Financing the UK’s green (and blue) future

With input from more than 300 experts across 50 organisations in the business, finance, government, land management, and environment sectors, the Financing UK Nature Recovery Coalition’s: Recommendations and Roadmap Report launched today sets out recommendations to make the UK an attractive market for nature-based investment.

Led by the Broadway Initiative, Finance Earth and Green Finance Institute, the report draws on the landmark Dasgupta Review on the Economics of Biodiversity in 2021, which called for changes in measuring economic success to protect the economy, enhance prosperity, and that of the natural world. It was officially launched today with a virtual event and panel discussion featuring some of the expert contributors.

It is estimated that there is currently a £5.6bn finance gap if the UK is to meet its key nature goals, which cannot be filled by public or philanthropic funding. It is hoped that the suggestions in this report will break down current barriers to private investment in nature, including:

• a systemic undervaluation of nature
• a lack of tested revenue streams and standards
• misaligned and complex environmental regulation
• expertise and capacity gaps.

Those recommendations were centred around three key areas:

• Market Design – addressing the need for new drivers for investment in nature recovery, such as such as nature-based targets, reform of existing regulations to remove barriers to private investment, and new institutional arrangements to regulate and provide independent market oversight
• Market Governance – establishing consistent and rigorous standards for measuring and accrediting the environmental benefits provided by nature-based solutions, including improved data for measuring those environmental outcomes
• Market Operation - to provide the market infrastructure needed for efficient trade in environmental services and mechanisms for local market delivery that provide opportunities for local businesses and benefits for local communities.

Rivers Trust CEO Mark Lloyd shared his thoughts on the report: “This is an important report that identifies the key challenges, and more importantly many solutions, to secure substantial new private investment in restoring nature. This is absolutely vital if we are to reverse the steep decline in biodiversity, build resilience and tackle the climate crisis because we cannot do it with public funding alone. The Rivers Trust has a number of pioneering projects being delivered in partnership with the private, public and voluntary sectors and we look forward to working with the Financing Nature UK Coalition to continue identifying new ways of working collaboratively.”

“One thing HM Treasury could do instantly to enable private investment would be to extend the Social Investment Tax Relief (SITR) Scheme which enables private investors to reclaim tax on the interest on investments. The scheme is due to be cancelled later this year.”

What does this mean for rivers?

Creating more accessible and attractive environmental markets could have a huge impact on restoring rivers and waterways up and down the country.

We know that there are lots of farmers and landowners who want to make improvements to their land to benefit the environment. We also know that many private organisations and corporations are willing to invest in nature as part of their corporate social responsibility activities. Currently, the barriers mentioned earlier have made it very difficult to connect these groups to implement nature-based solutions on a large scale.

If the recommendations in this report are brought forward, businesses will be able to pay for green infrastructure such as wetlands, woodlands, and sustainable drainage systems. These assets support wildlife and address environmental issues including flooding and over abstraction. They also make our landscape more resilient to the impacts of climate change, which in turn helps to safeguard economic interests.

The Rivers Trust has already been a pioneer in driving environmental markets. Last week, the Wyre Natural Flood Management (NFM) Investment Readiness Project got underway. A pilot project for Defra’s Natural Environment Investment Readiness Fund, the Wyre NFM project is the first of its kind. Over the next nine years, it will deliver nature-based solutions to communities at risk of flooding Lancashire. The initial investment of public and private funds will be repaid by beneficiary organisations in the area - whose businesses will benefit from the environmental improvements - through the sale of ecosystem services. Read more about this ground-breaking project below.