EU nature credits roadmap is 'vital step' in unlocking biodiversity market

By Rebecca Delaney

July 10 - (The Insurer) - Insurance industry representatives have welcomed the European Commission's roadmap for nature credits as a step towards quantifying nature on corporate balance sheets, laying the foundation for a biodiversity market.

Launched earlier this week, the roadmap is designed to incentivise private investments into actions that protect and preserve nature, as well as to reward these actions.

Nature credits represent an investment into nature-positive actions by a company, financial institution, public entity or citizen, which in turn can benefit from cleaner ecosystems and risk reduction.

The credits aim to change the way in which nature is valued and viewed as an asset class for investors by generating revenue for businesses and investors while also boosting biodiversity and preserving habitats.

The roadmap therefore seeks to develop clear standards and reliable certification for nature-positive actions.

It also noted the role of private finance in nature on the basis that companies that adopt nature-positive strategies can benefit from higher investor confidence, better financial conditions and greater long-term resilience.

"Some financial institutions are also starting to recognise this value and increasingly integrate biodiversity into risk assessments, as reflected in premiums, lending criteria and investment decisions," said the roadmap.

"For example, insurers create nature-aligned insurance products linked to green investments or invest in projects to restore ecosystems to reduce the insurance risk related to flooding. By creating such value, companies therefore benefit not only stakeholders including employees, customers, suppliers, local communities and society at large, but also their shareholders."

Members of the insurance industry have previously been vocal on the need to better quantify and price nature as a risk and as an asset class, as well as on opportunities for the insurance sector to drive private capital flows for nature.

"We welcome the recent EU Commission’s nature credits roadmap as a key step in recognising nature as a vital asset class," said Howden in a statement to Sustainable Insurer.

"By enabling businesses, landowners, and communities to monetise conservation efforts, this initiative has the potential to transform how nature is valued and protected. For investors, the roadmap lays the foundation for a biodiversity market that will stimulate resilient ecosystems and protect long-term value of broader investment portfolios, particularly in sectors like agriculture, real estate, and infrastructure."

Howden added: "We expect nature credits to become a powerful tool to manage biodiversity risks which are becoming increasingly material due to climate change and ecosystem degradation. Insurance will play an important role in unlocking this potential, as we have seen in carbon markets. Insurance solutions support growth in these nascent markets by boosting investor confidence and enabling capital to flow."

Thomas Viegas, group nature lead at Aviva, called the roadmap a "vital step" towards unlocking additional private finance to support nature-positive outcomes.

"The creation of high-integrity nature markets has the potential to be an innovative, additive solution to mobilise private investment to support nature conservation and restoration efforts," said Viegas.

"This roadmap is a timely and necessary development that sets out a clear pathway to create and scale a high-integrity market for nature credits in the EU. High integrity for a voluntary market is a prerequisite for sustained demand and scalability, and should not be seen as barrier to its development."