FfB reacts to EU Roadmap on Nature Credits
On 30 September, the FfB Foundation Secretariat submitted its reaction to the EU Commission Consultation on the Roadmap towards Nature Credits, calling for a holistic approach to aligning financial flows.
In its reaction, the FfB Foundation welcomes the Roadmap on Nature markets and the establishment of an Expert Group to ensure a participatory process. It recognises nature credits as one of several tools to channel private finance towards nature and calls for a comprehensive approach to developing a nature credit market.
There are a number of key elements to consider when developing a nature credit market. Firstly, the Nature Credits Roadmap should be integrated into the broader European policy framework alongside existing solutions to protect and restore biodiversity. Secondly, the Commission should seek to fully understand the risks of nature credits and recognise that they are an evolving mechanism that require further research and validation. Thirdly, FfB recognise the value in the two-step model – certification followed by crediting – but recommends further clarity on the intended mechanisms to be developed.
Ensuring integration of Nature Credits into the broader policy framework
FfB appreciates that certifications and credits are presented here as tools to “complement public funding” that can help reverse the decline in biodiversity and support transformative change across the global economy. For a holistic approach, the Commission should look to advance the following actions, from FfB’s policy asks: require nature-related disclosures for companies and financial institutions; mandate nature transition plans based on sectoral transformation pathways; actions from central banks and supervisors; and to develop economic incentives. The Commission should also ensure alignment with key frameworks, such as the International Advisory Panel on Biodiversity Credits (IAPB) and the Biodiversity Credit Alliance (BCA), with sustainability reporting frameworks, like CSRD, TNFD, NPI and SBTN, and with the broader climate policy framework, including implementation of the Paris Agreement’s Article 6.4.
Further research is needed in order to understand key risks
As the market remains young and fragmented, currently being comprised of various methodologies and credit types, the Commission should seek to fully understand the risks of nature credits. Important risks include the potential for mismanagement of social and environmental safeguards, the question of ensuring meaningful inclusion of indigenous peoples and local communities, greenwashing and the risk of misidentifying market demand and supply. When mentioning metrics, FfB would like to recommend the precision to use a basket of metrics relevant to local ecosystems, that are then verified by a consortium of experts to ensure alignment with science (or “state-of-nature metrics”).
More clarity is needed on intended mechanisms
FfB recognise the value in the two-step model certification followed by crediting but recommends further clarity on the intended mechanisms to be developed, notably, what is meant by pooled, banked and transacted. It is important to avoid allowing that damage in one location could be remediated through another action which may not be equivalent in value. Recognised frameworks such as the IAPB recommend that compensation must be local-to-local and like-for-like.
The nature credits framework should outline that it fits outside of a compensation scheme of the mitigation hierarchy, meaning renaturation beyond net-zero, and clarify its significance, meaning the magnitude of its contribution to the EU Restauration regulation. The Commission must ensure ecological integrity, regulatory clarity, and social justice, as the cornerstones of the Roadmap.
Find here the FfB Secretariat reaction to the Nature Credits Roadmap.