Welcome to another week of Shaken Not Burned! 

The world needs to plug a biodiversity finance gap worth $700 billion per year to effectively protect and restore nature, according to the United Nations. This issue is garnering more attention as sustainability efforts have evolved from reducing carbon emissions to protecting nature – moving from ‘do no harm’ to taking positive action.

A turning point was the Kunming-Montreal Global Biodiversity Framework, to which most countries agreed in 2022, defining biodiversity commitments, pushing for reporting and regulation and calling for more than $200 billion from public and private capital. 

One potential solution is raising financing through biodiversity markets. But establishing biodiversity credits isn’t as simple as carbon credits: a tonne of CO2 emitted has the same impact globally, while nature and biodiversity impacts are very specific and local.

The history of the development of the carbon markets has had its own challenges, as they were fraught with significant controversies, raising concerns about the same issues developing in the biodiversity markets. In this week’s episode, Giulia explores this new space with Simas Gradeckas, founder at Bloom Labs.

The conversation touches upon the role of corporate responsibility in addressing biodiversity loss, ethical considerations surrounding projects in the Global South and putting a price on nature, the differences between compliance and voluntary markets, and the future prospects for scaling biodiversity finance.

There is great controversy about the extent to which biodiversity offsets can or should be used: credits and offsets are often confused but serve different purposes. Offsets are typically regulatory tools used to compensate for biodiversity loss caused by development, effectively making up for environmental damage. In contrast, biodiversity credits represent measurable gains in ecosystem health and are designed to incentivise proactive investment in conservation or restoration.

While offsets are reactive and often mandatory, credits are usually voluntary and aim to drive nature-positive outcomes. Both tools can play a role in financing biodiversity, but they come with different risks, from greenwashing to commodifying complex ecosystems.

Since the interview, the EU has published its Nature Credits Roadmap to help define and facilitate a voluntary, but certified, market-based system to incentivise private investment in nature-positive actions, such as reforestation, wetland restoration and organic farming, without increasing public budgets.

It sets out a phased, stakeholder-driven plan to create a trusted biodiversity credit system that channels private capital into nature restoration, anchored by certification, pilots, and governance, to help close a €37-65 billion annual biodiversity financing gap in Europe.

Reading materials:

• Kunming-Montreal Global Biodiversity Framework

• Biodiversity Credit Markets

• Biodiversity Credits: An Overview of the Current State, Future Opportunities, and Potential Pitfalls

• Carbon Credits: An Overview of a Climate Controversy

• Carbon Markets and the New Scramble for African Land

• Would putting a price on nature help protect biodiversity?

• The call to put ‘a price on nature’ can be appealing – but it misunderstands what’s at stake

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