Corporate Action on Biodiversity: Sweden

The following is co-authored with Aleksandra Holmlund , an expert on European efforts to create credits for biodiversity at the Swedish University of Agricultural Sciences.

Sweden has ratified EU policies such as the 2011 EU Biodiversity Strategy and more recent ‘no net loss’ policies, set seven specific National Environmental Goals related to biodiversity, and is piloting results-based farm subsidy programs. However, we are not aware of national efforts to bring 'no net loss' or 'net gain' goals to life through policies that require full mitigation of new or ongoing development impacts and allow for effective offsets to be used to meet requirements.

In absence of clear government biodiversity regulations - much like the U.S. - a diversity of voluntary corporate 'biodiversity net gain' commitments and mitigation work is expanding in Sweden.?

However, implementation of these commitments goes far beyond U.S. corporate activity for biodiversity possibly both because ESG (environmental social and governance) is more contested in the U.S. than Europe and because European regulations on biodiversity are much further advanced than in the U.S. And because it makes sense for businesses to experiment with and implement practical approaches to meet future regulatory requirements where they can predict what that future might look like. Across Europe, its clear that regulatory standards for biodiversity outcomes are coming to every part of the continent. In contrast, in the U.S., the modest effort by the Obama Administration through a mitigation standards for no net loss in an executive order was reversed by the next administration, with no evidence yet that the Biden Administration plans to restore those domestic policies.

Biodiversity conservation commitments

Existing corporate biodiversity goals are primarily focused on strategies and actions to avoid impacts and reduce impacts through on-site actions.?However, there is growing interest in third party offsets for a diversity of reasons, including because many businesses have already recognized the difficulty and inefficiency of trying to achieve net zero or gain goals only within the footprint of their developments and operations.

Business@Biodiversity Sweden is a learning network of companies that have made a commitment to the long term goal of net gain for biodiversity in Sweden. By 2018, seven Swedish companies in this network had made voluntary commitments to begin minimizing and offsetting their impacts on biodiversity within the country.?These companies were primarily taking action on their own land and incentivizing action on lands within their supply chain (i.e. farms) with the intent of enhancing the condition of biodiversity present there. Three of the companies were also carrying out or supporting offsite actions, in partnership with their biodiversity strategy consultant, Ecogain.?Offsite actions were seen as both more efficient and more effective at producing biodiversity gains in some situations.

By 2022 Ecogain was able to analyze biodiversity commitments of more than 300 major companies primarily in Europe and found that in the Nordic region 20 percent of major food retail companies had biodiversity goals and concluded that, “at this speed, every company in the Nordics will have time-bound, measurable, and relevant goals for biodiversity by the end of 2027.”

Overall, 10 percent of the largest Swedish companies now have measurable and time-bound biodiversity no net loss or net gain goals and 29 percent of the largest companies have at least some biodiversity goal. Nearly 70 percent of these 300 companies at least mention biodiversity in their ESG goals.

For example, the Swedish mining industry has put together an industry-wide commitment for net gain of biodiversity that recognizes the limited choices available to avoid biodiversity impacts near places where mineral resources are found but makes a commitment to offset them. Although the commitment lacks implementation strategies to achieve it, its nonetheless striking that a sector like this is even willing to make such a commitment. In the U.S., there are examples of multinational mining companies making such individual commitments like Newmont Mining Corporation , but they work with international partners instead of U.S. nonprofits or research institutions because expertise on biodiversity loss avoidance and offsetting is mostly found outside of the U.S.

Evolving quantification tools that have practical value

In Sweden, Ecogain and a separate team from the Swedish University of Agricultural Sciences (led by Aleksandra) have each developed 'beta' versions of tools to quantify biodiversity impacts and benefits that would allow businesses to use one framework both to avoid and minimize impacts and to evaluate transactional opportunities available through third parties to adequately offset remaining impacts.

Ecogain’s Changing Land Use Impacts on Biodiversity ( CLImB) project is testing two quantification tools – one based on a Sweden-relevant amendment to the United Kingdom's Department for Environment, Food & Rural Affairs (DEFRA) Biodiversity Index 3.0 tools, and the other that is based off a set of international biodiversity impact/benefit scoring tools, again modified for Sweden ecosystems and land uses. Ecogain is working with Swedish companies that have made quantitative and time-bound commitments to fully offset or achieve a net gain for biodiversity, so these two approaches – or others – are likely to be tested in the near future as companies seek to avoid or use third-parties to offset biodiversity impacts.

Forest Biodiversity Value Quantification Tools

The Swedish University of Agricultural Science’s beta tool for quantification of boreal forest biodiversity values, gains and losses went through public review in summer 2022 before a revised version launched this autumn.

The system provides a score (50 points) that combines species composition, habitat diversity, and other methods – based on circular plot or linear transect measures – to assign a biodiversity value to a land management unit.?Unlike the UK's Index 3.0, presence of rare species has a significant positive impact on the score a site receives.

The tool is being developed for a different purpose than DEFRA and US biodiversity accounting tools. It is meant to serve a non-regulatory function for companies that have made ESG and other commitments to biodiversity and need tools to help them track whether they are meeting those commitments on their operational lands or through acquisition of third party credits.?

While the tool provides legitimate science-based data collection and indexing services that will allow companies to measure biodiversity conditions at baseline or as measured in future years, it is not currently useful as the predictive tool that companies need to estimate whether their actions and credit purchases today will meet their future needs (i.e. to track no net loss/net gain outcomes across a company's entire footprint.?The system could be revised to include scores and quantification that assigns future credit (or debit) value to specific actions.?

Because a number of the parameters in the biodiversity credit system are measured in the field, the tool avoids some of the subjectivity in the DEFRA index , but this will come at the expense of being able to use the tool to predict future conditions and is likely to be much more expensive to use on a site with impacts or with beneficial actions.?

?What's next

Earlier posts have looked at trends in biodiversity markets across the EU , the United Kingdom's net gain regulations, and Ireland's efforts to pay for biodiversity outcomes on farms. All of these efforts and Sweden's voluntary biodiversity tools obviously still have a long way to go - the good news is that each one is designed in ways that allow them to be improved. The UK crediting system, for example, has been criticized for allowing more common habitat types to be replaced with benefits to rarer habitats. While that seems like the right conservation policy (i.e. common for rare), if experts change their mind through a version 4.0, the system can handle it. Similarly, the Swedish biodiversity systems we looked provide an immediate way to quantify baseline conditions, but could be improved iteratively to capture more types of ecosystem (e.g. wetlands) or actions.

Corporate biodiversity crediting (and debiting) tools are likely to see some incredible interest and development in the next few years. We need investment in quantification tools, best practices, clearinghouse development, and credit banking standards to keep up.

[1] Swedish law limits the term of a private conservation easement to 49 years and there is currently no way for a private entity to guarantee permanent protection other than through transfer of full ownership (i.e. fee simple) to a conservation non-profit or a government agency.