Wildlife Works and Sniffer                            CAP0035

Written evidence submitted by Wildlife Works and Sniffer

What potential contribution can private capital investment make to measures to secure nature recovery?
 

• Follow principles for responsible investment in nature, such as those set out in Scotland. 
• Include nature-related risks in disclosure reporting, following recently issued recommendations from TNFD.
• Take a ‘nature-based-first’ approach to investments, rather than relying on standard grey infrastructure by default. When grey infrastructure required, it should be alongside NbS when possible. 
• Commit to sharing data on performance of nature investments. 

How can investment best be aligned with environmental benefits, so as to achieve or surpass the Government’s targets for nature recovery?

• Ensure that there are credible and accessible markets for nature-related outcomes for a wide variety of investments.
• Take a portfolio/aggregation approach for managing a range of smaller / lower value investments. 
• Ensure that nature outcomes are embedded in market codes for other outcomes, including in relation to GHG mitigation, carbon sequestration, infrastructure, and climate resilience investments.
• Explore innovative means of measuring value uplift from nature-related interventions, including on uplift in asset value / rental value; and benefits to industries dependent on nature – e.g. freshwater aquaculture, whisky, etc.

What measures are necessary to (a) establish and (b) maintain the high-integrity markets in ecosystem services which are expected to attract private investment? What confidence do investors currently have in the UK’s arrangements for these markets?

• Best to focus on ‘ecosystem integrity’, rather than habitat-specific measures, as this can then be applied at a portfolio level, and consider all types of relevant habitats and ecosystem functions.
• Have a common, public database.
• Focus on regional planning and implementation – individual actions and investments are likely to lead to a fragmented, less targeted, and less effective response to nature and climate crises. Regional planning approaches can also then maximise connectivity across ecosystems towards an ambition of creating ‘nature networks’ which positively reinforce one another.
• Need to clearly demonstrate value of both the ecosystem service, and related value uplifts that can be achieved through financing and investing in nature recovery. That includes water quality and temperature, impacts on economically critical species, impacts on land and asset value, etc.
• Incentivise locally led projects, nested with regional plans. Criticism of nature projects in the UK often focuses on land ownership. Individuals/corporates can purchase land to create nature-based projects. This can be done without the free, prior, and informed consent of local communities, increasing the investment risk of the project.
• Support market infrastructure that promotes or enforces best practice when it comes to local community participation in nature projects, such as the UK’s Nature Finance Certification Alliance.
• Stimulate demand for voluntary credits. Demand relies heavily upon the voluntary action of corporates. The UK could increase demand, as it is through the biodiversity net-gain policy, through regulation. However, this example only stimulates demand for a few buyers for compliance purposes, and not voluntary markets. Several countries have integrated nature credits into carbon pricing regimes. For instance, domestic nature credits can be used in lieu of purchasing emission allowances or paying a carbon tax.
• Clear claims guidance, and the allowance of claims, both nature and climate related, must be provided.

How can the proposed UK Green Taxonomy support high-quality investments which deliver genuine benefits to nature? What financial disclosures should the taxonomy require?

• Needs to consider climate mitigation, adaptation, and nature, and make clear how common approaches can achieve multiple outcomes.
• Disclosure of risks from climate change impacts and nature depletion beyond the asset level – to include the operational level, supply chains, staff, etc.

How can the operation of natural capital markets ensure genuine net gains for nature? How do such markets address the risk of ‘greenwashing’ of investments and the offsetting of natural recovery in the UK against environmental degradation elsewhere?

• Has to focus on in-situ minimisation of harm, rather than ‘offsetting’. Offsetting should only be for residual environmental impacts that absolutely cannot be avoided.
• Follow guidance such as Kew Garden’s ’10 golden rules for tree planting’ which highlight the need to focus on resilient, native species and avoid monocultures, and ensure ‘right tree, right place’; as well as considering things like grassland and peatland regeneration.

What role can the UK’s financial markets play in developing the flow of international capital into the development of natural capital in the UK and globally?

• If the UK can establish itself as a highly credible, trustworthy, and transparent location for nature recovery initiatives, it can gain a competitive advantage over other areas, even if costs for restoration may be higher here.
• UK financial markets have to help shape that though and be ‘first movers’ in financing and investing in nature in the UK.
• The UK should define how corporates can use carbon and nature credits credibly, building on work being carried out by private initiatives. This should emphasise that the purchase of any nature credit should be only made following the steps of the mitigation hierarchy (avoiding and reducing emissions and environmental degradation must be prioritised).
• Provide guidance on how international credits can be used. Recommendations could align to the priorities of international agreements, such as the Paris Agreement and Global Biodiversity Framework, as well as bodies such as the Intergovernmental Panel on Climate Change (IPCC), International Emissions Trading Association (IETA) and the Climate Change Committee (CCC).
• Providing guidance on the role credits could play for hard to abate sectors, and those corporates who miss climate targets would fill a gap in current available guidance.

September 2023