Last month, insurance giant Zurich argued the case as to why biodiversity investment metrics make for more effective carbon markets – and called on governments, businesses, scientists, and NGOs to step up collaboration on fast-tracking its development. But how long will it take?
An expert panel at the World Climate Summit, a side event to COP27 earlier today (November 14), argued it will take years – but there will not be enough time for a perfect solution.
“I absolutely love the idea that we are moving towards monetising things other than carbon – whether it’s biodiversity, whether it’s ecosystem service delivery,” said Carlijn Nouwen, co-founder of Climate Action Platform Africa. “Something that recognises the systemic interdependence of all of these things. But at the same time, I want to caution us against having that replace payment for carbon services – and avoid that Africa gets the short end of the stick.”
Nouwen’s view is that Africa should not be, in her words, the ‘hapless climate victim’ but seen as home to the largest untapped renewable energy potential in the world, as well as the youngest and fastest-growing workforce. “The world will be unable to achieve its climate objectives if not involving Africa as a climate action actor rather than a victim,” she added.
An example Nouwen cited was Gabon, which has almost 90% forest cover and limited annual deforestation, making it an HFLD country (high-forest, low-deforestation). This meant the country has traditionally been unable to get REDD+ credit, the United Nations-backed framework to help create financial incentives to reduce deforestation. As David Antonioli, CEO of Verra and moderator of the panel session put it, ‘in order to make [REDD] work you need a plausible, immediate threat to the forest.’
Bloomberg reported in September that Gabon is set to increase biodiversity investment by releasing a record 90 million credits onto the voluntary carbon market. Lee White, the country’s environment minister, said that much of Africa was ‘looking at this sale as a litmus test of whether rich countries and companies are willing to pay developing nations a fair amount to preserve their carbon-absorbing forests.’
Nouwen said that stakeholders needed to ‘push their thinking to make sure that we get appropriate, equitable compensation for all climate services that Africa provide.’ “The current set of incentives has everything to just damage them, tear them down, and get paid for potentially replanting. We need to turn that on its head.”
“We need a collateral that the banks accept… it is not all about carbon, but it is about pesticides, wastes, plastics. We need some mechanisms that can address that.”
Francisco Benedito is CEO of ClimateTrade, a company which offers blockchain technology to more transparently offset carbon footprints. He said that companies need to go to carbon positive from carbon neutral, and one idea was to create habitat banks, where a small parcel of land can be utilised to create a big uplift in biodiversity investment. ClimateTrade is currently working in Colombia on such a project with voluntary biodiversity credits (VBCs), and says its technology makes it possible to overcome various obstacles around their sale.
“In my opinion, we have to take care of indigenous people, the communities, the ones that can support and maintain that biodiversity,” said Benedito. “At some point carbon will be a collateral, but it is not yet,” he added. “We need a collateral that the banks accept… it is not all about carbon, but it is about pesticides, wastes, plastics. We need some mechanisms that can address that.”
So how can investors get behind this? Nouwen cited Credit Suisse research from 2021 which found that 70% of investors polled said data was the biggest hurdle to making investments which support biodiversity. The report’s foreword was written by the then-CSO, Marisa Drew, who noted ‘we need to start making the case for natural and conservation capital as an investable asset today.’
Nouwen added that the next step was for a mechanism or set of metrics that allows investors to ‘put together a portfolio and allow to compare things a little bit.’
“It’s very appealing in a market to measure an apex species,” said Nouwen. “It’s a lagging indicator. What are the fundamental driving indicators in, for instance, atmospheric health that you should be actually measuring? How do you weigh those in such a way that people can choose between a mangrove biodiversity restoration project going from 20%-40% biodiversity, and a forest one moving from 80%-100% biodiversity?
“If we can have the demand clarified… pull the science in… these are the things we need to understand to create a better comparison,” added Nouwen. “There is a need for a little bit more standardisation, otherwise these mechanisms credits, whatever you call them, are just too dependent on a nice narrative.”
“I think some organisations are giving us guidelines, basic quality measures for all these projects,” said Benedito. “That data needs to be technologically measured to see that, for real, that process is generating that positive impact, and then citizens will be happy to participate.”
“It’s clear we have no time to waste, in some regions of the world, 90% of biodiversity has already disappeared.”
Including citizens as the third link in the triangle, alongside governments and companies, is important, Benedito added. “We need that data to be accurate, because at the end it’s about positive impact. We don’t want projects that just want to make money, that protect areas that don’t need to be protected.”
So when can we see tangible results for this biodiversity market? Benedito gave a figure of at least five years, while for Nouwen, it was not about advocating something perfect – as there is not enough time. “It’s clear we have no time to waste,” she said. “In some regions of the world, 90% of biodiversity has already disappeared.
“We need to innovate; innovate with integrity, innovate with inclusivity.”
