British Standards Institution CAP0031
Written evidence submitted by the British Standards Institution (BSI)
Response to Environmental Audit Committee Inquiry The role of natural capital in the green economy
Supporting a nature positive future
1. BSI is committed to developing and encouraging the use of standards to meet environmental targets, reverse biodiversity loss and use natural capital to support the green economy. We have partnered with Defra to build a coherent and transparent governance market framework for ecosystem services through the development of a high-integrity standards framework for UK nature markets.
2. BSI published an update report, Integrity Principles for Nature Investment Standards earlier this year. This report sets out the initial priority areas of focus for the BSI programme, including an overarching standard for high-integrity principles for all nature markets, specific quantification standards for carbon, biodiversity and nutrients markets and additional areas for further scoping. The aim is to align to and build upon the huge amount of work being driven by industry in the UK and internationally. Further standards will provide more detailed requirements and guidance to operationalize the principles with consistent approaches to governance, measurement, reporting and verification for nature markets.
3. BSI supports the government’s 2023 Green Finance Strategy and Defra’s policy framework and ambitions for nature markets and nature projects. BSI has also been an active contributor to the recent work of the Taskforce for Nature-Based Disclosures (TNBD) and the Taskforce on Nature-related Financial Disclosures (TNFD) metrics for companies and financial institutions to embed into their investment decision making. BSI has been supportive of the development of a National Capital and Ecosystem Assessment.
4. BSI has a range of internationally recognised standards for environmental management, including emission calculation and measurement methodologies that can align to and aid the achievement of green finance objectives, including:
5. BSI supports Defra’s wider environmental targets and has developed standards for nature capital accounting and a range of standards to measure and address biodiversity loss, including:
Green Finance and Ecosystem Service Markets
6. Standards are playing an important role in facilitating green finance and the markets for ecosystem services. The Green finance agenda is accelerating globally with more countries developing taxonomies, sustainability reporting requirements and green product labels. The UK has ambitions to be a global leader in green finance and its Greening Finance Road Map aims to deliver rapid adoption of corporate disclosure, alignment with global standards and a leading position on transition for London’s financial markets. The scope of the Green Finance Strategy is also expanding beyond carbon emissions and into nature and biodiversity. BSI endorses these widening objectives, and its standards and governance frameworks support this strategy. In particular, the IC-VCM and around the pillars of financing green and greening finance to support the development of high integrity voluntary markets for carbon and other ecosystem services.
7. Markets for ecosystem services (including those for carbon, biodiversity, water quality and flood management) are a key enabler of scaling up private finance into nature restoration and sustainable farming and achieving environmental targets. The current ecosystem service markets, both in the UK and globally, are at an early stage of development, with a confusing landscape with various private ‘codes’ and ‘schemes.’ There is a role for government in enabling these markets to develop effectively and efficiently and function with integrity, and for standards to help introduce some quality guardrails and harmonise existing good practice. BSI is partnering with Defra to design and roll-out high-integrity principles for ecosystems and best practice, plus the supporting framework and delivery road-map needed to accelerate market adoption.
About BSI
8. BSI is the UK’s National Standards Body (NSB), appointed by government to oversee the development and management of national standards by UK stakeholders, to represent the UK at the international and European standards organisations and to provide the infrastructure for UK experts to participate in international standards setting activity. BSI operates in accordance with a Memorandum of Understanding with the UK Government and has a public function in support of the UK economy and society. We bring together over 13,500 stakeholders (including government, businesses, and consumers) to facilitate the development of “what good looks like”. BSI is sponsored by the Department for Business, Energy & Industrial Strategy and works across government and with regulators to advise on the use of standards to support the delivery of policy objectives.
9. Standards offer a tool to deliver influence on an international scale for the benefit of UK and global stakeholders. The UK participates in more international (ISO) standards committees than any other country so is well placed to lead the development of new standards for the benefit of UK stakeholders. Over 95% of our work is on international standards. For transboundary issues such as climate change and low emission production and supply chains, the global dimension is key.
