The environmental credit market is crowded, and it is getting harder to tell what you are actually buying. Carbon credits, Biodiversity Net Gain units, voluntary biodiversity credits, and Nature Credits all exist in the same conversation — but they are different instruments, serving different purposes, operating under different standards. This article maps each one clearly.
Carbon credits: essential, but incomplete
Carbon credits are the most established environmental credit type. Each credit represents one tonne of CO₂ equivalent avoided or removed from the atmosphere — a standard unit that made global carbon markets possible. Voluntary carbon markets have operated for over two decades; compliance markets for longer.
The limitation is scope. Carbon credits address one dimension of environmental impact: greenhouse gas emissions. They say nothing about biodiversity, habitat condition, species diversity, or water quality. A monoculture plantation and a thriving native woodland can generate a comparable number of carbon credits, despite their ecological value being very different.
This is not a criticism of carbon markets — they do what they are designed to do. It is a recognition that a corporate sustainability strategy built only on carbon credits is incomplete with respect to nature. Greenhouse gas accounting and biodiversity accounting are separate tasks requiring separate instruments.
Biodiversity Net Gain: a welcome compliance tool
Biodiversity Net Gain (BNG) was introduced as a mandatory requirement in England under the Environment Act 2021, with implementation from February 2024. It requires developers to demonstrate that their projects achieve a minimum 10% uplift in biodiversity value, measured using Defra's habitat-based biodiversity metric and expressed in biodiversity units.
BNG is a compliance instrument, not a voluntary corporate sustainability tool. It was designed to address the biodiversity impact of development in the English planning system — it is not applicable to global corporate nature strategies, is not aligned with TNFD or CSRD disclosure frameworks, and does not produce independently verified ecological outcomes in the sense that Nature Credits do.
For developers operating in England, BNG is an important and welcome requirement. For companies building a nature strategy beyond their planning obligations, it is not the relevant mechanism.
A useful distinction: BNG offsets harm from a specific development in a specific planning context. Nature Credits represent independent, positive ecological improvement — not a mitigation of a negative impact, but a verified contribution to nature recovery that stands on its own merits.
Voluntary biodiversity credits: a step forward, still maturing
Voluntary biodiversity credits have emerged from a growing recognition that carbon markets alone cannot address corporate nature impacts. Multiple providers now issue biodiversity credits under varying methodologies — some habitat-based, some species-based, some using composite indices.
The challenge for corporate buyers is the fragmentation. Without a common measurement standard, credits from different providers are not comparable. Verification standards vary significantly — some rely on self-reported data, others on third-party review of varying rigour. For companies reporting under TNFD or CSRD, the due diligence required to assess voluntary biodiversity credit quality is substantial, and the reputational risk of getting it wrong is real.
The voluntary biodiversity credit space is maturing, but it has not yet reached the standardisation and verification rigour that institutional investors and disclosure frameworks require.
Nature Credits: holistic, outcome-based, disclosure-ready
Nature Credits (Nature Investment Certificates, NICs) differ from other biodiversity credit types in three fundamental respects.
Holistic measurement. Rather than measuring a single ecological variable, Nature Credits are assessed across the Ecosystem Condition Index (ECI) — a 0–100 scale scored across four independent metrics: landscape connectivity, bird trait diversity, vegetation structure diversity, and trophic function. This multi-dimensional measurement captures overall ecosystem health rather than isolated features.
Outcome-based issuance. No Nature Credit is issued until Accounting for Nature (AfN) has independently verified that the ecological improvement has actually occurred — measured against the confirmed pre-intervention baseline. Credits represent improvement that has happened, not projected outcomes.
Disclosure alignment. The ECI is accredited under the Accounting for Nature Standard and aligned with the UN System of Environmental-Economic Accounting (UN-SEEA). This alignment makes Nature Credits directly usable for CSRD and TNFD disclosure — they are not just environmental instruments but verified evidence for regulatory reporting purposes.
Can these instruments work together?
Yes — and they should. These instruments are complementary, not competing. Each serves a distinct function in a comprehensive corporate sustainability strategy:
- Carbon credits address your organisation's greenhouse gas footprint under your net-zero commitment.
- BNG units address the biodiversity impact of specific developments under English planning law.
- Voluntary biodiversity credits may supplement broader biodiversity commitments, subject to the due diligence requirements noted above.
- Nature Credits provide independently verified, holistically measured, disclosure-ready evidence of your positive contribution to nature recovery — the instrument specifically designed for TNFD and CSRD compliance.
The bottom line: Carbon credits serve your climate strategy. BNG serves your planning obligations. Nature Credits serve your nature strategy and disclosure requirements. A well-designed sustainability programme will include all three where applicable — each doing the job it was built for.
Choosing the right instrument
For companies navigating this landscape, the decision framework is straightforward. Identify the obligation you are trying to meet. If it is a climate disclosure obligation, carbon credits are the relevant instrument. If it is an English planning requirement, BNG units apply. If it is a nature-related disclosure obligation under TNFD or CSRD — or a voluntary commitment to demonstrating positive biodiversity outcomes — Nature Credits are the right choice, because they are currently the only credit type that is outcome-based, holistically measured, independently verified under an internationally recognised standard, and aligned with the accounting frameworks that disclosure requires.
CreditNature's advisory team works with companies to map these obligations and design instrument portfolios that meet each requirement with the right level of credibility and verification.
