Global assessments show biodiversity has already declined beyond 'safe limits' across most biomes, calling for large-scale conservation and restoration interventions. At the same time, the potential and emerging catastrophic impacts of accelerated climate change have led to increasing investment in climate change mitigation efforts through maintaining or sequestering carbon in vegetation biomass, particularly woodlands and forests. This raises the challenge of whether these climate change mitigation investments can concurrently contribute to ameliorating the biodiversity crisis. However, the assumption of industry observers is that tree monocultures will sequester more carbon than biodiverse plantings, that is, there is a carbon-biodiversity trade-off. Here, we review experimental and observational evidence to examine whether a biodiversity trade-off is necessary to maximise carbon credits. We apply the findings to the four types of Australian vegetation projects that have been registered with the Australian Government's Emissions Reduction Fund since 2012: avoided deforestation, managed regeneration, farm forestry and tree planting. We find limited evidence in the biodiversity-ecosystem function literature for a trade-off between biodiversity and carbon stored in above-ground vegetation biomass; rather we find evidence for neutral or positive relationships. Further, additional benefits of plant diversity to carbon storage, rarely accounted for in vegetation projects, include increased soil carbon storage, stability and ecological resilience to disturbances. Our findings suggest opportunities for enhancing biodiversity in vegetation projects, for example through more diverse plantings, or manipulation of herbivores or plant propagules in avoided deforestation and managed regeneration projects. More research is needed to understand the contribution of faunal diversity to ecosystem functions and to manage fire in vegetation projects. We conclude that vegetation projects can aim to benefit biodiversity without compromising carbon credits.