Brussels – Sustainable activities to be certified, to be used to obtain public and private financial support through a quality label recognized at the European level, and thus stimulate the green economy and green investments. On the one hand, the Commission takes away and on the other, it gives back. The EU executive proposes accelerating the creation of a special nature credits scheme aimed at promoting virtuous entrepreneurial actions in terms of environmental conservation and restoration. The proposal follows the withdrawal of the proposed Green Claims Act, which aims to combat greenwashing by companies, and after the scheduling of the motion of censure against the Commission and its president, Ursula von der Leyen.
The timing is anything but casual. Von der Leyen is facing a no-confidence vote amid accusations of a lack of transparency in the conclusion of anti-COVID vaccine contracts with pharmaceutical company Pfizer on the one hand, and the discontent of Socialists, Liberals, and Greens over the backtracking on corporate sustainability arrangements on the other hand. Today (7 July), the plenary will debate the censure motion against the von der Leyen Commission, with the president now able to stand firm with this announcement aimed at mending rifts and discontent with S&D, Re, and Greens.
Admittedly, while the corporate environmental declaration regulation that was rolled back was mandatory, the new nature credits scheme is a voluntary tool. However, the measure is a cleverly crafted compromise that saves face and oneself, preserving the European legislature’s integrity.
Nature credits, what they are and how they work
Halfway between sustainability labels (eco-labels) and emission certificates, special nature credits are designed to recognize specific actions undertaken by individuals, such as farmers, that protect, preserve, and restore nature, soil, and ecosystems as sustainable. Through sustainability certification by a special independent authority, private and public investors can decide to participate in these actions by paying to expand their green-economy portfolios. By doing so, the promoters of green initiatives receive funds to use in the real economy.
By being certified, nature credits establish financial incentives to invest in nature-friendly actions and provide a standardized format for such investments. For companies, nature credits can help make their production processes more environmentally friendly, enhance their creditworthiness, and facilitate access to finance. Furthermore, they can help reduce risks in their supply chains, reduce insurance premiums, and meet corporate biodiversity goals.
“This is not about turning nature into a commodity, but about recognizing and rewarding actions that restore and sustain nature,” said Environment Commissioner Jessika Roswall, convinced of the need for the action launched. “75 percent of our services depend on the environment,” and this is also why “investing in nature becomes not the exception, but the norm.” On this path, she adds, “It is key to avoid greenwashing,” the practice of superficial sustainability. And so, what the Commission backtracked on returns to the spotlight.
“We need to invest more in nature restoration”, and from this point of view, “nature credits have the potential to attract essential private investment,” the Environment Commissioner continues. All this has to be done taking into account the developments occurring across the EU. Nature credits markets are still in their infancy globally. However, Roswall reminds us the global demand for biodiversity credits is expected to reach $180 billion, depending on policy adoption and corporate action. If the EU were able to intercept some of this demand, “it could help close the annual funding gap for biodiversity in Europe, estimated at EUR 37 billion.“
English version by the Translation Service of Withub
