New nature markets principles unveiled to combat greenwashing in offsetting
The Wildlife Trusts, RSPB, Woodland Trust, and the National Trust have collectively unveiled a set of principles aimed at enhancing the integrity and effectiveness of nature markets linked to carbon and nature credits.
These principles, formulated in collaboration with Finance Earth and Federated Hermes, seek to ensure that nature markets deliver genuine benefits to nature, climate and society.
The newly introduced ‘Nature Markets Principles’ encompass seven key project development principles from the supply-side perspective including science-based nature recovery, environmental and social safeguarding, additionality, permanence and financial prudence, seek co-benefits, verifiability, and transparency.
On the demand side, two key principles are designed to be applied by ecosystem service buyers and investors including buyer screening criteria and commitment to best practices.
Finance Earth, in partnership with Federated Hermes, will oversee the UK Nature Impact Fund, a Government-backed effort aimed at fostering considerable institutional investments in nature restoration projects across the UK. It will adhere to and implement the Nature Markets Principles across all its activities in the UK’s nature markets.
Finance Earth’s chair James Alexander said: “Enshrined in the principles are the need for projects to be science-based, transparent and verifiable, ideally in perpetuity and benefiting local communities as well as society more broadly.
“There are also stipulations about who the producers of the credits will do business with, ruling out those companies dependent on environmentally damaging activities such as fossil fuel extraction.”
Greenwashing in nature markets
Nature markets are grounded in the trading of environmental credits, which encompass carbon credits, biodiversity units, nutrient credits, and payments for natural flood management.
These credits stem from nature-based solutions that have the capacity to deliver multiple benefits for society and the environment, alongside generating new revenue streams for rural communities and agricultural practitioners.
The urgency for this development arises from the dearth of regulations governing these nascent markets, potentially creating a ‘wild west’ scenario where substandard or lacklustre initiatives could permeate the space, enabling certain industries or businesses to engage in greenwashing.
Furthermore, the groups warn that such lapses in oversight could curtail opportunities to maximise advantages for both the people and nature.
A recent study by UC Berkeley and Carbon Market Watch highlighted a significant gap in the effectiveness of carbon prevention and removal efforts in various forest projects. The study determined that only one in every 13 credits truly delivers a net benefit in terms of climate impact and community benefits.
This underscores the need to ensure the credibility and transparency of the market for biodiversity credits to prevent misleading claims and greenwashing.
UK lags in its nature commitments
The UK faces an annual funding gap of approximately £6bn in its commitments to rejuvenate and conserve its natural assets across both land and sea.
To bridge this considerable deficit, the Government has set a target of increasing private investments in nature by a minimum of £500m by 2027, with a subsequent rise to more than £1bn by 2030.
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