The City of London Corporation                            CAP0020



Memorandum from the City of London Corporation
Submitted by the Office of the City Remembrancer




  1. The City of London Corporation is the governing body of the Square Mile, home to many of the institutions which make up the international financial services based in London.


  1. In September the Corporation, in partnership with PwC, and with support from the Green Finance Institute (GFI) published a report titled A global centre for nature finance. The report sets out a vision for what an innovative and world-leading nature finance sector could look like, assesses the readiness of the UK to be the global centre for nature finance, and outlines a roadmap to achieve this.


  1. The report recommendations target action from UK Government, regulators, and the financial and related professional services sector. These recommendations were developed based on desktop research, international case studies, and interviews across the nature finance ecosystem.


  1. The report was launched with a webinar including speakers from the FCA, the GFI, Lloyds Banking Group, PwC, and the City of London Corporation. A recording of the webinar is available here.


  1. This inquiry response draws upon text from the report, with further detail available in the report itself.



      This section addresses call for evidence question 1 and 7.


  1. Global demands and pressures on nature have dramatically increased, posing significant economic risks as companies rely directly and indirectly on nature’s resources and ecosystem services. 55% of global GDP, equivalent to about £45.8 trillion, is moderately or highly dependent on nature.[3] By 2030 nature loss could cause global GDP reductions of £2.1 trillion each year.[4] To halt biodiversity loss, limit global average temperature rises to 1.5°C, and achieve land degradation neutrality, annual investments in nature-based solutions will need to more than triple by 2030 to US $484 billion.[5]


  1. Unlocking private finance for nature will be a crucial step in bridging this finance gap, representing a clear opportunity for investors, with several factors pointing to the long-term value of investing in nature-related projects. This includes investing defensively to safeguard existing businesses and revenue streams, but also to leverage the opportunities from changing demands from consumers and new markets brought about by new targets and commitments on nature.


  1. To bring these opportunities to fruition, an enabling environment must be created through supportive policies and regulation alongside the development of bankable opportunities that lenders and investors can understand.  The UK can take a leading role in helping to develop these products and services and the supporting ecosystem to support businesses to understand and act on their nature-related impacts, dependencies, risks and opportunities.




  1. The following five recommendations address the need to mobilise private capital and create opportunities for investments in nature to unlock the capital flows required for a nature-positive transition.



a)      Provide clarity on how the UK will operationalise the commitments it has signed up to under the Global Biodiversity Framework, especially with regards to 30 by 30 and phasing out subsidies which are harmful for nature.

b)      Develop sector-specific targets and roadmaps (focusing on high impact industries) for reducing pressure on nature and facilitating nature restoration and protectiondrawing on appropriate inputs from industry bodies, the private sector, academia, and NGOsto support the delivery of the UK’s national nature-related targets and international commitments and provide certainty to the real economy and investors.



a)      Provide price certainty to project developers investing in emerging solutions, for example by implementing a guaranteed price for project developers investing in the creation of biodiversity and nature-based carbon credits.

b)      Develop clear long-term guidance outlining how subsidised programmes (such as Environmental Land Management) will be linked to nature markets in the future.

c)      Integrate nature into existing R&D funding models (such as the British Patient Capital Programme) and consider utilising tax incentives for investors to encourage the development of new technologies and nature-related solutions, as well as developing bespoke new funding models.



a)      Leverage similar models from climate finance to de-risk nature-related investments, for example by establishing a major domestically focused impact investing organisation for nature.

b)      Increase the availability of concessional capital or financial support for nature-related transactions through existing UK public financial institutions, especially British International Investment and UK Export Finance.


      This section addresses call for evidence question 3 and 6.


a)      Expand and develop the regulatory market for nature credits, for example, by:

b)      Consider integrating nature-based carbon credits into the UK Emissions Trading Scheme, provided appropriate MRV requirements are included to ensure integrity.

c)      Lead the development of voluntary demand for biodiversity credits, including appropriate standards and claims guidance.


The UK’s financial markets are ideally placed to support the market for nature. Over the past several years, leading financial institutions (e.g., LSEG and ICE) have fed into international standards and have developed products supporting a high-integrity voluntary carbon market (VCM). The development of the VCM has potential learnings for the nascent nature market, as both seek to establish market-based pricing for things which historically have been used at zero cost (these being carbon emissions and degradation of nature, respectively). The UK should seek to leverage the knowledge base which has developed in the private financial markets in support of VCMs to facilitate the flow of international capital into the development of the UK’s natural capital.


It is essential that nature credit markets are created with integrity and trust, in a way that brings together all parts of the nature finance ecosystem, including local communities. When developing a voluntary market for biodiversity credits, lessons can be learnt from the development of voluntary carbon markets, for example:

         Nature-based solutions are complex and varied and therefore clear and strong integrity standards are required to ensure the quality of underlying projects and credibility of buyers claims.

