Nature is the backbone of the global economy. More than half of global GDP, or about $44tn every year, depends directly on ecosystems that provide food, water, medicine, raw materials, and climate regulation.
Yet nature is in crisis. Wildlife populations have collapsed by 73% in the past 50 years. One million species are at risk of extinction. The World Economic Forum’s global survey now ranks biodiversity loss among the top three threats to business over the next decade.
For business, this cannot be an abstract concern. It’s a material risk, which has direct and indirect impacts that too few companies bother to measure or properly factor into their risk assessments.
At the same time, nature can also present a major opportunity. Investing in biodiversity could unlock $10tn in value and create almost 400 million jobs. Companies need to position themselves now and better understand the role of nature in their value chain.
An emerging tool gaining attention can help. Voluntary biodiversity credits (VBCs) are a new way for companies to invest directly in measurable conservation outcomes. Done well, VBCs can help ease the way for companies to get into nature conservation and technology in an exciting and inspirational manner. In due course, VBCs can help protect supply chains, build brand credibility, and position businesses at the forefront of the sustainability agenda.
For years, corporate environmental sustainability has revolved around carbon and energy. Cutting emissions is indeed critical, but it is only part of the story. Without tackling deeper issues of value creation and nature, all other efforts on climate will fail. Tackling climate change without addressing the loss of nature is a bit like treating heart disease by putting in a stent, but then ignoring the patient’s diet, exercise, and lifestyle.
You can’t deliver on climate without also focusing on biodiversity.
For one thing, climate change is a key driver of biodiversity loss. Conversely, biodiversity plays a key role in absorbing carbon, so biodiversity loss makes the climate crisis worse. Forests, wetlands, grasslands, and oceans act as carbon sinks. Simply cutting global deforestation in half would avoid 226 gigatons of CO2 emissions (or the equivalent of six years of global emissions). Whales are another example: they sequester 33 tons of carbon when they die and sink to the ocean floor.
Healthy ecosystems not only absorb carbon, they also protect us and our infrastructure from the effects of climate change: forests, mangroves, and kelp protect from storm surges; trees provide shade, humidity, and cool; forests help fill and retain water in aquifers and play a key role in the rain cycle, helping to prevent droughts.
Beyond its role in fighting climate change, biodiversity ensures clean water and clean air. It’s the source of our food, with three-quarters of our staple crops depending on pollinators. Biodiversity is a major source of our pharmaceutical industry, plays a key role in managing the spread of disease, and helps our mental well-being.
Each credit represents a measured, evidence-based biodiversity outcome, for example, a restored wetland, a recovering species population, or avoided habitat destruction.
Tackling biodiversity loss is therefore critical to maintaining resilient economies and healthy societies. And VBCs are an easy way to get started.
VBCs are an emerging market instrument designed to channel private finance into conservation and restoration. Each credit represents a measured, evidence-based biodiversity outcome, for example, a restored wetland, a recovering species population, or avoided habitat destruction.
VBCs are not offsets. Unlike mandatory “like-for-like” biodiversity schemes, VBCs are voluntary and outcome-based. And unlike carbon credits with biodiversity “co-benefits,” they stand on their own: the measured positive biodiversity outcome is the commodity. VBCs also differ from traditional philanthropy, where funding sustains conservation efforts rather than outcomes. More than carbon credits, VBCs are stories that can be told specifically about certain locations or species that were conserved or rehabilitated.
Many private players, governments, and NGOs are beginning to pilot VBCs. In 2022, Niue, a Pacific island state, issued credits covering 127,000 km² of oceans to raise $32m. The market is still nascent, but supply should not be an issue. The question on everybody’s mind is on the demand side. Why would businesses purchase VBCs?
VBCs are not going to solve the biodiversity crisis by themselves, of course. They do not ensure sustainable supply chains or that business activities will not degrade natural areas. VBCs don’t replace the need to reduce biodiversity impacts in operations and supply chains. They should be complementary to other efforts like voluntary frameworks (TNFD, SBTN, GRI), but they can nevertheless play a critical role in corporate strategy by:
Purchasing VBCs should be done carefully and conscientiously. Standards for high-integrity credits have been issued, notably by the International Advisory Panel on Biodiversity Credits (IAPB) and Biodiversity Credit Alliance (BCA).
IMD, in collaboration with the University of Lausanne and Enterprise for Society (E4S), has produced a guide to help companies engaged with this nascent market. Some of our key lessons are:
We have also developed a concrete checklist to help guide corporate action on VBCs. You can find the full guide here.
Biodiversity is moving rapidly from the margins to the mainstream of business strategy.
Biodiversity is moving rapidly from the margins to the mainstream of business strategy. The question for businesses is not whether to engage, but how.
Voluntary biodiversity credits offer one route forward. The market is still evolving, but used wisely, they can complement operational action, build credibility, and deliver tangible conservation outcomes.
Our white paper guide dives deeper into this emerging topic, offering detailed checklists, case examples, and technical guidance.
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