10. Standards are a critical tool to achieve industry transformation and to accelerate green innovation. BSI provides the national, regional, and international standards platforms for innovators to shorten their innovation cycles and bring new products to market. We are a partner of Innovate UK, and our work is referenced in the National Innovation Strategy, Net Zero Strategy, the Integrated Review and the TIGRR report.
11. BSI supports the path to net zero. Standards provide knowledge, guidance, best practice, consistent and credible methodologies, and governance frameworks, plus assessment techniques that can be used by organizations to accelerate the transition to net zero. This is why we facilitated the London Declaration, a commitment by ISO signed in September 2021, for all members to actively consider climate change in the development and revision of all international standards and to facilitate the involvement of civil society and those most vulnerable to climate change. The London Declaration was referenced in the government’s Net Zero strategy published in October 2021. BSI is a global convenor in net zero and we are playing a leading role in several key initiatives:
12. BSI has published dedicated guidance for organizations on net zero to support transition plans and accelerate their net zero ambitions.
Consultation Questions:
13. We have these specific comments on the consultation questions:
Private capital investment has an important contribution to make within an established and coherent, transparent framework that works across all ecosystem services.
Investment can be best aligned if it is made in accordance with the governance, and reporting frameworks established which will give clear transparency on whether the Government is achieving its target for nature recovery.
The markets for ecosystem services (including those for carbon, biodiversity, water quality and flood management) are a key enabler of scaling up private finance into nature restoration and sustainable farming. Accelerating the development of these markets requires:
BSI addresses this in its update report on nature Investment Standards. The development of high-integrity markets in ecosystem services will bring much needed confidence and transparency.
We agree that the Natural Capital and Ecosystem Assessment (NCEA) programme is vital to gauging the extent, condition and change over time of England’s ecosystems and natural capital, and the benefits to society, and demonstrating the value of managing our natural capital assets. This data is vital to informing programmes for ecosystems covering air quality, biodiversity, carbon storage, habitats, natural flood defences and resilience.
The UK Green Taxonomy can support high-quality investments through a clear classification of sustainable activities, the facilitation of green bonds and securities, ensuring ongoing compliance and linking to international standards.
We suggest that the Taxonomy requires transparency, life cycle analysis, risk analysis, third-party verification and regular reporting.
Market confidence comes through ensuring financial and environmental integrity, with the transparency and common benchmarks and framework being provided. That is, assurance that what is being bought is ‘real’ and that there is low risk of greenwash.
The current ecosystem service markets, both in the UK and globally, are at an early stage of development, with a confusing landscape comprising various ‘codes’ and ‘schemes’ designed by private initiatives but not underpinned by an agreed and coherent framework. This is leading to confusion, high transaction costs and lack of market confidence.
There is a role for government in enabling these markets to develop effectively and efficiently and function with integrity and for standards to help introduce some quality guardrails and harmonise existing good practice. BSI has partnered with the Green Finance team at Defra how best to design such a programme of standards and the supporting framework and delivery road-map needed to develop a coherent framework for ecosystem markets. BSI published an update report following BSI’s initial discovery stage, “A high-integrity standards framework for UK nature markets” earlier this year.
The UK is playing a key and leading role and establishing, by example and through our membership of international standards organisations, the basis for adoption into international standards for natural capital investment in other jurisdictions. Standards are playing a significant role in facilitating green finance and the markets for ecosystem services. The Green finance agenda is accelerating globally with more countries developing taxonomies, sustainability reporting requirements and green product labels. The UK has ambitions to be a global leader in green finance and its Greening Finance Road Map aims to deliver rapid adoption of corporate disclosure, alignment with global standards and a leading position on transition for London’s financial markets. The scope of the Green Finance Strategy is also expanding beyond carbon emissions and into nature and biodiversity. BSI endorses these widening objectives, and its standards and governance frameworks support this strategy. In particular, the IC-VCM and around the pillars of financing green and greening finance to support the development of high integrity voluntary markets for carbon and other ecosystem services.
14. BSI would be pleased to discuss any aspect of this submission and provide oral evidence to the Inquiry, if helpful.
Please contact:
Melanie Worthy, Manager, Industry and Government Engagement
British Standards Institution
Head of Sustainability
British Standards Institution
September 2023