         Standards need to be sufficiently ambitious and robust, but must also be cognisant of current technology, data and scientific understanding and flexible to adapt to new developments and learnings over time.

         Strong linkages must be developed between players in the ecosystem including the science and research sector and NGOs, with robust feedback loops.

         Clear guidance on best-practice for voluntary demand is required to ensure credibility, provide certainty to buyers, and ensure transparency in the market.

         Buyers must conduct appropriate due-diligence, and should develop a comprehensive understanding of the market, and the available tools, data and labels necessary to assess credit quality. 

         Independent assurance processes are crucial for avoiding perverse incentives.

         Indigenous peoples and local communities must be included in the development of the market, with fair and transparent agreements with regards to benefit sharing.



a)      UK-based financial institutions should invest in the deployment and scaling of innovative nature financing solutions, to capitalise on expected market demand. This could be supported through relevant industry forums sharing best practice examples of when such solutions are launched in the UK or other jurisdictions (for example through initiatives such as the GFI’s UK Financial Institutions for Nature Group and the Natural Capital Investment Alliance). In the immediate term, insurance firms and sources of more patient capital may be better placed to lead on this.



      This section addresses call for evidence question 2.


  1. The report shares two recommendations addressing the need to align the financial system with UK nature goals, with the objective of supporting the mainstreaming of nature into financial decision making and enhancing the current, largely climate-focused, regulatory agenda.



Informing Investors and Consumers: The UK Government is introducing requirements for businesses to disclose decision-useful information on their nature-related impacts, dependencies, risks and opportunities.

a)      Encourage businesses to voluntarily align their reporting with the Taskforce for Nature-related Finance Disclosures (TNFD) Framework in anticipation of future regulation.

b)      When designing transition plan disclosure requirements as part of UK SDR, incorporate the UK Transition Plan Taskforce (TPT) outputs, including the TPT’s anticipated guidance on nature. 

c)      In its autumn consultation on the UK Green Taxonomy, it would be beneficial for the UK Government to provide clarity on timings for developing Technical Screening Criteria for the nature-related objectives and its approach to the principle of Do No Significant Harm.


Shifting Financial Flows: The UK Government and regulators have begun work on ensuring that financial flows across the economy shift to align with the UK’s environmental goals, including on nature.

a)      To ensure coordination across the economy, the UK Government could consider exploring how private and other real-economy companies are approaching sustainability (including nature-related) governance and culture. This could help drive transformation within the real economy as well as in the financial services sector.


a)      The PRA should consider publishing specific supervisory guidance for the management of nature-related financial risks.

b)      The Bank of England should seek to understand nature-related risks across the financial system in anticipation of the possibility of a future nature-focused stress test for banks and insurers.



      This section addresses call for evidence question 8.


  1. Building on its world-leading climate regulation, the UK is now well placed to lead the way on nature and has already begun to do so through flagship regulatory and standard-setting initiatives such as the UK Sustainability Disclosure Requirements (SDR) regime and the recently launched Nature Investment Standards Programme.[6]


  1. In advancing its regulatory framework, the UK has sought to prioritise international interoperability and intends to base its regulation on leading international standards. We are supportive of this approach.


  1. Acknowledging the risks facing the UK economy as a result of nature loss, the Government should consider encouraging businesses to voluntarily align their reporting with the TNFD Framework while the International Sustainability Standards Board (ISSB) is advancing its proposed project on nature. This would build momentum and capabilities on nature-related disclosures ahead of the ISSB finalising its project and UK reporting requirements being introduced via UK SDR. While the final regulatory requirements may not align exactly with the TNFD Framework, early adoption by organisations would help businesses lay the groundwork for nature-related reporting and ensure that they are prepared for eventual regulatory requirements.


  1. The UK should aim for its regulation to serve as a model for other countries incorporating nature into their regulatory frameworks. This would help position the UK as a leading centre for nature finance.


  1. The UK Government has demonstrated early support for international organisations developing standards for the voluntary carbon market, such as the Voluntary Carbon Markets Integrity Initiative and the Integrity Council for the Voluntary Carbon Market. It should consider doing the same for voluntary biodiversity credits, with consideration for future pathways of such standards into regulation.


  1. The UK should also seek to play a leading role in establishing international standards. The UK’s Woodland Code and Peatland Code are often cited as examples of international best practice for providing assurance and clarity to investors that woodland and peatland-based projects are fulfilling their climate objectives. The UK should seek to leverage the institutional knowledge which has enabled the development of these codes to lead in the development of international standards for natural capital investments. 


September 2023

[3] PwC (2023) Managing nature risks: From understanding to action

[4] WEF (2022) Scaling Investments in Nature: The Next Critical Frontier for Private Sector Leadership. (original value reported in US$)

[5] United Nations Environment Programme (2022) State of Finance for Nature

[6] BSI (2023) BSI and Defra launch Nature Investment Standards Programme