On July 7, 2025, the European Commission presented its Roadmap Towards Nature Credits, setting the blueprint for biodiversity certification in the EU. The Communication was also accompanied by a Q&A and a call for feedback by 30 September 2025.
Nature Credits: Practical Uses Across Sectors
In short, nature credits will constitute quantifiable and fungible units for verified biodiversity outcomes that can be registered, pooled, banked and traded. Companies, investors, insurers, and public authorities will be able to use nature credits in several practical ways:
- Businesses can buy nature credits to support their sustainability claims, such as demonstrating measurable contributions to biodiversity in their annual ESG reports.
- Multinational corporations and retailers can use nature credits to manage sustainability risks in their supply chains, for instance, by securing credits from regions where their suppliers operate to mitigate biodiversity loss linked to raw material sourcing.
- Project developers can use nature credits as part of environmental permitting requirements, for example, to compensate for unavoidable biodiversity impacts of infrastructure projects like highways or energy plants.
- Institutional investors and banks can invest in nature credits to build nature-positive portfolios.
- Public authorities can link subsidies and green loans to biodiversity performance by requiring or encouraging nature credit acquisition as part of the eligibility criteria.
- Insurance companies can use nature credits to manage biodiversity-related risks, for example, by reducing exposure to flood-prone areas through investment in wetland restoration projects that generate credits.
This blog provides an overview of the foreseen regime as companies explore associated opportunities and risks.
The EU’s Roadmap to a Green Market by 2027
2024: Global Commitment to Nature Financing
As we reported back in December 2022, the 15th Conference of the Parties (“COP”) to the Convention on Biological Diversity (“CBD”) specifically encouraged Signatory States to consider biodiversity credits as part of their national biodiversity strategies (Decision 15/4, target 19). The goal is to find 200 billion USD per year by 2030 for biodiversity preservation. Innovative financing and the private sector are key targets as new sources of funding. This has resulted in the creation of the new UN global biodiversity fund seeking contributions from the private sector; and is generating significant momentum to nature credits as a tool for biodiversity conservation and restoration.
2025: Building Momentum
Accordingly, the Commissioner for Environment Jessika Roswall was mandated to put forward a relevant framework for nature credits as a way to compliment public funding for biodiversity. Taking stock of previous studies, consultations and pilot projects, the Commission launched a call for feedback which will remain open until September 30, 2025. In addition, the Commission is establishing a dedicated expert group, with applications to be submitted by 10 September 2025, and will carry out an EU-wide assessment for nature credits. The aim will be to evaluate the market potential for nature credits, with demand projections and investment drivers.
2026: Technical Foundations
By 2026 the Commission will propose the first carbon farming methodologies under the Carbon Removal Certification Framework (“CRCF”) with mandatory co-benefits on biodiversity. It remains yet to be seen if this will pave the way for “bundling” (i.e. combining multiple ecosystem services into a single credit) or “staking” (i.e. separating and quantifying different ecosystem services into distinct credits, for e.g. carbon and biodiversity credits, to be sold to multiple buyers) under the EU nature market. In mid-2026, the dedicated expert group is expected to provide the technical criteria and outlines of the methodological framework which will build upon existing practices.
2027: Launching the Framework
Finally, the Commission will present guiding governance principles and the certification framework by 2027 to scale up EU nature markets.
Expected Regime, Certification Criteria and Methodologies
Although the Communication does not detail certification criteria for nature credits, it indicated that it would build upon methodologies enshrined under the CRCF and similar carbon crediting regimes.
The scope of eligible activities for nature credits is expected to be larger than for carbon crediting, encompassing organic farming, the preservation and/or restoration of areas contributing to biodiversity and water-related goals, removal of invasive species, etc. Metrics and indicators to evaluate nature-positive outcomes will be multiple and adapted to context. They will notably rely on the Joint Research Center’s an Eurostat’s methodologies to map and assess ecosystem condition. Still, based on existing regimes, we could draw the following typology of criteria to be expected within future EU nature crediting methodologies:
Additionality Criteria
The principle of “additionality” is crucial to ensuring the integrity of nature credits by verifying that the positive biodiversity outcomes are directly attributable to, and would not have occurred without, the project’s interventions. To do so, the activity must prove the following:
- It goes beyond relevant statutory requirements, as under the CRCF and the Common Agricultural Policy eco-schemes.
