Natural Course CAP0006
Written evidence submitted by Natural Course
Response from Natural Course on the inquiry into the current and potential future role of natural capital in the green economy, and the Government’s proposals to increase private investment in measures to support nature recovery.
What potential contribution can private capital investment make to measures to secure nature recovery?
With regards to River Basin Management Plans, the current investment requirements are stated as £87 billion (£51 bn present value) over 37 years.
Ref 3.2 Investment requirements for England’s river basin management plans - GOV.UK (www.gov.uk)
Private capital investment can be used to fill the gap between the funding that is available and the funding of what is required to protect and improve the water environment.
A healthy business relies on a healthy environment, and by investing in nature recovery there are clear benefits to businesses.
However, it is unrealistic to expect private capital investment to provide 100% of the funding, so a blend of public and private investment is required. This blended financing will secure larger post of money (and will also involve new and different stakeholders who will provide a different outlook and the outcomes will bring about multiple benefits).
For example, United Utilities ‘Catchment Nutrient Balancing’ trial on the River Petteril helped enable partnership working with Nestle and First Milk Ltd. The piloting of nutrient trading and catchment markets through demand-led models (Landscape Enterprise Networks) delivered joined-up investment in the catchment.
Transforming the River Petteril (unitedutilities.com)
Another example is Sainsbury’s purchasing the ‘replenish volumes’ of water associated with natural flood management interventions as part of the Wyre Natural Flood Management project and benefiting from water being stored in the catchment - Water neutrality at Sainsbury’s – Sainsbury's (sainsburys.co.uk)
Private capital investment should not impact negatively on the environment. All development should have a positive impact/improvement, which should be felt locally through benefit to the local environment and economy (rather than off-setting outside of the catchment).
Private investors appear to be looking for large-scale, multi- million pound projects (for them to get a decent return on investment.) In our experience, most ‘on the shelf’ projects are smaller scale, therefore a change in approach is required.
How can investment best be aligned with environmental benefits, so as to achieve or surpass the Government’s targets for nature recovery?
Government targets (Environmental Improvement Plan) should be broken down at a landscape level, as this would enable a more targeted approach.
Investment needs to be aligned to ensure delivery in all areas of the country. Need to use data to identify where environmental benefits are most needed and will have the most impact. However, it is worth noting that there is a difference in the cost of delivery between rural and urban areas.
There is a disconnect between short and long-term investments – Government funding is year on year, private investment can be longer-term and therefore more stable and secure. Longer term funding can help deliver interventions at scale, however many of the smaller charities are not always set up to deliver at scale, therefore an option could be to collate smaller projects to make a portfolio. For example, habitat banking - where you create a ‘bank’ of small projects to aggregate making it more attractive to investors. The Greater Manchester Combined Authority have been trying to do this through Biodiversity Net Gain across Greater Manchester.
Private capital investment tends not to be altruistic, and often needs to have a commercial benefit. This could be overcome via corporate social responsibility. Examples of where private investment has delivered a return to the business include Mayfield Park in Manchester and demonstrates how investment into the environment brings in socio-economic benefits, as well as environmental benefits – this was a big investment in green space to begin with, then partnered with businesses to generate new businesses and apartments to generate and stimulate the local economy
What contribution will data from the Natural Capital and Ecosystem Assessment (NCEA) programme make to the objective measurement of changes in environmental outcomes?
Metrics and their standardisation are important, however local geography needs to be taken into account too.
There are a number of natural capital tools available, so industry standardisation with all of the data being in one place and easy accessible would be beneficial.
What role does the UK have in establishing international standards for natural capital investments, alongside other jurisdictions and financial centres?
There are a number of natural capital projects in the UK that are exemplars. Natural Course has delivered a number of natural capital projects and showcased these to European partners. This experience with natural capital puts the UK in a great position to input to international standards.
September 2023