Nature, our strongest ally, fundamentally supports our livelihoods, health and prosperity. It provides key ecosystem services such as water retention, soil fertility and pollination, and contributes to climate change mitigation and adaptation. For businesses, nature is a fundamental prerequisite for a competitive and resilient economy, influencing production processes, creditworthiness and access to finance. Despite this immense value, which exceeds half of global GDP and two thirds of EU economic value added, ecosystem services are difficult to monetise and are not sufficiently reflected in market price signals. This leads to overexploitation of nature and a chronic underinvestment in its protection and restoration.

While the European Union has committed to significant public funding for biodiversity, there is an estimated global funding gap of USD 700 billion per year that cannot be filled through public resources alone. In this context, emerging natural credits as an innovative and voluntary instrument to complement public funding and support private investment in activities beneficial to nature.

What are nature credits?

Nature credits are a key tool for rewarding measures with a positive impact on nature through private investment. Their concept is based on a two-stage model:

1. Certification: Provides assurance that specific, high-quality measures with a positive impact on nature are implemented in accordance with pre-defined criteria. Certification assesses the design, implementation and achieved effects of an intervention, providing a signal of environmental integrity and helping to reduce risks for funders.
2. Credits: Based on a certified and independently verified measure, a nature credit is considered a unit that represents a result with a positive impact on nature, quantified using a recognized biodiversity metric or indicator. Credits convert observed and verified improvements into a unit that can be registered, aggregated, transferred and traded, providing dividends to suppliers and early investors.

People on the front lines of nature conservation – such as farmers, foresters, landowners, fishermen and local communities – can be fairly rewarded through this market mechanism for their contribution to protecting and enhancing the strategic economic asset that nature is. An example would be a group of farmers working to improve a wetland ecosystem; once their practices are certified, they can gradually earn nature credits as they demonstrate results. These credits can be purchased by businesses, financial institutions, public entities or citizens.

Building trust and integrity

To make this process credible, it is essential to establish strict criteria and principles to ensure transparency, avoid conflicts of interest, environmental misrepresentation (so-called greenwashing) and double counting. It is crucial to separate roles between project proponents, certification bodies and registry operators. Experience with voluntary carbon markets has shown that concerns about integrity can lead to shrinking markets, while demand for high-quality projects with environmental and social co-benefits remains high. It is therefore important to prioritise ambitious and scientifically sound standards, independent monitoring and clear use cases.

The EU's path to developing nature credits

The European Commission is setting out a path to develop markets for nature credits, building on existing EU standards, such as the organic farming scheme, with the aim of minimising administrative burdens. Key steps include:

• Creation of an EU expert group on nature credits: This group will bring together experts, Member States, farmers, foresters, businesses and scientific communities to exchange knowledge, identify good practices and provide input for methodologies and management.
• Development of reliable methodologies and management: Methodologies must be simple, practical and ensure a high level of transparency and integrity. The Commission will also examine carbon farming methodologies with mandatory biodiversity co-benefits, to be implemented in early 2026.
• Supporting market readiness: A Europe-wide assessment of the supply and demand for nature credits will be carried out, taking into account investment incentives and the capacity of small farmers and SMEs.
• Public seed funding: Targeted public or public-private financing will be supported by EU funds to kick-start early-stage initiatives, reduce transaction costs and attract private capital. A pilot project on nature credits supported by EU funds will be launched in 2025-2027.

These steps will pave the way for further exploration of policy options, including using the existing carbon architecture to create a new area dedicated to nature credits, with a focus on scientific validity, practical feasibility and consistency with EU objectives. The aim is to translate assumptions into policy measures through reliable methodologies, robust certification processes and inclusive governance frameworks. JRi

Nature Credits Plan