Even when every effort is made to avoid, minimize and restore, human activities can still have negative impacts on biodiversity. To avoid a net loss of biodiversity and ecosystem services, damages resulting from human activities need to be balanced by at least equivalent gains.
EU legislation protects a wide variety of habitats and species. Compensation for damage occurring in Natura 2000 sites is a legal requirement of the EU Birds and Habitats Directives.
However, there is no similar EU requirement for the compensation of unavoidable residual impacts on species and habitats that are not covered by nature legislation. This results in a net loss of biodiversity and ecosystem services.
The EU is committed to halt the loss of biodiversity and the degradation of ecosystem services by 2020. The Biodiversity Strategy to 2020 set out 6 targets and 20 specific actions geared towards this overall objective. Action 7 was to ensure no net loss of biodiversity and ecosystem services. The action called for the development of a methodology to assess the impact of EU funds on biodiversity and foresees that the Commission proposes "an initiative to ensure there is no net loss of ecosystems and their services (e.g. through compensation or offsetting schemes)." This commitment is reiterated in the roadmap to a Resource Efficient Europe.
In its conclusions of 21 June 2011, the Environment Council of Ministers stressed "the importance of further work to operationalise the 'no net loss' objective of the Strategy for areas and species not covered by existing EU nature legislation". In its conclusions of 19 December 2011, it adds that "a common approach is needed for the implementation in the EU of the 'no net loss' principle", inviting the Commission to draw on the experience and specificities of each Member States to address this in its preparation for the planned initiative on no net loss.
Both sets of conclusions gave a preliminary definition of the No Net Loss principle: 'that conservation/biodiversity losses in one geographically or otherwise defined area are balanced by a gain elsewhere provided that this principle does not entail any impairment of existing biodiversity as protected by EU nature legislation'.
In a resolution of 20 April 2012, the European Parliament urged the Commission to ‘develop an effective regulatory framework based on the ‘No Net Loss’ initiative, taking into account the past experience of the Member States while also utilizing the standards applied by the Business and Biodiversity Offsets Programme’. It stressed the importance of applying such an approach to all EU habitats and species not covered by EU legislation.
Several initiatives involving biodiversity offsets have taken place in Member States in recent years.
A Working Group was established to collect views on how to prepare the no net loss initiative, taking into account all relevant policies and instruments. Members were selected to ensure a geographical balance of Member State representatives and a balanced representation of different interests, with a preference for organisations representing the views of stakeholders at EU level. The Working Group also included a limited number of experts with direct technical experience of NNL and offset projects.
In its last meeting on 5th July 2013, the NNL WG adopted a set of documents, including a definition of the scope and objectives of the no net loss initiative and a glossary. In a document discussing the development of operational principles of any proposed EU no net loss initiative, it stressed that it is "vital that any EU NNL initiative anchors compensation/offsetting into a strict and systematic mitigation hierarchy". This means that the first objective should be to try and avoid or prevent negative impacts. Where this is impossible, damage should be minimised and restoration attempted. Compensation or offsetting should be a last resort.
In June 2014, the Commission launched an internet consultation on the EU No Net Loss initiative. The consultation asked interested citizens, public authorities, business and NGOs for their views on a No Net Loss Initiative at EU level: how to develop the policy, how to apply the mitigation hierarchy; the scope and the scale of the initiative; which drivers of biodiversity loss and which economic sectors to include; how to tackle the challenges related to offsetting and the choice of policy instruments to use.
In 2016, a study contracted by the Commission delivered an impact assessment report to support a possible EU No Net Loss initiative, taking into account the results of this consultation.
In 2019, the Commission published a Guidance on the integration of ecosystems and their services into decision-making including steps to follow the mitigation hierarchy (avoid-reduce-restore-compensate) to potential negative impacts on biodiversity.
The Commission has financed several studies in preparation of the No Net Loss initiative: