ENVIRONMENT BANK NEWS
Environment Bank's Chairman speaks at Environmental Audit Committee at Westminster
Our Chairman, Professor David Hill CBE, was recently invited to attend the Environmental Audit Committee where members discussed the role of natural capital in the green economy at the Palace of Westminster.
David was joined by panellists Dr Pernille Holtendahl from the Centre for Climate Finance & Investment, Professor Guy Standing from SOAS University of London, and Peter Bachmann from Gresham House.
Panellists were chosen to present oral evidence to 16 committee members who represent constituents from across the UK.
Biodiversity Net Gain (BNG) and restoration at scale
Panellists discussed the newly introduced policy for Biodiversity Net Gain (BNG) and how mechanisms introduced for compliance markets can guide standardisation for voluntary markets in the coming years. This includes, for example, the Biodiversity Metric established by Defra and Natural England which gives us a yardstick with which to measure biodiversity.
Peter Bachman commented: “The UK should applaud itself for the Environment Act. And that’s actually put a price on nature. And because of that, we are going to see really rapid action on creating additional biodiversity that wasn’t there before.”
When exploring the importance of large-scale restoration sites, David commented: “Biodiversity, by its very nature, if it’s at scale, is actually very untidy.” Continuing to say that is why off-site BNG can be preferable to attempting to restore nature at the development site itself where thriving nature in its raw form may be unsightly to people living nearby.
When asked about what happens to the viability of a habitat creation project if the investor pulls out mid-project, Peter Bachman discussed how Gresham House has taken steps to ensure that restoration schemes, such as BNG Habitat Banks, can be guaranteed for the long term.
Gresham House secure full funding for a nature project’s lifetime upfront with a letter of credit, like an on-demand bond. Peter encouraged this approach to be adopted more broadly to prevent project failures.
Transparency on monitoring, reporting, and verification
When discussing Environment Bank’s transparency, David explained “We deliver [...] monitoring and reporting which is completely transparent and we use a whole range of methodologies [such as] LIDAR, spectral reflectors, habitat condition monitoring, eDNA. [...] We do that because we know that the local planning authorities (in relation to BNG) just don’t have the resource, capacity, or people to do that.”
“If we are to make a ‘profit’ out of raising BNG Units then we ought to be in the position to provide that independent data that can be reviewed by everyone. It would be a poorly governed system if we keep the data to ourselves.”
Greenwashing and governance frameworks
When questioned about greenwashing, Peter said: “In respect of the Biodiversity Net Gain mechanism, the developer has a specific obligation to improve the biodiversity of the site and then they’re buying their Units and that’s directly compensating for the lost biodiversity there. [...] In that respect, the Biodiversity Net Gain Unit is quite complete, and it doesn’t allow people to greenwash.” He pointed out how attention to greenwashing will be vital as voluntary markets establish.
Peter described BNG as “a good example of how the UK government can take a leadership position in mandating the requirement to do biodiversity for someone that has an objective to pay and that has a profit – the developer,” and said that “You need to find ways in which you capture the ‘profit’ [...] in such a way that you can redirect it into something that has real, meaningful good for the planet.”
David then discussed the Taskforce on Nature-related Financial Disclosure (TNFD) and how frameworks like these can help us avoid greenwashing in the voluntary and compliance markets: “It isn’t about offsetting. [...] TNFD, as I understand it, is about changing behaviours throughout a supply chain to reduce impacts and compensating or going nature positive [...] by buying into ecosystem function restoration schemes like we are creating.”
He also elaborated on the gaps in environmental frameworks like BNG: “We feel that there should be a level playing field. On-site [BNG] should be under the same scrutiny [as off-site]. Because if you’re giving a developer planning permission on the basis of them doing BNG [...] on-site and it fails because they walk away [...] then you’re going to lose all that biodiversity value. It’s much better to put the liability into a third party who knows how to do that.”
Moving forward
As natural capital markets continue to develop, the Environmental Audit Committee gave MPs had the chance to understand more about how investors should measure natural capital assets and explore monitoring and reporting standards.
It’s clear that private investment will play a fundamental role in achieving net zero targets and the committee were able to explore how this investment can help contribute towards our nation’s environmental goals.
Importantly, rigorous data gathering, industry standardisation, and independent verification will be needed to maintain integrity – and government bodies have the power to impose frameworks to mandate best practice.