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Executive Summary

The 17th Conference of the Parties (COP17) to the Convention on Biological Diversity (CBD), scheduled for 2026 in Yerevan, Armenia, will represent a defining moment for one of the most significant innovations in conservation finance: biodiversity credits. As the midpoint assessment of the Kunming-Montreal Global Biodiversity Framework (GBF), COP17 will be forced to confront the reality that public funding alone is insufficient to meet the framework’s ambitious targets. In this context, biodiversity credits—market-based instruments designed to generate finance for measurable positive biodiversity outcomes—will transition from a specialized concept to a central pillar of the high-level political negotiation. This report analyzes the trajectory of this evolution, anticipates the key debates that will shape the Yerevan discussions, and outlines the potential futures for this mechanism post-2026. The core thesis is that COP17 will not produce a final, unified global market, but will instead establish the critical governance guardrails and political mandates that will determine whether biodiversity credits become an effective tool for closing the finance gap or a source of conflict, greenwashing, and inequity.

1.0  Introduction: The Imperative for Innovative Finance

The Kunming-Montreal GBF, adopted in 2022, set a target of mobilizing at least $200 billion per year for biodiversity by 2030 from all sources. Current flows are estimated to be less than half this amount, with a significant shortfall in international public finance from developed to developing countries. This financing gap coincides with mounting accountability pressure on the private sector. Frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) are compelling corporations to assess and report their dependencies and impacts on nature, creating a demand for credible ways to demonstrate “nature-positive” action.

Biodiversity credits have emerged as a proposed solution at this nexus of need and demand. Conceptually, they are units representing a measurable, positive, and additional outcome for biodiversity, verified against a standard and tradable in a market. Proponents argue they can unlock scalable private investment for conservation and restoration. Critics warn of replicating the challenges of carbon markets—issues with additionality, permanence, leakage, and community rights—and express concern about the commodification of nature itself. COP17 in Armenia will be the arena where these competing visions meet, with the outcomes setting the course for conservation finance for decades to come.

2.0 The Evolution of Biodiversity Credits: The Path to Yerevan

The journey of biodiversity credits to the center of the COP17 agenda has been accelerated by parallel developments in finance, policy, and science.

2.1 The Post-2022 Acceleration (2023-2025):

Following COP15, activity intensified outside the UN process. Private standards bodies, consultancies, and coalitions began developing competing methodologies for quantifying biodiversity gains. Pilot projects launched from Colombia’s páramos to the savannas of Kenya, testing everything from rainforest carbon-and-biodiversity stacked credits to species-specific habitat banking. The voluntary carbon market’s challenges around integrity, particularly concerning rainforest credits, served as both a cautionary tale and a catalyst, with actors determined to build a new model with higher integrity from the outset.

2.2 The Key Drivers:

• Corporate Demand: Taskforce on Nature-related Financial Disclosures (TNFD) adoption and consumer pressure are creating a voluntary buyer’s market.
• Government Pilots: Countries like France (for offsetting) and Australia (Nature Repair Market) are creating domestic compliance and voluntary demand signals.
• Technological Advancement: Remote sensing, eDNA, and AI are improving the ability to monitor and verify ecological outcomes.
• Investor Interest: Natural capital is being framed as an asset class, attracting venture capital and impact investors to credit development platforms.

2.3 The Pre-COP17 Landscape (2026):

By mid-2026, as delegations finalize their positions for Yerevan, the landscape will be characterized by:

• A Fragmented “Market”: Multiple, incompatible methodologies and registries, causing confusion and integrity risks.
• Heightened Political Awareness: Both strong support (from nations seeing a finance solution) and deep skepticism (from those fearing unfair resource extraction).
• A Mature Civil Society Critique: Indigenous Peoples and local communities (IPLCs), alongside NGOs, will arrive with well-articulated demands for rights, equity, and ecological rigor.

3.0 The COP17: Anticipated Negotiations and Fault Lines

In Yerevan, biodiversity credits will be debated not as a standalone financial tool, but as an issue touching on the core pillars of the GBF: resource mobilization, equity, rights, and implementation. The negotiations will crystallize around several key fault lines.

3.1 The Core Debate: Governance vs. Abdication.

The central question will be: Should the CBD establish a governing framework for biodiversity credits, or should it remain a passive observer of private sector-led development? The negotiations will see a clash between:

• The “Governance First” Coalition: Led by nations like Costa Rica, France, and many G77+China members, this group will argue that the CBD must act to set minimum standards, prevent a race to the bottom, and ensure credits support—rather than undermine—national sovereignty and NBSAPs.
• The “Innovation Space” Advocates: Led by private sector constituencies and some developed nations, this group might caution against premature over-regulation that could stifle innovation and investment. They will advocate for the CBD to simply “welcome” market developments and endorse principles, leaving detailed standard-setting to existing bodies.

3.2 The Non-Negotiable Red Lines: Equity and Rights.

The most intense negotiations will surround social safeguards. The IPLCs and their ally states will demand legally binding conditions for any CBD recognition of credits. Their core requirements will include:

• Free, Prior and Informed Consent (FPIC): As a non-negotiable prerequisite for any project on or affecting customary lands.
• Tenure Security: No credits issued without resolution of land and resource rights.
• Equitable Benefit-Sharing: Mandatory, upfront agreements ensuring the majority of financial benefits flow directly to stewarding communities, not intermediaries.
• No Offsetting of Rights: Credits cannot be used to offset nature damage violations or legitimate conservation regulations.

