The cross-party Environmental Audit Committee (EAC) has warned that, without substantial private investment and clear commitments from ministers, the UK may not meet its pledge to protect 30% of land by 2030 and offer communities greater access to nature.
In its report on the role of natural capital in the UK’s green economy, the committee urges ministers to set out the government’s support for Biodiversity Net Gain (BNG) and ensure that BNG delivers on the policy’s aspirations.
BNG drives investment in nature by encouraging developers to provide a minimum 10% increase in biodiversity, whether this is done on the development site, delivered somewhere else or by buying ‘credits’ from the government as compensation.
Since the government’s current growth agenda prioritises substantial housebuilding and large-scale infrastructure development, private investment in schemes such as BNG is expected to be critical to reversing the UK’s position as one of the most nature-depleted countries in the world.
Also read: Born to rewild: How nature shares are aiming to restore biodiversity to the UK
However, there has been speculation that the government may be wavering on its commitment to BNG, given recent proposals for a state-administered Nature Restoration Fund supplied by developer contributions. The committee said it fears a move away from BNG will cause uncertainty in nature markets and will have a negative impact on direct investment into nature restoration initiatives.
EAC chair, Toby Perkins MP, said: “No ifs, no buts: we need ministers to facilitate private investment by setting out a clear commitment to the Biodiversity Net Gain policy.
“Biodiversity Net Gain is a ground-breaking approach which can secure genuine and lasting nature recovery in tandem with development in every corner of the country. Speculation that it might be ditched in favour of a broad-brush approach to state funding of nature restoration at scale risks undermining market confidence and further depleting nature in some communities.
“There is a real opportunity, through the Government’s commitment to growth, for nature to grow hand in hand with the economy. Failure to do this properly, and to keep on top of which projects are being invested in, will see green spaces slip away from already nature-deprived communities.”
Strengthening BNG
The committee made several recommendations to strengthen BNG, including offering developers the ability to pool BNG projects to ensure that they can attract investments at scale.
Progress on BNG should be subject to annual review, and a comprehensive and publicly accessible register of the location of on-site and off-site assets under development— and the investors in each project—should be established, the committee also said.
More broadly, the government “should be clear about how it proposes to invest the ringfenced revenues from BNG credits”, the committee stated, and ministers should demonstrate that natural capital approaches are embedded into all decision-making across government. This should include a renewal of the government’s commitment to the principle that “economic and financial decision making… support the delivery of a nature positive future”.
The upcoming Spending Review should also be used to show how the government has taken a natural capital approach to evaluate spending decisions, as well as to set out how the approaches taken will grow the UK’s stock of natural capital.
At present, there is no clear method for the government to understand or assess progress towards the 2021 target to deliver £1bn of private investment into nature recovery by 2030. EAC, therefore, recommended that within 12 months, the government should provide a report to Parliament on current and projected levels of private investment into nature recovery in England.
The Committee also recommended the government undertake a specific assessment of how its proposed Nature Restoration Fund (to be provided for under the Planning and Infrastructure Bill, currently making its way through Parliament) is likely to affect the level of private investment into BNG projects. The government’s commitment to promoting natural capital investment in nature restoration “can be demonstrated by publishing a swift response to its current consultations on the operation of UK natural capital markets”.
Reaction
Catherine Spitzer, CEO of Environment Bank, commented: “We warmly welcome the Committee’s recommendations and support its clear call for ministers to confirm their unequivocal support for Biodiversity Net Gain. BNG is a demonstrable real-life success story – boosting rural economies, driving nature recovery, and supporting farmers, housebuilders and local authorities to build the housing and infrastructure the UK needs to achieve its ambitious growth targets.
“BNG is also unlocking the full potential of private finance for nature. It is creating a robust, investable market, mobilising hundreds of millions in private capital to deliver measurable environmental outcomes. In England, BNG is already generating £454.6m in annual economic value, supporting nearly 4,500 jobs and restoring over 17,000 acres of land each year.
“At Environment Bank, we manage 35 Habitat Banks, covering over 2,500 acres, and have generated more than 6,500 Biodiversity Units to support thousands of development projects. Crucially, over £240m of private investment has been pledged through our model, showing what’s possible when policy creates the right conditions for business to invest in nature. The government must now give the market the long-term certainty it needs to thrive.”
Heather Plumpton, head of research at Green Alliance, added: “Our economic system isn’t working when we destroy natural assets we depend on for future prosperity. The UK is one of the most nature-depleted countries in the world, and we need to dramatically scale up investment in nature restoration, as MPs have noted. Yet the £27.8bn of investment the government will make through the National Wealth Fund isn’t explicitly directed towards supporting the UK’s nature targets, on current plans. It’s critical that this is part of the NWF’s remit by law, and that the success of the UK’s new impact investor isn’t just defined by financial returns.”