- The incentive effect of the certification is needed for the activity to become financially viable.
- The biodiversity net gain (“BNG”) is quantified and reaches the minimum additionality threshold (e.g., a 10% biodiversity net gain). The quantification of net gains must account for the baseline status of the area, including the expected biodiversity gain/loss under a non-intervention scenario, and whether the project area has a particular importance. It must also consider environmental impacts attributable to the implementation of the activity over its entire lifecycle, such as indirect land use change, emissions from energy use, etc.
Permanence Criteria
Ensuring the long-term durability of biodiversity outcomes is critical for maintaining the value and integrity of nature credits. To do so, several mechanisms could be considered, such as long-term commitments under maintenance/management plans, financial assurances, and varied contractual safeguards.
Certification Methodologies
The implementing operator must also use applicable certification methodologies proving its compliance with quality criteria and with related statutory safeguards to avoid incidental impacts from the project. Here, we may find methodologies with considerations to ensure food security, avoid land speculation, minimize the administrative and financial burden on operators, etc. Also, under certain certification methodologies, we could imagine the possibility for bundling or stacking.
Process and Participants
The nature credit value chain will involve a range of actors, including:
- Project developers;
- Certification bodies;
- Intermediaries such as aggregators and local facilitators;
- Buyers.
In practice, project developers will not need to wait until the end of the monitoring period to sell nature credits. Credits may be issued progressively, based on validated milestones—for example, once the site is protected, financial assurances are secured, and certification bodies have approved the project’s compliance.
The European Commission may establish a Union-wide registry for permanent nature credits, likely after December 2028. This registry may be paired with the Carbon Removal Certification Framework (“CRCF”) registry, particularly if bundling (combining ecosystem services) or staking (separating ecosystem services into distinct credits) is adopted.
However, full fungibility across all nature credits may not be achievable, given biodiversity’s inherently local characteristics. It is likely that local registries will also emerge to pool credits within specific regions or ecosystems and allow fungibility within those areas. Finally, we could also expect varying levels of liability, depending on the level of harmonization and associated agreements, to sanction any “reversal” of acquired biodiversity net gains during the monitoring period. Such sanctions could also be associate with relinquishment requirements when certificates were issued as a result of false or misleading information, if there is a significant reversal or if the disclosed biodiversity outcome was not attained.
Payments to the Cali Fund as Nature Credits?
Finally, the Communication suggests that nature credits can be used in the context of “local benefit-sharing schemes.” This opens the opportunity for discussions with the Commission (or at the dedicated expert group) whether access and benefit-sharing (“ABS”) payments can be considered to qualify as nature credits. This can be a great tool to incentivize participation of companies in the recently created Multilateral Mechanism on Benefit-Sharing (“MLM”) from Digital Sequence Information (“DSI”).
Under this mechanism, companies across sectors such as agriculture, biotechnology, cosmetics, pharmaceuticals, laboratory equipment, and artificial intelligence that “directly or indirectly benefit” from DSI from nature are encouraged to make annual contributions to the UN Cali Fund, calculated at either 1% of profits or 0.1% of revenue. These payments are meant to be then disbursed to countries and Indigenous Peoples and Local Communities (“IPLCs”) for the purpose and carrying out biodiversity restoration projects. However, to date, no company has made a contribution. Key reasons for this hesitation include concerns about the transparency of the Cali Fund’s distribution processes and the absence of a robust certification framework that would guarantee contributions are effectively used for biodiversity conservation and restoration.
Recognizing ABS payments to the Cali Fund as eligible nature credits could help address these concerns by embedding them within a more formalized, traceable, and potentially tradable structure, thus providing companies with tangible recognition for their contributions and strengthening the overall incentive to participate.
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If you have any questions concerning the material discussed in this post, please contact Bart Van Vooren: bvanvooren@cov.com
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Pol Revert Loosveldt of Covington & Burling LLP contributed to the preparation of this article.