There has been much progress in the last few years, from a policy perspective and corporate appetite to support biodiversity. However, there is still less clarity on the pathway to on the ground action and project development. The task of restoring biodiversity is recognised as being beyond the capacity of public finance, so providing a vehicle for private finance to step in is incredibly important.
The carbon markets were once referred to as the wild west. While the landscape of standards, methodologies, integrity councils, and corporate claims has become much more established, the voluntary biodiversity landscape as a market is still very much uncharted. As project developers with over 16 years of experience in both developing projects and being instrumental in the development and design of the UK Woodland Carbon Code and Peatland Code, we have attempted to make sense of the emerging biodiversity market with our ‘Carbon Code’ lens.
Biodiversity Standards and Codes
From a landholder’s perspective, it is important to understand the differences in the market and how that applies to your land. With the arrival of statutory biodiversity net gain (BNG) requirements for English and Welsh developments, there may be an opportunity to develop a BNG project on your land under the DEFRA 3.1 Metric for statutory BNG credits within your local authority. However, we are seeing the emergence of a wider voluntary biodiversity market to cater for the increasing desire from corporates and investors to also contribute to solving the biodiversity crisis. From the many standards currently developing, we see a number emerging that will provide good solutions for UK projects.
When developing a voluntary biodiversity project, it is extremely important to choose a methodology or standard that is robust, science based and is going to best measure and value the positive uplift of the project. Another point to note is that not all carbon standards allow, at present, ‘stacking’ of different credit types. Most relevant to this is the stacking of voluntary biodiversity credits with carbon. However, there are a number of carbon standards that allow this already, with others due to release guidance in 2023. Planning how the carbon and biodiversity components of a project will interact and obtaining suitable baseline data is essential.
Best Practice Initiatives
As we previously said in our blog piece on the carbon markets, for any voluntary carbon market to operate smoothly, a degree of governance and regulation is essential. The same must hold true for the biodiversity credit market as it develops.
The Taskforce on Nature Related Financial Disclosures (TNFD) and the Science Based Targets Networks (SBTN) are two initiatives who will be guiding this on an international level. The TNFD is developing and delivering a risk management and disclosure framework for organisations to report and act on evolving nature-related risks. While the SBTN is due to publish their guidance on science-based targets in Q1 2023. This will give companies and cities a clear pathway to reducing emissions and tackling nature loss. These frameworks will provide guidance for corporates and investors to purchase voluntary biodiversity credits to demonstrate their commitment.
Looking forward to 2023
So, we look forward to 2023 and to this incredibly important element of the voluntary ecosystem markets maturing. We look forward to the outcome of COP15, to seeing private finance being channelled to impactful and high integrity projects and most importantly to real impact and action taking effect on the ground. Voluntary biodiversity credits will be particularly important for projects where, while the project would have been extremely important for biodiversity, it did not deliver enough carbon income to make the project viable. Now we can quantify and define more than just carbon, finance need not be the barrier for these projects.
Forest Carbon specialises in the development of high integrity land use projects, bringing them to market and connecting them to our large network of corporate clients. We are at an exciting point, where we feel that the standards have progressed enough for us to be able to offer advice and project development solutions to landholders who are looking to make strides to conserve and regenerate biodiversity on their farms and estates.
Developments to the voluntary biodiversity market are evolving quickly, keep an eye on our blog to keep up to date with the UK biodiversity market.
If you would like to discuss a potential biodiversity project, or if you are a company looking to support a biodiversity project, please contact us.