Biodiversity Certificates: Avoiding Offsetting and Promoting Contributions

As COP16 came to a close in Cali, Colombia, in early November, countries hit a snag on one of the key issues on the agenda: reaching an agreement on financing for biodiversity conservation that would help bridge with the annual deficit amounting to 700 billion dollars^[1]. To achieve this, the International Advisory Panel for Biodiversity Credits (IABP), launched by France and the United Kingdom in 2023^[2], presented a comprehensive framework for high-integrity biodiversity credits. While these advances are welcome, Carbone 4 regrets the lack of a clear position aimed at excluding offsets from voluntary mechanisms.

The biodiversity credits, which can be defined as a unit representing a positive, measured, and proven impact on biodiversity that is sustainable and additional, are now part of the financing toolkit that is the focus of intense debate. Although the principle of issuing ecological benefit units is not new, The voluntary and unregulated use of credit is a cause for concern among civil society, which fears it could be misused for greenwashing purposes. Others, on the contrary, see it as a credible and effective tool for financing biodiversity restoration.

While it is widely acknowledged that avoiding and reducing environmental impacts must remain the top priority for companies, Carbone 4 emphasizes the importance ofrule out any compensatory logic in these mechanisms to ensure that these priorities are effectively upheld. It is in this context that Carbone 4 believes that the biodiversity certificates, based on a high scientific integrity and strong principles of fairness and justice, could serve as a relevant funding mechanism to contribute to local and global nature conservation and restoration goals. However, their role must be clear: to supplement, rather than replace, prevention and reduction measures.

Risks Associated with Biodiversity Loans

Against a backdrop of mounting pressure on public sector finances, calls for increased private funding for conservation are growing. Largely mirroring the principles governing carbon credits, biodiversity credits have been the subject of widespread criticism. Indeed, they raise concerns that the pitfalls already observed in carbon offset markets will be replicated: a large majority of certified carbon credits were considered “ghost” credits and did not result in actual emissions reductions by companies.^[3]. In this regard, Carbone 4, the National Museum of Natural History, and the Foundation for Biodiversity Research conducted a in-depth analysis the risks and opportunities surrounding the topic of biodiversity credits^[4]. Among the identified risks, integrity and the principles of fairness and justice, particularly with regard to the sharing of resources, raise serious concerns.

The Risk of “Business as Usual”: Voluntary Offsetting Without Any Real Net Gain

From a semantic perspective, the concept of “ credit "Biodiversity implicitly refers to the concept of '" flow rate ", thereby suggesting a form of equivalence between biodiversity losses and gainsand implicitly referring to the concept of compensation. However, while this concept is not new—since it is enshrined in numerous regulatory texts—^[5], in practice, compensation is difficult to achieve and to demonstrate scientifically. The The results are often disappointing for the conservation and restoration of biodiversity, especially when offsetting is done on a voluntary basis. Indeed, unlike carbon, biodiversity is specific to the local context and varies greatly from one ecosystem to another. These ecosystems are difficult to replace through offsetting measures. Furthermore, the issue of measurement of actual gains generated in support of biodiversity remains complex and involves significant uncertainties. This is why its critics fear that we will see a proliferation of voluntary compensation measures by companies, which would give them the opportunity to to “offset” their impacts without any emphasis on efforts to prevent and reduce impacts—a requirement that only a regulatory framework could truly enforce.

The risk associated with asymmetric governance and unequal resource distribution

Biodiversity credit mechanisms raise concerns about justice and equity, particularly if their governance is poorly designed. This includes insufficient involvement of local stakeholders as early as the design phase. Furthermore, these mechanisms can generate perverse incentives : overestimating future profits, funding low-impact projects to maximize operators’ profits, or reducing payments to local communities for their rights and efforts on the ground. It is therefore crucial to ensure the fair inclusion of all stakeholders.

The implementation of a poorly regulated biodiversity credit mechanism could therefore send the wrong message to the public the illusion of effective and fair action in support of conservation and the people who depend on these efforts, while demonstrating de facto standard practices, without any real corrective or transformative actions on the part of companies.

Toward a "contributory" approach to biodiversity certificates

The term “ biodiversity certificate "refers to a certified amount of 'biodiversity gain' that the end buyer can claim for demonstrate its contribution to collective biodiversity goals, without seeking to offset negative impacts that could not have been avoided or reduced. In a contribution mechanism, certificates do not offset negative impacts and are accounted for separately, thereby avoiding any possibility of substitution between avoidance and reduction measures and restoration and conservation measures. This reduces risks and can simplify requirements, as there is no longer a need to ensure equivalencies or to closely monitor the hierarchy of impact mitigation (or the “avoid-reduce-compensate” sequence). This mechanism also allows efforts to be focused on the collective goals of conservation and restoration, which are at the heart of the issue.

The Key Role of Regulation in Ensuring Real Gains for Biodiversity

In addition, Carbone 4 advocates, in the long term, for the emergence of regulatory mechanisms capable of enforcing reductions in environmental impacts—a coercive element which a purely voluntary compensation mechanism could not provide. Only within this framework could legally regulated compensation measures become not merely a means of “offsetting” negative impacts, but rather restoration obligations that complement the mandatory effort to avoid and reduce those impacts..

Furthermore, the approach based on biodiversity certificates could pose the foundations for a structured and fair regulatory contribution from the private sector biodiversity goals. At the same time, these certificates could play a a complementary role within a voluntary framework, while awaiting or preparing for the introduction of future regulatory mechanisms.

It is important to note, however, that even at their full potential, biodiversity certificates will account for only a fraction of the funding needed to preserve nature.

The Research Program on Biodiversity Certificates

While awaiting the development of a regulatory response, Carbone 4 is working with the National Museum of Natural History and the Foundation for Biodiversity Research to develop a Methodological Framework for Biodiversity Certificates^[6].

The research program includes two parts :

1. Developing a Method for Assessing Biodiversity Gains. This approach is based on the development of a taxonomy of biodiversity-friendly practices and the assessment, through expert consensus, of the biodiversity benefits associated with a change in practices.
2. A Study of the Integrity Requirements for Biodiversity Certification Mechanisms, and the development of a contribution approach

These certifications enable companies to take meaningful and effective action to protect biodiversity by contributing to collective strategies for the conservation and restoration of ecosystems, in collaboration with leading institutions.

This system is designed to ensure a "fair contribution" organizations with collective goals, by prioritizing the reduction of impacts and ensuring that funding actually benefits biodiversity.

An operational methodology is currently being developed and will be the focus of future work by the Organization for Biodiversity Certificate (OBC) and its members.

Publication - Biodiversity Certificates: Risks and Opportunities

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