Catalysing the emergence of a biodiversity stewardship credit market

Human activities are putting Life on Earth under tremendous pressure. Through direct exploitation of species, conversion of their habitats for new uses, climate change and other causes, more and more species are being threatened with extinction. Many species, the outcomes of millions of years of evolution, have gone extinct already. They are lost forever. There is broad public consensus that this wave of extinctions should be stopped, and yet many of us are unknowingly contributing to it. Through the products we buy and the ways in which we and or our pension fund invests our money, we may be fuelling business activity that contributes to this destruction.

The global financial industry has therefore come together in the Taskforce on Nature-related Financial Disclosures (TNFD) to help everybody understand better how companies and investments affect nature in both positive and negative ways and how they in turn depend on functioning natural ecosystems. The idea is to define a few metrics that measure these impacts and dependencies and allow us to evaluate and compare different business and investment opportunities, so we can make informed choices.

However, there is a problem: while we know that globally the populations of many species are declining, it is not easy to decide which local measures are most effective in reducing the resulting extinction risk. Moreover, it may be unavoidable to modify even more habitats than we have already, for example to build solar farms or to grow plants that rapidly absorb carbon from the atmosphere. We can try to balance the resulting pressure on biodiversity by giving species more room to grow at other places. But how much of this is necessary to reduce extinction risks overall? What metrics should the TNFD use to quantify impacts on risks to biodiversity?

This Fellowship aims to help answer these questions. Setting other qualities of Nature aside, it focuses specifically on extinction risk and how to quantify the impacts of businesses on this risk. Use of a simple metric that has recently been proposed for this purpose is trialled in practice. Participants in the TNFD process will learn about the new metric and carefully compare it with other available options. Eventually, choices are proposed and documentation and scenarios for the practical use of these metrics developed. In facilitating this process, the Fellowship will assure that the powerful framework developed by the TNFD does not overlook protecting the rich diversity of species on Earth that we have inherited, even when other aspects of Nature may appear more important and more useful to us now.