This informal CPD article, ‘Nature-Positive Business: Why Biodiversity Credits Matter?’ was provided by IFRS Lab, a leading ESG advisory and training institution committed to advancing sustainability.
Biodiversity loss has emerged as one of the most pressing risks to global stability—third only to extreme weather and system-level environmental shifts. For businesses, this is not just an environmental concern, but a direct economic and operational one. Nearly half of the world’s GDP is dependent on nature and the services it provides, from clean water and fertile soils to pollination and climate regulation. Yet, over the past 50 years (1), indicators of ecosystem health have plummeted.
The global private sector is beginning to acknowledge this reality. However, turning awareness into structured action remains a challenge. One of the more innovative tools gaining traction is biodiversity credits—verifiable, quantifiable units representing preserved or restored biodiversity. These credits are emerging not just as conservation mechanisms, but as potential instruments for aligning business value with nature-positive outcomes.
This article offers a detailed breakdown of what biodiversity credits are, how businesses can use them, and what safeguards are needed to ensure credibility, impact, and long-term value.
Understanding Biodiversity Credits: The Fundamentals
Biodiversity credits are designed to capture and quantify positive actions taken to preserve or restore ecosystems. Although the market has not yet standardized definitions, these credits typically represent a measurable unit of biodiversity improvement—such as restored hectares, improved species richness, or enhanced ecosystem integrity—over a defined period.
Each credit is rooted in the specific context of the landscape, biodiversity baseline, and conservation activity. For instance, a single credit may represent the restoration of one hectare of degraded forest to a biodiverse ecosystem over 30 years, with monitored outcomes such as the return of native flora and fauna. Other credits may focus on keystone species protection or critical habitat preservation (2).
Importantly, biodiversity credits are not a direct substitute for carbon credits. While carbon credits measure the offset of greenhouse gas emissions, biodiversity credits capture ecological value—often tied to location, species diversity, and ecological connectivity. However, integrated “stacked” credits (where carbon and biodiversity credits are issued from the same project) are increasingly being explored, adding multi-dimensional value for both climate and nature objectives.
Why Biodiversity Credits Matter for Enterprise Strategy?
Biodiversity credits are not merely instruments of environmental restitution—they are rapidly emerging as strategic levers in enterprise value creation, risk management, and market differentiation. Their relevance extends far beyond ESG compliance into the realm of operational resilience, investor signaling, and license to operate.
1. Securing Ecosystem-Linked Operational Continuity
Many sectors—particularly agriculture, food and beverage, consumer goods, mining, and pharmaceuticals—are intrinsically dependent on ecosystem services such as pollination, water purification, climate regulation, and fertile soil. As ecosystem degradation accelerates, so does the risk exposure embedded in global value chains. Biodiversity credits provide a verifiable mechanism to actively invest in the regeneration of these systems, creating a form of "natural capital insurance" that enhances long-term business continuity.
2. Investor and Stakeholder Signaling in the Post-TCFD Era
As frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) (3) move from voluntary to mainstream, capital markets are demanding greater transparency on nature-related risks and opportunities. Forward-leaning enterprises that integrate biodiversity credits into their broader sustainability investment strategy send a strong signal to capital providers: that they are actively aligning with emerging fiduciary norms and are prepared to manage nature-related financial risks. This alignment may improve creditworthiness, reduce the cost of capital, and open doors to green finance vehicles.
3. Strategic Differentiation through Measurable Nature-Positive Impact
Consumers and B2B buyers increasingly prioritize suppliers that go beyond mitigation and contribute to regeneration. Unlike general sustainability pledges, biodiversity credits offer a quantifiable, time-bound, and independently verified nature-positive contribution—serving as proof of action. Enterprises that integrate these into product design, procurement strategy, or supply chain narratives can unlock competitive advantages in procurement processes, customer retention, and brand equity.
4. Strengthening the Social License to Operate
For companies operating in ecologically or socially sensitive geographies, biodiversity credits offer a practical pathway to enhance community relationships and manage reputational risk. Projects that embed co-benefits for Indigenous Peoples and Local Communities (IPLCs) can serve as tangible evidence of inclusive and restorative business practices. This is particularly important in jurisdictions where public scrutiny, NGO monitoring, and regulatory interventions are intensifying.
5. Embedding Nature into Net-Zero Transitions
Carbon and biodiversity are inherently interlinked. Companies aiming to meet science-based climate targets through nature-based solutions can enhance the credibility and permanence of their offsets by stacking biodiversity credits (4). This not only aligns decarbonization pathways with broader ecological integrity but also preempts future regulatory tightening on carbon offset integrity.
