Financial transparency

Projects must have financial transparency regarding their IP and LC relationships

Many ecological crediting programs have been conducted without the inclusion or profit sharing of IP or LC. In the case of biodiversity, the exclusion of IP and LC is directly detrimental to project efficacy as these are the stakeholders most likely to participate in predation activities if their livelihoods are not addressed.

It is not within the purview of this methodology to enforce financial equity. There are many subtle, and non-subtle practices that have been deployed against IP and LC around the globe with reverberating economic effects — and many IP and LC communities will struggle to form projects de novo due to a lack of equipment or scientific training.

While we hope that the methods we have outlined give IP and LC an equal, or perhaps advantageous playing field for biodiversity crediting, some projects will inevitably arrive for crediting with borderline financial practices. We have reduced the risk for IP and LC by enabling one-year contracts which allow them to seek the best business partners they can find. We are hopeful that financial transparency will reveal any undesirable practices for buyers, and that the market will join us in rewarding more equitable projects.

In the case where landowners or BCP project developers are not the same as IP or LC, the BCP must explicitly define these populations and how, when, and in what proportion proceeds from VBCs are distributed to these communities.

The value of the VBCs will be determined by the market, as will the percentages that need to be paid to the different parties. The ISBM will not define guidelines but instead requires full transparency of the mechanisms and amounts of remuneration of the different layers. While the different types of rights-holders may get different remuneration, they all have full transparency into the remuneration of the others in the preservation effort.

It is within the purview of this methodology to require complete disclosure from projects as to four things:

  • How much of the company implementing the BCP is owned by IP and/or LC

  • How much of the revenue from sale of biodiversity credits is given to IP and/or LC and in what format (pre- or post crediting, net or gross)

  • How much of the expense of project implementation is assumed by IP or LC

  • What proportion of staff employed by the project is IP and/or LC,, and how much of project staff salaries is paid to IP and/or LC

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