Investing in UK nature to become nature positive

Last updated: 12th September 2023

It is tempting to think of restoring nature in far-off places when planning how your organisation can reach net zero and become nature positive – but opportunities to invest to achieve your carbon, biodiversity and community aims right here at home in the UK are growing fast. Bruce Howard, curator of the Nature Finance UK Conference 2023 taking place on 26 September, explains.

The UK is one of the world’s most nature-depleted countries in the world. The Biodiversity Intactness Index (2021) by the Natural History Museum found that the UK was in the bottom 10% globally, came bottom of the G7 and has just half of its biodiversity left compared to a global average of 75%. Similarly, the State of Nature Report (2019) found that 57% of UK waters had their seafloor habitats disturbed by bottom contact fishing between 2010-2015.

Economic analysis carried out in 2021 estimated that £44 billion to £97 billion above current public sector commitments is required for the UK to meet nature-related outcomes through to 2031.

The good news is that the UK is emerging as a global leader in finding opportunities for private money to flow into this gap. This presents opportunities for companies who buy and invest, for example through carbon credits, as well as the land and marine managers who can supply the necessary projects at scale. Government initiatives such as the Natural Environment Investment Readiness Fund in England and the Facility for Investment Readiness in Nature Scotland are also enabling the development of UK nature finance markets. These are supported by initiatives such as the British Standards Institution’s Nature Investment Standards Programme.

This year saw the inaugural review of the UK’s nature finance project pipeline, the Nature Finance Review 2023 by the Ecosystems Knowledge Network (EKN). This identified 219 projects actively seeking nature finance right now or in coming months as they become ‘investment ready’. These range from grassland and woodland restoration projects, to wetlands, waterways, heathland and scrub, and ‘enabler’ projects, such as project collaborations and online trading platforms. The report profiles some outstanding case studies of enterprising projects around the UK, such as the initiative of Wilder Carbon Ltd at Honeygar Farm in Somerset and the work of Highlands Rewilding in Scotland.

Of course, there are challenges to overcome as nature finance develops, including how to aggregate projects so as to offer the scale required by larger investors, and how to ensure that all transactions are of the highest integrity (including providing community benefit). Organisations also need to assess their aims for trading or investing in nature’s services and be clear about how to report against their objectives. Specialists, such as Biodiversify, are forming to advise on corporate biodiversity strategy and the Taskforce on Nature-related Financial Disclosures is set to publish its final framework later this month providing a clear reporting methodology; a huge step forward for businesses.

Whitni Thomas, Head of Corporate Finance, Triodos Bank UK explains how “nature finance projects on the ground are telling us that developing revenue streams is the biggest challenge. But the requirements of capital providers shouldn’t dictate the development of the market. Finance should serve the needs of the real economy and society, and that includes nature.”

Nature finance has the potential to connect financial institutions and large corporates with relatively small enterprises around the UK and the local communities in which they operate. Successes so far have depended on establishing effective ways of measuring outcomes, as well as collaboration between previously disparate groups. It is likely that the ongoing success of the sector will continue to depend on this approach.

Naomi Conway, Director, National Parks Partnerships says “the time for collaborative action and partnerships at scale is now. UK nature restoration is moving from investment concept to investable reality. Done right, nature finance can drive powerful climate and biodiversity action across the UK’s landscapes.”

James Farrell, Head of Rural, Knight Frank adds “UK plc, landowners and farmers have a wonderful opportunity to work together to help solve some of society’s big issues. Climate change and habitat degradation are at the top of the list of challenges and nature-based solutions provide opportunity and hope.”

What is clear is that the UK nature finance market is evolving rapidly and for those organisations brave enough to move first, the rewards for their business and UK nature will be enormous.

If you’d like to discover the latest in UK nature finance, why not join EKN’s Nature Finance Learning Hub or get tickets to their sixth natural capital conference, Nature Finance UK Conference 2023 on 26th September at Guildhall in the City of London. See UK nature finance in action and discover how natural capital finance can enable your organisation to become nature positive. With special thanks to our conference partners the Green Finance Institute, the CLA, and edie; our Host Sponsor the City of London Corporation; and Lead Sponsors National Parks Partnerships, Triodos Bank UK and Knight Frank.

EKN is an award-winning non-profit network for the exchange of innovation in the stewardship of land, water and nature across the UK. Membership is free.

Article by Bruce Howard, Director, Ecosystems Knowledge Network (EKN).

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