Financial Integrity

Financial Integrity
Photo by Zane Lee / Unsplash

There are growing opportunities for generating revenue through uplifting and protecting nature. This includes developing projects structured to sell environmental credits, measured against uplifts in nature, biodiversity, water quality and carbon sequestration (known in the industry as 'ecosystem services').

These credits are typically purchased by companies seeking to offset their environmental impacts, via either a voluntary or compliance based mechanism.

There is also a growing interest, for nature credits in particular, from companies seeking to go over and beyond their obligations - i.e. developing their nature positive strategies. Such nature credits can include claims for carbon offsetting (known in the industry as 'bundling'). 

Such projects often require significant upfront investment, and long lead times before revenue is generated. 

Accurately forecasting prices for environmental credits is difficult. 

This uncertainty, plus limited scale and unclear demand are slowing down investment. 

As such, projects can struggle to find financing. One solution, is for investors or buyers to provide up front financing in return for the environmental credits generated, with the anticipation that this will cut costs. 

These investors need additional reassurance that the projects are meeting high ecosystem integrity and thus the standardisation in measuring 'ecosystem services' is essential to securing such investment.

Furthermore, many projects may find that they cannot generate sufficient revenues to cover costs, if crediting is the only source of finance. In these cases, alternative revenue sources can supplement, such as the blending of project finances with traditional grants, generating multiple credits (known in the industry as 'stacking'), eco-tourism, recreation, or by providing other services.

Addressing Financial Integrity in practical terms is closely linked to the Solution Integrity of the project.

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