Nature Credits

What is the issue?

Biodiversity financing heavily relies on public funding which is currently insufficient and becoming scarcer with an estimated funding gap of around $700 and $900 billion per year globally and EUR 47 billion annually in the European Union. To bridge this gap, private finance needs to step in and help revert biodiversity loss. 

Mobilising private finance for biodiversity is not a recent undertaking but it remains very timid with only 14% of total financing coming from the private sector and most of it being philanthropic. As stated in the State of Finance for Nature by UNEP-FI, “private finance flows remain small, fragmented, and largely untapped.” 

Nature credits are the most recently proposed vehicle by the European Commission which are expected to become tools providing an opportunity to generate income to the people involved in the protection, restoration, and sustainable management of ecosystems. 

In parallel, and as part of new IUCN resolutions resulting from the 8th World Conservation Congress held in November 2025, Resolution 8.078 “Regulating financing mechanisms based on biodiversity certificates and credits and guarantee positive effects on nature” paves the way for the IUCN Secretariat to engage actively on the matter, building also on Resolution 6.059 “Biodiversity Offsets” (Hawai’i , 2016) which led to the adoption of the IUCN Policy on Biodiversity Offsets.

What they are?

In their strictest understanding, nature credits are verifiable, quantifiable and tradable financial instruments allowing investments in nature (units) with the objective to create positive net outcomes in species recovery and/or the uplift of species conservation status. While definitions differ strongly from one case to another the idea lies in a financial vehicle allowing mainly businesses to invest in nature. The return on investment for a buyer varies as to the scheme’s design (offsetting or not, mandatory or not) and can be various: 
 

• Risk-adjusted value preservation to face potential regulatory risks (future obligations), lowered operational risk (water scarcity, pollination loss...) or reduced transition risks when environmental regulation evolves. 
• Cost of capital and insurance effects as biodiversity is slowly integrated in lender and investor risk models or insurance premiums are created as an incentive.
• Regulatory readiness with regards to biodiversity or sustainability disclosure obligations and/or alignment with frameworks.
• Reputational advantage through brand differentiation for example.