Deep Dive: Suppliers
The "who", "where", and "how" of biodiversity credit creation.
Intro
Hi folks 👋
Who are the leading biodiversity credit schemes and, especially, project developers? Where do they operate? Where are they based? How many of them are there?
These are just a few of the questions I want to shed a bit more light on today. Time to take a look at Suppliers - the often undervalued Group making these biodiversity credit projects happen. To do that, I’ll use our new Voluntary Biodiversity Market (VBM) database.
📚 Suggested resources
Let’s dig in.
📢 But first, a couple of messages from the friends of Bloom Labs: 📢
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Speaking of hiring, Big Future recently launched. It’s a climate talent marketplace focused on Europe. Check them out!
The core Groups
As shared in earlier articles, the database is built on the Group-Area-Category structure shown below, with Group being the highest and Category the lowest level. We’ve prioritized keeping organizations in a single Group but if they’re clearly operating across multiple realms, we've made sure to reflect that.
Overview
Group
In total, we have 374 Suppliers - organizations that create biodiversity credit projects (i.e. project developers) or are closely involved in their creation (e.g. credit schemes). Among these, 49 also belong in the Enablers group - these are usually advisories or MRV providers that also develop biodiversity credit projects. Then we have 24 that are also Funders - these organizations are usually large companies or investors that are also involved in project development. And finally, we also see 21 Shapers. These are usually large conservation NGOs that also want to enter the biodiversity credit market via their own projects.
Area
If we go a little deeper into the Area level, we see the actual distribution between Credit Schemes and Project Developers.
Credit Schemes
For Credit Schemes, we have 32 “pure” credit schemes (i.e. organizations that only develop standards or methodologies and do not engage in project development). The majority of these (21) are standards.
Then we have 35 “mixed” credit schemes. They not only develop methodologies but also use them to develop their own credit projects. Savimbo, Wilderlands and Terrasos are some of the better-known mixed schemes.
In total, we have 67 credit schemes, with more being developed privately. Quite a couple for such a small market.
Project Developers
The 35 mixed Credit Schemes & Project Developers are the minority among Suppliers. 307 others focus only on developing projects. That makes sense - developing a scheme as a Project Developer is costly, time-consuming and comes with some baggage (i.e. potential conflict of interest). Most try to choose a “winning” 3rd party scheme.
Having said that, developing your own scheme can give more flexibility to meet the needs of the specific buyers - a big benefit for buyer-centric biodiversity credits. More on that in a minute.
Category
Let’s move to the most granular level. The most interesting part here is the distribution of different supported project activities.
Uplift
Uplift is the most dominant activity, with 293 out of 374 Suppliers supporting it. More specifically, uplift is supported by 84.4% of pure Credit Schemes, 62.9% of mixed Credit Schemes & Project Developers and 79.4% of pure Project Developers.
It’s a living proof of the restoration bias that the nature-based solutions space is defined by. It may not be the most efficient use of capital (high-integrity preservation and maintenance always is) but it is the least risky - project interventions are very concrete (e.g. tree planting) and outcomes are easier to observe (i.e. there was “nothing“, now there are trees).
Avoided loss
Avoided loss is the second most common activity. It is supported by 68.8% of pure Credit Schemes, 62.9% of mixed Credit Schemes & Project Developers and 53.4% of pure Project Developers.
Sustainable use
Sustainable use is the improvement of productive landscape management, such as agriculture, forestry or grazing, resulting in uplift or avoided loss.
Note: many Credit Schemes put sustainable use projects as uplift or avoided loss projects. (which technically is true). In practice, we see a big difference between productive and natural landscapes. That’s why we created a separate category.
It is supported by 53.1% of pure Credit Schemes, 22.9% of mixed Credit Schemes & Project Developers and 32.9% of pure Project Developers.
Maintenance
And finally, let’s take a look at the newest and smallest project activity - maintenance. These projects prevent medium- or long-term threats in intact areas that do not face immediate threats. They are often connected to the territories of the Indigenous Peoples. Some would describe these projects as “low additionality but high impact”.
Maintenance projects are supported by 12.5% of pure Credit Schemes (i.e. Cercarbono, International Carbon Registry, Terrascape & Verra), 11.2% of mixed Credit Schemes & Project Developers and only a single pure Project Developer (Healthy Forests Foundation). Obviously, more developers are open to maintenance projects but few make it publicly clear.
