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Building trust: steps to enhance Africa's biodiversity credit market

A Swiss-based non-profit, NatureFinance, has released new recommendations to enhance Africa’s biodiversity credit market. These recommendations include establishing minimum price floors for credits and creating an independent body to assess project outcomes.

Building trust  steps to enhance Africas biodiversity credit markets_Aerial view of African nature landscape_visual 1Aerial view of African nature landscape. AI generated picture. 

NatureFinance’s study, conducted from September to March, analysed over 30 biodiversity credit projects across Africa. The organisation outlined several actions aimed at building market trust and ensuring fair compensation for conservation efforts.

‘Biodiversity credits can represent the potential of a non-traditional revenue stream for both conservation and restoration, and denote nature gains, offering investment prospects for a larger range of conservation efforts across ecosystems and species,’ said NatureFinance. They highlighted six key areas for improvement: quality of credits, market incentives, equitable access, fair pricing, regulations, and stakeholder engagement.

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A major recommendation is forming an independent body to determine the integrity and outcomes of biodiversity credits. Additionally, a sellers club could help set price floors to ensure minimum compensation for nature’s stewards.

The study noted that while biodiversity credits can promote nature-positive behaviours in businesses, there are risks related to offsetting. NatureFinance emphasised the need for safeguards to prevent negative impacts from poorly managed claims.

To support market expansion, the study suggested regulatory frameworks like no-net-loss or net-gain mandates across supply chains and sectors. Tax incentives could also be introduced to allow conservation expenses to be deducted from taxable income.

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Financial institutions are encouraged to integrate nature into their strategies by introducing biodiversity-linked products and incorporating nature-positive requirements into lending criteria. Derisking measures should be developed to attract investments in biodiversity credits, with a commodity exchange authority providing trading guidance.

Crucially, the study called for the involvement and benefit of Indigenous peoples and local communities in biodiversity projects. It stressed that projects should commence only after proper negotiation and consultation with these communities, supported by financial and legal resources.

Despite low demand from the Global North, particularly Europe and North America, the Biodiversity Credits Incubator sees potential for investment in Africa's biodiversity credit market. However, experts caution that this emerging market faces significant challenges before full adoption. In April, the African Natural Capital Alliance announced plans to create a comprehensive nature data platform to attract investments in nature-based solutions across the continent.

At DGB Group, our commitment to biodiversity is built on our extensive experience with leading global institutions and organisations. We are dedicated to developing impactful, verified nature-based solutions that have a positive impact on biodiversity. As we move towards a more sustainable future, it is vital for companies to integrate biodiversity into their strategic frameworks, aligning with the new Corporate Sustainability Reporting Directive (CSRD). This focus not only drives their growth but also enhances ecological health and societal wellbeing. By collectively committing to biodiversity, we strive to create a world where economic prosperity, social welfare, and environmental conservation are interconnected and mutually beneficial.

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