Abstract:

Aim & Background Unlike biodiversity offsets, which are based on the premise of biodiversity loss, biodiversity credits are an economic instrument that is measurable, traceable, tradable, and generates net biodiversity gains. To address the funding gap for biodiversity and to halt and reverse global biodiversity loss, biodiversity credits have emerged with carbon credits as a blueprint.

Results This paper introduced the conceptual framework of biodiversity credits, providing a detailed explanation of their similarities and differences with biodiversity offsets and carbon credits. Drawing on the foundation of high-quality carbon credits, the paper summarized the principles of biodiversity credits, including their accounting approaches and governance systems. Furthermore, it presented the current global market for biodiversity credits, offering specific practical examples of various trading projects.

Prospects The paper also examined four aspects of problems and challenges related to biodiversity credits: (1) pricing in voluntary markets lacks clear standards; (2) the risk of being a potential greenwashing tool used by enterprises; (3) regulatory and governance systems need safeguards for transparency and community rights; (4) the compatibility with carbon credits is controversial. Looking forward, challenges and opportunities of biodiversity credits co-exist as a critical tool for businesses to achieve their Environmental, Social and Governance (ESG) goals.

Key words: biodiversity loss, biodiversity credits, biodiversity offsets, carbon credits, market mechanism