3.3 The Technical Battlegrounds:

Even if political agreement is found, difficult technical issues remain:

• Additionally: How to prove the biodiversity outcome would not have happened without the credit revenue.
• Permanence: How to ensure outcomes are sustained over decades, not just years.
• Measurement: Moving beyond simple area-based metrics to capture ecosystem health, function, and species recovery in a standardized, cost-effective way.
• Stacking & Bundling: Rules for combining biodiversity credits with carbon or green water credits (GWC) on the same piece of land.

4.0 Potential Outcomes from COP17

COP17 is unlikely to deliver a fully fleshed-out global biodiversity credit system. More probable is a decision that sets the direction of travel. We anticipate three possible scenarios:

4.1 Scenario A: The Yerevan Governance Framework.

COP17 agrees to establish a CBD Advisory Body on Biodiversity Credits with a mandate to develop:

1. A Set of Core Global Principles: Covering ecological integrity, additionality, permanence, governance, and equity.
2. Guidance for National Governance: Helping Parties integrate credit mechanisms into NBSAPs with strong legal safeguards.
3. A Roadmap for a Global Meta-Standard and Registry: A framework to recognize and harmonize credible private standards under CBD oversight.

• Impact: This would legitimize the concept while imposing necessary guardrails. It would provide clarity for investors and protection for communities, but delay full market scaling until post-2028.

4.2 Scenario B: The Hands Off Approach.

Political deadlock leads to a weak decision that merely “notes” the development of biodiversity credits and “encourages” Parties to share experiences. It defers all substantive decisions to future COPs.

• Impact: The private market continues its rapid, fragmented growth without any serious international oversight. This increases risks of greenwashing, community conflict, and a loss of faith in market mechanisms, potentially undermining future finance innovations.

4.3 Scenario C: The Ambitious Breakthrough.

Driven by a powerful alliance of developed countries, climate-vulnerable states, and the private sector, COP17 mandates the immediate design of a Global Biodiversity Credit Mechanism, with simplified access for IPLCs and high-integrity methodologies.

• Impact: This could rapidly channel significant new finance but risks being rushed, bypassing adequate consultation, and repeating the centralized, bureaucratic challenges of early carbon mechanisms.

5.0 The Future Post-Yerevan: Trajectories to 2030 and Beyond

The decisions in Yerevan will set one of several possible trajectories for the 2027-2030 period.

5.1 If Strong Governance is Established (Following Scenario A):

• 2027-2028: The CBD Advisory Body works intensively. A handful of “gold standard” pilot projects are launched in partnership with IPLCs. National legislation is drafted in key countries.
• 2029: The first CBD-recognized credits are issued. A global registry goes live. Corporate buyers begin preferring these credits for TNFD reporting due to their verified integrity.
• 2030: A functioning, if still nascent, high-integrity market exists. It provides a meaningful but partial contribution to the $200B goal, primarily financing community-led conservation and restoration in high-biodiversity areas. The focus shifts to scaling and ensuring benefits are sustained.

5.2 If Governance Fails (Following Scenario B):

• 2027-2030: A chaotic, multi-speed market develops. A flood of low-quality credits from “easy” ecosystems saturates the market, while complex but critical biomes are ignored. High-profile controversies involving community displacement or questionable credits erode trust. The CBD’s relevance in conservation finance diminishes. The finance gap remains largely unaddressed.

5.3 The Hybrid Reality:

The most probable future is hybrid. A CBD-governed “quality” track will coexist with a larger, less rigorous voluntary market. The success of the GBF will hinge on whether governments, pension funds, and leading corporations choose to support the high-integrity track, creating the demand needed for it to become the dominant model.

6.0 Strategic Recommendations for Key Actors at COP17

For CBD Parties (National Delegates):

• Developed Countries: Come prepared to support strong governance and commit to using high-integrity credits in public procurement and for corporate disclosure guidance. Finance the capacity building of the Advisory Body.
• Developing Countries & IPLCs: Form a united bloc to negotiate the social safeguard requirements. Develop model national legislation in advance to inform the CBD guidance. Insist on direct access to finance and decision-making seats.

For the Business and Finance Sector:

• Move beyond advocacy for “no regulation” to actively engaging in designing credible rules. Support the development of robust, science-based methodologies. Demonstrate commitment to the Free, Prior, and Informed Consent (FPIC) and benefit-sharing principles pre-emptively.

For Civil Society and IPLCs:

• Continue to articulate the critical warnings and ethical frameworks. Shift from purely oppositional stances to proactively proposing alternative models for community-controlled conservation finance that may or may not involve credits.

7.0 Conclusion: Yerevan as the Pivot Point

Biodiversity credits arrive at COP17 not as a finished product, but as a profound question. They ask whether the global community can design a financial instrument that truly values ecological complexity and human dignity, rather than reducing them to the simplest tradable metric.

Armenia, a nation with deep cultural ties to its landscapes and a history of resilience, provides a fitting backdrop for this debate. The outcome in Yerevan will determine whether biodiversity credits evolve as a tool for realizing the vision of the GBF—a world living in harmony with nature—or become another example of how well-intentioned market mechanisms can be misapplied.

COP17 will not be the end of the journey for biodiversity credits, but it will be the moment the international community chooses the path. That path will lead either toward a future where finance finally flows at scale to those stewarding our planet’s biological wealth, or toward further disappointment with market-based solutions to the crisis of nature.