13.3.2.4 Voluntary offsets

The voluntary offsets business is an emerging industry. Mainstream investors such as Caisse des Dépôts, ABN-AMRO, Henderson Investors, BNP Paribas Bank, ISIS Asset Management, the World Bank Group and the IFC consider biodiversity offsets as a business opportunity.1 According to Cortex Consultants Inc., certain large companies have already committed themselves to offsetting the harm they cause to biodiversity on a voluntary basis. Multinational companies such as BHP Billiton and Rio Tinto are using voluntary biodiversity offsets, and have communicated the ambition that their economic activities have no negative impact on biodiversity.2 Another example is Wal-Mart. In 2006, this company made a ten-year commitment, totalling USD 35 million, to the National Fish and Wildlife Foundation for the creation of permanently protected reserves. Wal-Mart's "Acres for America" project is intended to ensure that the company preserves one acre of priority wildlife habitat for every acre developed by the company. By 2008, 395,000 acres of land have been protected in this way.3

Various programmes in the field of voluntary biodiversity offsets have been developed. One of them is the Business and Biodiversity Offsets Programme (BBOP).4 This initiative was launched in 2004 by the NGO Forest Trends with support from the NGOs Conservation International and the Wildlife Conservation Society. BBOP is operating as a partnership that consists of 40 leading organisations and individuals including governments, financial institutions, companies and conservation experts. The essence of the programme is: (i) to demonstrate conservation and livelihood outcomes in a portfolio of biodiversity offset pilot projects; (ii) to develop, test and disseminate best practice on biodiversity offsets; and (iii) to contribute to policy and corporate developments on biodiversity offsets so that they can meet conservation and business objectives.5 A set of guidelines for offset design and implementation was developed (see Annex 13.2). The guidelines were tested in a portfolio of pilot projects in a range of contexts and industry sectors aimed at demonstrating that the programme enhances additional conservation and business outcomes.6 An example of a biodiversity offsets case study is offered by the Australian company Basslink Pty Ltd ( Basslink').

In Australia, ( Basslink') was constructing an electricity cable to link Tasmania with Victoria State in mainland Australia, thereby impacting an area located within the Special Protection Zone of a State Forest. The 'habitat hectares approach' was adopted. This approach constitutes a precise, quantitative method for assessing the type, quality and conservation significance of the vegetation at stake. The initial amounts of habitat hectares were combined with an additional multiplier to address risks and other factors to indicate the total number of habitat hectares needed to compensate for impact. The company purchased a property with similar, albeit degraded vegetation adjacent to the main impact site of the project, for purposes of the restoration, maintenance and improvement of the habitat. After the purchase of the property to be conserved, a management plan was prepared before the construction of the project began. The developer will manage the offset areas for a ten-year period. The land is to be given protective tenure by its inclusion in the Crown estate. Basslink's objective was to achieve a net gain' for native vegetation. It succeeded by using an explicit, systematic and transparent approach to establish compensatory conservation measures commensurate with the loss of biodiversity.7

In general, what would be the reason for companies to commit to voluntary biodiversity offsets? Apparently, there are several driving forces for this corporate behaviour. One of them is that companies in this way can show to society that it can trust them when they need access to land or sea for their business activities. In other words: that they are companies that conduct their business in a responsible way taking into account the P of Planet besides the P of People and the P of Profit. To participate in a biodiversity offsets programme will contribute to the enhancement of a company's reputation because biodiversity appears to have high symbolic value.8 Another reason is that banks often demand guarantees from borrowers that their projects do not cause environmental damage. Furthermore, the development of conservation tradable credits has business potential, especially in areas where there is a significant demand for offsets, or in places where demand can be easily stimulated. Hence, biodiversity offsets also constitute a new business opportunity for ecosystem service 'brokers' and investors, as was demonstrated in the US wetland banking and Malua Bio Bank examples.9 To summarise, companies' motives for engaging in a voluntary biodiversity credit scheme are:

Certainly, investment in voluntary biodiversity offsets also entails risks equivalent to other business ventures in an emerging market. Possible set-backs can include that a company can be disappointed with the results, e.g. the conservation outcomes, good public relations and reputational benefits (although this risk can be minimised by closely attending to the design of the biodiversity offsets programme). Furthermore, any corporate involvement in innovative projects can lead to additional costs and related criticism from shareholders.