New Credit System Encourages Businesses to Halt and Reverse Biodiversity Loss

Biodiversity loss is recognized as the third largest global risk over the next decade. As awareness grows, businesses are increasingly setting biodiversity-related targets due to reputational risks, stakeholder expectations, operational and financial risks, and dependency on ecosystem services like pollination and clean water. But integrating biodiversity in responsible investment and reporting is challenging, as it’s difficult to measure an organization’s impact. Businesses attempting to take action on biodiversity encounter obstacles like a lack of understanding of the impacts and measuring methods and difficulty incorporating the management of shared resources into standard business practices.

To address these challenges, and biodiversity loss at large, researchers developed a credit metric with support from the United Kingdom Natural Environment Research Council. The Biodiversity Impact Credits (BICs) metric computes changes in the probability of a species long-term survival related to businesses' actions. This metric assesses species extinction risk and is based on the changes in global species population patterns caused by an organization — with adjustments for species nearing extinction.

The researchers propose that this metric aligns with the global biodiversity goals set in place to reduce extinction risk at the 2022 United Nations climate change conference. It could also be adopted in biodiversity policies and financial reporting. The membership organization Botanic Gardens Conservation International manages the credits.

Applying Biodiversity Impact Credits

The BIC metric helps people understand how species populations are changing due to business activities, said Axel Rossberg, lead researcher of the study. Companies can use this credit metric by measuring their intentional and unintentional impact. 

For example, a business emitting harmful chemicals that reduce the population of a local species would earn them negative credits but taking action to prevent biodiversity decline would earn positive credits. Businesses calculate their result and effect on biodiversity by adding together all negative and positive impacts, Rossberg told TriplePundit. These credits are based on a business’s current state and not on its future restoration plans, projected improvements, or risks and uncertainties of future restoration plans with other organizations. 

Benefits beyond business

There is a global funding shortfall for biodiversity conservation with an estimated $700 to $900 billion needed to restore and preserve global biodiversity. Biodiversity credits create the potential to boost private funding in biodiversity and conservation. And these credits bring benefits to businesses, such as market differentiation and being up to date with regulations and consumer preferences and interests.

While the prevailing narrative suggests businesses should protect biodiversity because they depend on the ecosystem, this view is only partially correct, Rossberg said. Species extinction is a weak argument because the species close to extinction do not significantly contribute to ecosystems. The real benefit for businesses lies in contributing to the common good, he said.

“In different places, different people in different cultures value biodiversity in different ways," Rossberg said. People derive unique benefits from ecosystems, so the conservation of species is for the benefit of future generations and the opportunities it may bring. We currently cannot predict the benefits future generations might seek from ecosystems, so preserving species is critical, he said. "If it's lost, it's the most difficult to get back."