How can biodiversity credits be designed in a way that provides simplicity for projects and buyers, and enables investment in Scotland’s nature?

• In Scotland there is a ￡20 billion funding gap for Nature Restoration, with no functioning mechanism for direct private investment in biodiversity.
• Projects need to be aggregable at a sufficient scale to be attractive to corporate investment and ESG buyers, as well as enabling new funding mechanisms, via regulated exchanges, that could attract retail investment.
• There is a lack of a common commercial mechanism for landowners to join up to, for landscape-scale restoration that fully takes into account the benefits to Nature, which is needed for both investors and to achieve the desired outcomes for nature – i.e. ecosystem intactness and integrity.
• There is an insufficient financial incentive for landowners and managers to arrive at common agreement on land use and management across a landscape.
• While a current lack of ’NBS Project Pipeline’ is cited to be holding back private investment, the reason for the scarcity of projects, is that carbon financing (currently the only established mechanism of private financing available to nature restoration projects) is often insufficient to make the project viable, compounded by a natural reluctance by landowners to sell their carbon credits, in case they would require them in the future to offset their own emissions.
• Scaled up carbon financing opportunities are also constrained, by the fact the established Carbon Codes for Woodland and Peatland constrain purchases to UK only buyers. This is necessary, as the international regulations of the Voluntary Carbon Markets (VCM) determine UK credits sold internationally cannot be used towards achieving the UK's Nationally Determined Contribution (NDC) to the UNFCCC under the Paris Agreement, in response to the Glasgow Climate Pact

A potential solution? click to see 2 minute explainer video

Biodiversity credits are an economic instrument that can be used to finance actions that result in measurable nature positive outcomes for biodiversity and the environment. They directly address the need for investment in natural capital, beyond nature’s role in managing the carbon cycle.

Biodiversity credits differ to biodiversity offsets - they can be part of a company’s nature-positive journey, an investment in nature’s recovery, rather than an offset for damage.

The development of biodiversity credit markets has the potential to help address the ￡20 Billion finance gap for nature in Scotland by leveraging responsible private investment into nature recovery, in line with the Scottish Government’s Biodiversity Strategy and Natural Environment Bill and the Interim Principles for Responsible Investment in Natural Capital.?

What does good look like?

Biodiversity credits designed in a way that provides:

• simplicity for developers of nature-based projects and buyers,
• robust methodologies to ensure nature positive for biodiversity (linked into related work like the parallel biodiversity metrics project – see below),
• join up with a UK-wide market approach, linked into the work of DEFRA,
• join up with the International ESG markets, linked into the work of the TFND,
• and an equitable share of benefits for local communities.

A trusted platform in Scotland, formed around a class of technically viable Biodiversity Credits, for pairing up Investors with Projects, is in operation and enabling the first wave of major Biodiversity Credit based transactions.

• Highlighting and rewarding good practice, in line with published protocols and standards.
• Access only available to investors/buyers passing a level of independent scrutiny with regards to ethical standards and the risks of greenwashing.
• Ability to scale across UK, and ideally Internationally.

Could you help us crack this nut?

By 30 November 2022, send in your application to join our Accelerator programme.

• ￡5,000 + VAT for a minimum of 3 companies to join us for an Exploration stage (January 2023)
• ￡30,000 + VAT for at least 1 company to go through our Accelerator stage (March - June 2023)
• With potential follow up ￡500k pre-commercial stage

Visit our Challenge page to find out more

Register for our Q&A event on 15 November

This challenge is sponsored by the Scottish Wildlife Trust , The Scottish Government and NatureScot with support from Scottish Nature Finance Pioneers , Esmée Fairbairn Foundation , Green Finance Institute , Ecosystems Knowledge Network , and Scottish Environment Protection Agency

It is being delivered with close co-ordination with the wider efforts of the World Economic Forum , 联合国开发计划署 , Taskforce on Nature-related Financial Disclosures (TNFD) , Taskforce On Nature Markets , Natural Capital Finance Alliance , Natural Capital Coalition , Botanic Gardens Conservation International , NatureFinance , Climate Impact Partners , rePLANET , Verra , Plan Vivo Foundation , ValueNature , Terrasos , CreditNature , Operation Wallacea and many many more agents working in this space, collaborating together for a High Integrity Nature Finance Market.

About? CivTech Scotland

CivTech’s mission is?to drive daring and innovation in the public sector by collaboratively solving Challenges that make people’s lives better – and in doing so create generations of sustainable, high growth businesses.??

CivTech?brings together public sector expertise and private sector innovation to solve real problems, develop new products, and deliver better, faster and easier services for everyone. Central to the approach is co-production with the citizen.

Part of the Scottish Government’s Digital Directorate,?CivTech’s approach is helping transform public sector engagement with tech and innovation, delivering significant benefits to public services, producing genuine uplifts for the Scottish economy - and along the way, making lives better.?

Across the country there are problems public sector organisations would like to solve and in the current environment the need for smart, efficient and effective products has never been greater. The Scottish Government is aware innovation is a good way to create them and is committed to ensuring a large part of its tech spend goes to smaller, innovative businesses. This is where?CivTech?comes in.

The?CivTech?Innovation Flow is designed to create products as quickly and effectively as possible, and uses a true Accelerator model at the heart of its Innovation Flow model. For you – whether you’re an individual, team or company – it’s an opportunity to take on a Challenge, solve it, and win contracts with a blue-chip public sector organisation. You’ll build a product, and a business to take it as far as possible. Because here’s the kicker: the Challenges we issue aren’t ‘single organisation’ problems – most exist worldwide.

In short: Open Challenges are set. Any organisation, team or individual can respond. Applications are assessed, and shortlisted proposals go into an Exploration Stage where they’re developed further [for which participating applicants are paid]. The best go through to the Accelerator – a period of intensive work to create the solution, and through?CivTech’s unique business workshop system, a business capable of taking the product to the world.?

This Challenge is also one of the first being launched as part of the Innovate for Nature strategy, and falls under Mission 2. For more information on Innovate for Nature and its Missions please visit the dedicated page on our website.?

https://www.civtech.scot/innovate-for-nature??