The relationship between policy and practice has ever been uneasy. As a professional working across international development, sustainability, and business, I believe that real-world processes should shape policies, particularly when reflecting on the longue durée of their impact. This conviction was central when I was invited to speak at the recent Scottish Parliament Roundtable on “Climate Future and Critical Perspectives: North-South Dialogue on a Sustainable Climate Future.” My talk focused on three key themes (1) What are biodiversity credits and why are they crucial for our future? (2) How can we ensure equity and impact for both nature and Indigenous Peoples and local communities (IPLCs)? (3) The pivotal role Scotland can play in setting global standards for nature-positive finance. Here I will give my perspective on these themes. Nature risks are reshaping markets and investment priorities, compelling businesses to integrate these risks into their ESG strategies. More than half the world’s GDP depends on healthy ecosystems, yet conservation funding remains precarious, with public sources under strain, philanthropy offering limited hope, and a global biodiversity financing gap of US$700 - 900 billion annually (Taskforce for Nature Markets 2023). Biodiversity credits have emerged as a promising tool to mobilise private finance at scale to help close this gap, but their real value will only be realised if businesses and policy makers come together to ensure these credits are credible and impactful. We have a unique opportunity to learn from the early carbon markets. This time, we can build transparency, traceability, and local agency from the ground up, leveraging cutting-edge technology like blockchain and satellite monitoring. Unlike traditional biodiversity offsets, which compensate for unavoidable losses, credits can incentivise direct investment in ecosystem health, often outside of regulatory requirements. Since the adoption of the Kunming-Montreal Global Biodiversity Framework in 2022, the concept has gained significant momentum, with more than 30 pilot projects now underway globally. The voluntary market is projected to grow exponentially to US$69 billion by 2050 (World Economic Forum 2023) if issues of integrity and governance are addressed. Scotland is emerging as a leader in biodiversity credits, with the government, NatureScot, and the Scottish Environment Protection Agency advancing a voluntary biodiversity credit market by supporting CreditNature in a bid to attract private investment and help close Scotland’s £20 billion nature finance gap (Green Finance Institute 2021).
The promise of biodiversity credits is matched by their complexity. One of the most significant challenges is the lack of standardised metrics for measuring and verifying biodiversity outcomes. Biodiversity is inherently place-based; a wetland in Finland is not the same as a mangrove in the Democratic Republic of the Congo, and a one-size-fits-all approach risks oversimplifying the unique needs of each ecosystem. Local metrics allow projects to focus on what matters most in their specific context, whether it is protecting keystone species, restoring soil health, or safeguarding Indigenous stewardship. This local specificity can be a strength, enabling experimentation and learning. While the drive for global equivalence in carbon markets often sidelined local priorities, with biodiversity, we have the chance to do better. Yet, this also poses risks, such as the difficulty of scaling markets and ensuring global comparability. The need for context-specific solutions is further underscored by the central role of IPLCs, who, despite occupying less than 6% of the planet’s surface, conserve around 80% of its biodiversity. Ensuring these communities have a seat at the table from planning to implementation and benefit-sharing is not just a matter of equity but essential for the effectiveness and legitimacy of biodiversity credit systems.
The market for biodiversity credits is still new, and the first few years will be experimental. We need “sandbox” spaces where government, business, and IPLCs can innovate without fear of failure. Embracing local specificity isn’t a bug; it’s a feature. Done right, this approach can help us avoid past mistakes and build a more just, effective system for valuing nature. The journey toward nature-positive finance demands a radical rethinking of how we value and invest in nature. Biodiversity credits, if designed and governed with integrity, have the potential to unlock new funding streams, align corporate responsibility with global frameworks, and inspire a shift in our collective storytelling about nature’s role in society. Nature is not simply a cost but a source of value and renewal. Sustainability is underpinned by contingency, uncertainty, and political negotiation, especially when it comes to biodiversity credits. It is here that economic analysis should grapple with the epistemic challenges posed by nature’s complexity. A truism in investment in that nature will be more valuable tomorrow than it is today. While we may not know the exact curve, we can build businesses and investable products around this principle. What I appreciated most at the roundtable was the depth of engagement and the shared recognition of the co-dependence between healthy ecosystems, thriving communities and resilient economies. This isn’t just a conversation but the launch of a new working group spanning climate justice, fossil fuel transition, gender, migration, and nature finance. Looking ahead, COP30 in Belém will be a pivotal moment for nature-positive finance, with its focus on tropical forests and biodiversity credits. Brazil’s early-stage biodiversity credit projects and new models for large-scale restoration will be closely watched as examples of how policy and practice can align to deliver both ecological and socioeconomic gains.
