Dr Pernille Holtedahl                            CAP0057

Additional written evidence from Dr. Pernille Holtedahl, Imperial College London

I’d like to briefly cover two points which we didn’t discuss, but which are central to the overall subject of The Role of Natural Capital in the Green Economy and to re-iterate a point I made in my deposition.

1. On the opportunities that voluntary biodiversity action by the private sector holds. Such actions are sometimes pointed to as an alternative to regulatory-driven actions or as somehow miraculously expected to follow in the wake of transparency and awareness initiatives such as TNFD. However, in a study carried out last year (Holtedahl et al., 2023, Corporate action on biodiversity: an exploration of drivers), we found that:

1. Biodiversity is pursued only when it delivers co-benefits or win-win outcomes alongside other objectives (e.g. ‘tagged onto’ climate action, social justice, supply chain security).
2. Most corporations will not act on their own on biodiversity, and certainly not at the scale required.

It follows that:

1. Policymakers will have to address the market failure. and public goods nature of biodiversity through stronger regulation or incentives driving corporate action. Issues of scale and coordination and the interconnectivity of large ecosystems make it difficult for corporations to act individually – further pointing to a coordinating and catalytic role of governments.
2. Since corporations do take action where biodiversity appears alongside multiple co-benefits, Government incentives should seek to encourage investments in areas which provide win-wins – e.g. mandating the use of ‘green’ rather than ‘grey’ infrastructure when possible and incentivising supply chain investments in biodiversity (so, Scope 3, which also brings in the international dimension of finding solutions to the biodiversity crisis). This relates to what I referred to in my oral evidence as mainstreaming nature into all assets and the economy as a whole.

2. On where to focus biodiversity efforts -where is the biggest bang for the buck? Since 70% of UK’s land area is farmed and since agriculture is the primary driver of biodiversity loss, the management of agriculture must remain a key focus of the Government’s efforts to improve biodiversity. The members of the committee are aware of this and I know the Government is already developing several schemes for farmers, so the purpose of raising this point is simply to bring it to the foreground of the committee’s continued deliberations – especially since most of the committee’s discussions were around BNG which targets developers/the built environment.

In a 2022 study (Future of Food Part 3 – Can Markets Save Nature? Investing in Nature to Tackle Biodiversity Loss and Enhance Food Security, Oct 2022), colleagues and I highlighted the feedback loops between nature loss, climate change and food security and discussed eight instruments through which private investors can get exposure to the sector.

1. We concluded that while markets (and private investors) are worth exploring, they are unlikely to represent a significant solution to the nature investment challenge in the short to medium term. Since the consequences of nature loss are urgent and experienced now, Government must step up as well.
2. We also point to nature-positive and resilient agri-food systems as a key investment opportunity with tremendous growth potential (seven-eight-fold growth over next 15 years)

3. Finally, I’d like to re-iterate the point I made in my oral evidence that international evidence on the effectiveness of biodiversity offset markets is very mixed and indeed show predominantly poor success rates in achieving these markets’ objectives. Study 1 and Study 2 provide some evidence on this (meta studies). I bring up this point to underline the crucial role monitoring and evaluation will have to play in BNG and other markets going forward. And to – again- temper expectations on what we can expect from these new instruments/ markets.

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April 2024