Natural Credits Roadmap
The EU releases natural credits roadmap, aimed at providing guidance for natural credits and nature-related financing.
The EU believes that natural credit is a potential and valuable tool that can supplement the gap in public funding for biodiversity and nature financing, and promote ecosystem conservation, restoration, and sustainable management.
Related Post: World Economic Forum Releases Nature Finance Report
Background of Natural Credits Roadmap
Two thirds of the economic value added of the European Union relies on nature and its ecosystem services. Despite innovative efforts such as the EU integrated system of ecosystem accounts generating 234 billion euros in benefits annually, ecosystem services are still difficult to monetize and have not been fully reflected in market price signals. Long term investment in natural restoration and conservation mainly relies on the public sector. The EU’s annual natural investment demand is 65 billion euros, but it is expected that 7 billion euros will be used for biodiversity action in 2027.
Besides the public sector, the number of private sector participation in natural financing is increasing. For enterprises, natural investment can improve risk management capabilities, reduce operational risks, and gain higher investor confidence. However, the challenges of upfront costs, data gaps, and measuring natural outcomes require more innovative tools and frameworks for natural financing.
Introduction to Natural Credits
Natural credit is a tool that encourages private sector investment in nature solutions, representing a natural positive outcome unit that has been independently validated and can be quantified using biodiversity indicators. Natural credit can monetize proven impacts on biodiversity and generate revenue for credit providers. To ensure the credibility of natural credit, regulatory agencies need to establish strict standards, ensure transparency in information disclosure, reduce conflicts of interest, and prevent double counting. Currently, there are over 50 natural credit initiatives worldwide, which typically draw on the experience of carbon credit markets and consider the characteristics of biodiversity outcomes.
Based on the above background, the EU believes it is necessary to establish an honest, transparent, and rigorous natural credit development framework, promote stakeholder cooperation, develop honest and transparent methods, identify and develop market supply and demand, and provide public funds when necessary. The EU Natural Credits Roadmap includes the following actions:
In 2025:
Establish a natural credit expert group to share best practices and provide experience: The EU plans to invite stakeholders to form an expert group to provide opinions on different methods, certification systems, and governance models.
Participate in international cooperation and prepare for the 17th Conference of the Parties (COP) to the Convention on Biodiversity: The EU will collaborate with the Biodiversity Credit Alliance, the World Economic Forum (WEF), and the International Advisory Panel on Biodiversity Credits.
From 2025 to 2026:
Assess the supply and demand relationship of natural credit: The EU will evaluate the supply and demand of natural credit and address potential development obstacles.
In 2026:
Adopt the Carbon Improvements and Carbon Farming approach with biodiversity synergies: The EU will certify carbon agriculture activities with biodiversity synergies to ensure they protect and restore biodiversity and ecosystems.
Develop standards and methods for natural credit markets: The EU will invite an expert group to provide knowledge on natural credit and identify key challenges.
From 2025 to 2027:
Launch the Natural Credit Pilot Project: The EU plans to provide public funding to support EU competitiveness and innovation projects.
In 2027:
Provide a natural credit market governance framework: The EU will establish a natural credit measurement, reporting, and verification framework that meets the needs of small farmers and small and medium-sized enterprises.
Reference:
Nature Credits Roadmap to Reward Nature-positive Action and Boost Private Finance
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