Despite growing discussion of biodiversity credits at major international forums and within leading business circles, market activity remains limited. To date, the total volume of traded voluntary biodiversity credits is estimated at less than USD 2 million, generated by just a handful of projects. While supply is gradually emerging, demand remains subdued as corporate interest has yet to translate into widespread purchasing.
Drawing on exclusive interviews with corporations, financial institutions, and market experts, the CC Facility aimed to examine how corporate perspectives on biodiversity credits are evolving and what barriers and drivers are currently shaping this emerging market.
The Promise of Biodiversity Credits
As the prominence of carbon credits has grown in recent years, helping to channel finance into otherwise unbankable climate projects, other types of environmental credits have emerged to emulate this model. Among these are biodiversity credits*, which have recently captured widespread attention as a potential mechanism to mobilize much-needed funding for nature conservation and restoration that explicitly targets biodiversity outcomes.
While many companies are increasingly aware of their nature-related risks and opportunities, few have yet translated that awareness into purchasing biodiversity credits.
Breaking Down the Barriers to Purchasing
Limited Understanding and Lack of Consensus
Many potential corporate buyers are still in the early stages of integrating carbon credits into their environmental strategies, with biodiversity credits remaining an even more nascent consideration.
Hesitation in purchasing largely stems from the lack of standardization in defining what constitutes a biodiversity credit and what can be claimed from such a credit. Although significant progress has been made toward standardization, there is not yet convergence on a single approach, which has weakened the confidence of corporate buyers. Many are also waiting for statutory guidance before taking further action and do not yet see a strong incentive to act as first movers in this space.
A Nascent Market with Low Trust
The biodiversity credit market is often perceived as an offshoot of the carbon market, which has faced reputational challenges in recent years. These issues have, in turn, shaped corporate perceptions, creating caution about the credibility and integrity of biodiversity credits.
Key concerns include issues of fungibility, questions of additionality and permanence, debates around stacking, bundling, and sequencing, and risks of double-counting. Many corporates also fear accusations of greenwashing if they engage in a new market that inherits the credibility challenges of the carbon market it seeks to emulate.
Preference for Insetting and Project Development
Many of the corporates at the forefront of nature action have considered biodiversity credits as a tool to achieve their conservation and restoration goals. Ultimately, however, many of these corporates opt for alternative pathways, such as insetting within their own value chains or exploring opportunities to generate biodiversity credits themselves. This is particularly common in the agrifood sector, where companies pursue nature-positive initiatives within their own operations to meet biodiversity targets.
What Will Drive Future Demand?
Despite limited demand for biodiversity credits, there are three key drivers that could help tip the scales for project developers:
1. The Reputational Tipping Point
Unlike carbon credits, where demand is largely driven by regulatory mandates and net-zero commitments, demand for nature credits is primarily linked to corporate reputation. Yet, public pressure for companies to manage their nature impact is not yet mainstream. Consumer-facing firms with nature impacts may face more scrutiny but have typically responded with internal nature initiatives.
As a solution, project developers can strategically engage corporates with significant nature impacts but limited opportunities or capacity for internal supply chain improvements.
2. The Localization Priority
Existing biodiversity credit buyers prefer projects located near their supply chains or corporate headquarters. The localized nature of such projects supports corporate reputation by delivering visible positive impacts and can also add business value, as improved biodiversity outcomes can enhance productivity and resilience in resource-dependent supply chains.
Project developers who design credits with specific corporate buyers and their preferences in mind can better align with both reputational and operational objectives, increasing engagement and the likelihood of support.
3. The Regulatory Catalyst
As seen with the voluntary carbon market, clear reporting mandates and other regulations requiring action for nature can be one of the most powerful drivers of mass corporate uptake of biodiversity credits. Voluntary disclosure and market frameworks are important for laying the groundwork, but they alone will not drive widespread corporate demand.
Project developers can help accelerate demand by working with advocacy groups and policymakers to advance nature-related disclosure requirements.
Building the Bridge to a Nature-Positive Future
Project developers can play a critical role in accelerating market growth by co-designing credits that reflect corporate priorities and demonstrated biodiversity outcomes. For forward-thinking investors and corporates, engaging with such developers offers a valuable first-mover opportunity to shape—and benefit from— the transition toward a nature-positive future.
*A biodiversity credit is a “certificate that represents a measured and evidence-based unit of positive biodiversity outcome that is durable and additional to what otherwise would have occurred” (CBD, 2024). While carbon credits can be used as offsets, biodiversity credits are generally not intended for offsetting because ecosystems and their services are not interchangeable.