Geography
The Western dominance in Supply is even more pronounced than in the full database. Only Brazil and Colombia cracked the top 10, with more than 50% of Suppliers being based in UK, US, France, Germany & Australia alone. It’s easier to find Western organizations and that has definitely played a part in our data collection. Still, the trend is clear.
Similar to other voluntary biodiversity market participants, most Suppliers operate globally (i.e. in more than one continent).
Again, that is not a surprise. Smaller Project Developers, the most populous group, look to achieve scale by reusing similar playbooks across continents. Larger ones (especially the main conservation NGOs) operate globally by default. Suppliers that are also Funders (i.e. corporates or investors) are usually large enough to operate globally while Suppliers that are also Enablers (e.g. advisories, MRV providers) do not have permanent on-the-ground operations, making them very flexible geographically as well.
Main characteristics
Tech
The majority of Suppliers do not have a specific tech focus. Obviously, they use all sorts of different tech but are not defined by a single type. For others, remote sensing, blockchain & AI were the most popular technologies used at 8.4%, 6.5% and 5.8% respectively.
Focus
For focus areas, carbon and nature-based solutions (NBS) dominate at 24.7% and 24.5% respectively. It’s a great illustration of the deep overlap between biodiversity and carbon markets. In reality, even more organizations have ties to carbon markets or come from them.
In this case, we decided to separate the carbon and nature-based solutions tags. Every organization in carbon is also in nature-based solutions. The opposite is not always the case. Nature-based solutions is a broader category.
Social
Similar to tech, most Suppliers do not have a primary social mandate. Almost every organization in the voluntary biodiversity market is focused on social impact, of course. Most just aren’t necessarily defined by a single topic. Those organizations that are, focus on local communities, Indigenous rights, cultural heritage and human rights at 28.9%, 8.2%, 1.9% and 0.2% respectively.
Industry connections
Similar to the whole market, almost 42% of all Suppliers are part of the Biodiversity Credit Alliance (BCA). BCA has become by far the biggest convening body of the market. Other popular alliances are International Advisory Panel on Biodiversity Credits (IAPB), Nature Tech Collective (NTC), Capitals Coalition and Organization for Biodiversity Certificates (OBC).
Parting thoughts
The data confirms many of the common talking points: the early market oversupply, questionable demand (proven by not only the limited interest of the corporates but also their curiosity to sell biodiversity credits and not buy them), Western dominance and the carbon & biodiversity overlap.
Here’s one new(ish) talking point:
Corporate biodiversity credits: are they the future?
It’s clear how difficult it is to build an effective (i.e. fair, efficient and additional) biodiversity market when 1. there is still no (at least semi) binding agreement on what exactly a biodiversity credit is, 2. biodiversity credit regulations are still rare and fragmented 3. biodiversity is fundamentally local and 4. contributions only offer indirect commercial gains (i.e. brand value). That’s a treasure trove of excuses for corporate buyers not to act.
A year in, I’m even more convinced of the buyer-centric approach. Increasingly more people refer to it as corporate biodiversity credits. Under this approach, projects are designed together with corporates from the start. They might commit to purchase these credits for supply chain risk or reporting purposes. They might decide to integrate them into their products (i.e. each container of milk is bundled with the restoration of 10cm2 of grasslands, independently verified and accessible via a QR code). They might even try to sell them for profit to non-consumers (although I don’t know who would buy them other than governments or other polluting corporates under more pressure).
What’s important is that now they 1. understand biodiversity credits, 2. have more flexibility to use them how they want and 3. have reasonable quality assurance on their “nature positive“ activities.
What’s next for Bloom Labs
Biodiversity markets (and the whole nature finance space, to be honest) is riddled with challenges. Seeing how compartmentalized everyone’s knowledge is does not cease to amaze me. Literally no one knows, or can know, everything in this space. A central market intelligence hub is a must. The space deserves a single source of truth of what is happening, at a granular level.
We’re building just that and are currently conducting in-depth user interviews. If you’d be interested in using something like our current Airtables times 100, reach out to hello@bloomlabs.earth.
If you’re short on time, we’d then like to ask to fill a 3-minute product discovery survey below:
And if you’re a software engineer who wants to help build this nature finance intelligence hub, give me a shout.
Thanks all!
Well done in taking a dive into the rabbit hole. I find your research useful and thought provoking. Thanks for sharing! Keep it up, build the central hub to make sense of the emerging market.
Informative pill to swallow. Thanks