Biodiversity offsetting is transforming conservation practice around the world. Development activities that degrade or destroy biodiversity at one location are now increasingly acceptable because of compensatory environmental gains generated elsewhere. This change represents a major shift in how nature is protected, and yet its philosophical justification has received little attention. We argue that biodiversity offsetting aligns most easily with a utilitarian ethic, where outcomes rather than actions are the focus. However, offsetting schemes often neglect to account for the multiple values that people assign to biodiversity including unique, place-based values. Furthermore, the implications of defining nature as a tradeable commodity may affect our sense of obligation to protect biodiversity. Ironically, offsetting may exacerbate environmental harm because it erodes ethical barriers based on moral objections to the destruction of biodiversity. By failing to consider the ethical implications of biodiversity offsetting, we risk compromising the underlying motivations for protecting nature.