Strategically operationalized across corporate landscape
Strategic Use Cases: Where Biodiversity Credits Fit into Corporate Strategy
For biodiversity credits to evolve from experimental instruments into integrated components of enterprise strategy, their application must be precise, material, and aligned with real business outcomes. McKinsey’s recent research (5) outlines five primary use cases—each with distinct implications for different sectors, geographies, and stages of sustainability maturity. Below is a reinterpreted framework for how these use cases can be strategically operationalized across the corporate landscape.
1. Stacked Credits: Integrating Biodiversity into Carbon Programs
Many companies already participate in voluntary carbon markets through nature-based solutions (NBS) such as afforestation, reforestation, and avoided deforestation. These same projects, when designed with ecological complexity and biodiversity integrity in mind, can be structured to generate “stacked credits” (6)—delivering both carbon sequestration and measurable biodiversity uplift.
Strategic Fit:
Ideal for companies with net-zero commitments under SBTi or similar frameworks. By stacking biodiversity with carbon credits, businesses enhance environmental co-benefits while reinforcing the permanence and credibility of their offset portfolio.
Implementation Note:
Stacking requires rigorous project-level additionality tests, harmonized MRV (Monitoring, Reporting, and Verification) protocols, and alignment with emerging taxonomies from TNFD, SBTN, and the Biodiversity Credit Alliance.
2. Ecosystem Services as Input Risk Management
A growing number of enterprises—especially in food, beverage, apparel, and pharmaceuticals—depend on ecosystem services they do not own or directly manage (e.g., pollination, clean water, healthy soils). Biodiversity credits can be used to finance upstream habitat protection or restoration that safeguards these inputs.
Strategic Fit:
Relevant for companies seeking to de-risk supply chains exposed to ecological vulnerability (e.g., coffee producers reliant on pollinator health; textile brands sourcing from biodiversity-rich regions).
Implementation Note:
Target geographies with ecological stress signals (e.g., pollinator loss or soil degradation). Partner with local project developers to co-create credits that reflect material risks to your input stream.
3. Voluntary Contributions to Nature Recovery Beyond Operational Boundaries
Companies looking to proactively contribute to global biodiversity targets (e.g., the Kunming-Montreal Global Biodiversity Framework) (7) or enhance their brand’s environmental narrative can use biodiversity credits to finance ecosystem restoration or conservation projects beyond their direct footprint.
Strategic Fit:
Best for corporates with brand-facing sustainability ambitions, or those seeking to support national or global conservation outcomes.
Implementation Note:
Communicate clearly that such credits are “beyond offsetting”—they are voluntary contributions, not compensatory mechanisms. Ensure transparency and traceability through recognized registries.
4. Product Differentiation via Consumer-Facing Nature Contributions
Consumer brands can embed biodiversity credits into their offerings as a voluntary attribute—for example, selling a product that contributes to the regeneration of a coral reef, wetland, or meadow. This form of cause-linked marketing can differentiate a product line and drive value-aligned consumer engagement.
Strategic Fit:
Highly effective for premium consumer products, especially in home goods, luxury, fashion, and food sectors.
Implementation Note:
Ensure there is no implied claim of full environmental neutrality unless backed by robust LCA (Life Cycle Assessment) and offset equivalence. Emphasize contribution, not compensation.
5. Contested but Emerging: Addressing Residual Biodiversity Impacts
The most contentious—but potentially transformative—use case is leveraging biodiversity credits to compensate for residual biodiversity impacts that remain after applying the mitigation hierarchy (avoid-minimize-restore). This use case currently lacks regulatory acceptance but is actively debated in voluntary markets.
Strategic Fit:
Long-term potential for extractives, infrastructure, and agribusiness sectors—especially in jurisdictions without formal biodiversity offset policies.
Implementation Note:
Requires advanced frameworks for quantifying corporate nature impacts and for establishing equivalence in biodiversity gains. Adoption hinges on future standardization from TNFD, ISO, and the Biodiversity Credit Alliance.
ESG narratives into structured operational frameworks
Taking Action: How Business Leaders Can Engage with the Market
For biodiversity credits to become more than a symbolic gesture, business engagement must move beyond ESG narratives into structured, operational frameworks that link nature-positive actions to core enterprise value. While the market is still maturing, early adopters are well-positioned to shape standards, build reputational capital, and align nature strategies with climate and compliance imperatives.
Below is a roadmap for how forward-thinking business leaders can begin to operationalize biodiversity credits in their organizations.
1. Establish Internal Clarity on Nature Dependencies and Impacts
Before considering biodiversity credits, companies must develop a structured understanding of how their operations depend on and impact natural ecosystems. This involves using frameworks such as:
- TNFD (Taskforce on Nature-related Financial Disclosures) to assess nature-related risks and opportunities;
- Science Based Targets for Nature (SBTN) to set actionable targets on freshwater, land, and biodiversity;
- ENCORE (Exploring Natural Capital Opportunities, Risks, and Exposure) to identify ecosystem service dependencies.
Action Step:
Conduct a nature materiality assessment across the value chain—prioritizing locations and processes with high ecological sensitivity, regulatory risk, or reputational exposure.
2. Align Biodiversity Credits with Strategic Environmental Objectives
The purchase of biodiversity credits should be purpose-driven—not a one-off CSR activity. Credits must reinforce existing environmental strategies such as:
- Climate transition plans that include nature-based solutions;
- Water stewardship and land-use strategies for high-impact industries (e.g., food and agriculture);
- ESG-linked financing instruments that require nature-related KPIs.
Action Step:
Define the internal use case. Is it for brand equity, climate integration, access to inputs, or community engagement? This clarity drives procurement decisions and stakeholder alignment.
3. Engage with Credible Credit Developers and Verifiers
High-integrity biodiversity credits require credible project design, additionality, and long-term impact monitoring. Businesses should only partner with credit developers and registries that adhere to:
- Rigorous science-based baselines and improvement metrics;
- Transparent monitoring and verification protocols (e.g., remote sensing, third-party audits);
- Co-benefit documentation (e.g., community equity, livelihood improvement, ecosystem resilience).
Action Step:
Develop a procurement framework that screens developers against globally recognized standards—such as Verra’s new biodiversity methodology or those proposed by the Biodiversity Credit Alliance.
4. Create Internal Governance and Cross-Functional Ownership
Biodiversity credit strategies are not solely the domain of sustainability teams—they intersect with risk, legal, procurement, investor relations, and HR. To avoid fragmented or superficial adoption, companies must embed governance through:
- A cross-functional Nature Working Group;
- A C-suite-level mandate with defined performance metrics;
- Clear accountability structures for credit procurement, use case monitoring, and reporting.
Action Step:
Institutionalize nature governance by embedding biodiversity KPIs into executive scorecards, supply chain protocols, and ESG disclosures.
5. Co-Create Market Infrastructure and Lead Standardization
Early movers in the carbon credit market influenced methodologies, trust signals, and pricing benchmarks. The same opportunity exists with biodiversity credits. Businesses that engage now can shape:
- Credit taxonomy: What constitutes a credit? What metrics are used?
- Integrity frameworks: How do we prevent greenwashing and ensure real impact?
- Disclosure norms: How are credits accounted for in financial or sustainability reports?
Action Step:
Join emerging coalitions such as the WEF Biodiversity Credit Frontrunners, engage with Verra’s public consultations, and collaborate on standard development with Biodiversity Credit Alliance working groups.
Conclusion: Moving from Aspiration to Action
The growing momentum behind biodiversity credits signals more than a passing trend—it reflects a paradigm shift in how businesses view their responsibilities toward nature. As global frameworks evolve and investor expectations intensify, biodiversity is no longer a peripheral ESG topic. It is fast becoming a core indicator of risk management, market positioning, and long-term enterprise resilience.
But the success of biodiversity credits will depend on how the business community engages now—when definitions are still forming, when integrity mechanisms are still stabilizing, and when early leadership can shape lasting norms.
For business leaders, the message is clear: don’t wait for the market to mature—shape it.
Start by integrating biodiversity risk and opportunity assessments into your corporate strategy. Build internal capacity to understand nature’s financial relevance. Engage early in pilot projects with high-integrity credit developers. Use your influence to support credible standards and transparent disclosures.
Those who move first will not only gain competitive advantage—they’ll earn stakeholder trust, attract talent, access better financing, and future-proof their license to operate in a nature-dependent economy.
The next wave of ESG leadership will belong to those who act boldly today.
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References:
- Nature risk rising: Why the crisis engulfing nature matter for business and the economy, World Economic Forum, January 2020; Living planet report 2022: Building a nature-positive society, World Wide Fund for Nature, 2022.
- According to Oxford Reference, “Keystone species are those species whose importance to an ecosystem’s structure, composition, and function is disproportionately large relative to their abundance.”
- https://tnfd.global/recommendations/
- https://assets.kpmg.com/content/dam/kpmg/nl/pdf/2025/sectoren/biodiversity-investing-markets.pdf#:~:text=Investments%20in%20reforestation%2C%20regenerative%20agriculture%2C%20and%20wetland,responsible%20forestry%2C%20regenerative%20farming%2C%20and%20sustainable%20fisheries.
- https://www.mckinsey.com/capabilities/sustainability/our-insights/sustainability-blog/biodiversity-credits-lessons-for-leaders
- https://cloverly.com/blog/carbon-credits-explained-what-is-carbon-credit-stacking
- https://www.cbd.int/gbf
