Communities and nature markets: Building just partnerships in Biodiversity Credits

Biodiversity credits are increasingly being piloted as a market-based mechanism to help halt and reverse the loss of global biodiversity. As new markets for biodiversity credits emerge, Indigenous Peoples (IPs) and Local Communities (LCs), who are on the frontline of protecting and maintaining the world’s biodiversity, are key stakeholders who a market should not progress without. A just and sustainable market would foreground the rights of Indigenous Peoples, increasingly recognised as the most effective avenue for protecting biodiversity. The Kunming-Montreal Global Biodiversity Framework extensively highlights the importance of IPs and LCs, including that, at a minimum, they should benefit from financial flows for nature—as is their right with respect to their territories and efforts. It is important to note that IPs and LCs may not want biodiversity credits as a solution, and they have the right to decide if and how they are involved.

The BCA has commissioned this paper to unpack the topic of IPs and LCs in the biodiversity credit market. It is primarily aimed at external investors, including financial institutions and corporates, whose circumstances differ from those of investors from the local community, including IPs and LCs themselves. The paper argues that investors should be more aware of the important role of IPs and LCs in nature and biodiversity—and by extension in biodiversity credit markets.

The paper focuses on the ability of IPs and LCs to identify and effectively manage risks related to biodiversity credit investments in terms of a business case, largely directed to investors from outside the community. Investors should first and foremost support Indigenous and locally-led approaches in biodiversity credit markets. Investors considering entering biodiversity credit markets must engage with IPs and LCs on fair terms: this is a pre-condition to be able to identify, manage and mitigate environmental, social and financial risks on both sides of a transaction.