Abstract:

Background & Aim: As a complementary market tool to address the financing gap in biodiversity conservation and support the ecological value transition, biodiversity credits are emerging as an innovative mechanism that mobilizes corporate capital and participation in conservation and restoration. Biodiversity credit markets are still at an early stage, yet they are increasingly recognized by enterprises as relevant to regulatory expectations, risk management needs, brand value and social responsibility, and long-term investment potential. This paper systematically analyzes the core elements of biodiversity credit markets, including how biodiversity net gain is quantified, how value is priced, why and how enterprises participate, and examines key issues in the development of biodiversity credit markets. 

Results: In this paper, we showed that biodiversity credits usually quantify biodiversity net gain through methodologies that aggregate multiple biodiversity indicators; their pricing is based on the direct and transaction costs of conservation and restoration actions rather than ecosystem asset valuation. Corporate participation is driven by regulatory and disclosure requirements, risk mitigation considerations, brand value and social license, and expectations of long-term returns. Participation pathways include direct credit purchases, co-development of conservation and restoration projects, product-credit bundling, and biodiversity–carbon combined instruments. However, challenges persist: concerns about credit misuse and offsetting, greenwashing risks, methodological uncertainty, monitoring and verification difficulties, insufficient market infrastructure, and gaps in regulatory systems and standardized guidelines for credit use and claims. These challenges collectively limit market confidence and hinder corporates’ effective participation. 

Suggestions & Perspectives: Based on the identified gaps, we propose a set of recommendations for the future development of China’s biodiversity credit market, including learning from the carbon market, linking accounting methods with demands, improving market infrastructure and regulatory rules, and establishing consensus on credit claims. These measures are essential for creating a high-integrity biodiversity credit framework that supports enterprise-driven biodiversity investment and financing and contributes to biodiversity conservation outcomes.

Key words: biodiversity credit, corporate engagement, biodiversity net gain, market mechanism, Environment, Social and Governance (ESG)