A group of organisations on Wednesday published the Nature Markets Principles, which contain a number of supply and demand-side principles for buyers and sellers of nature-oriented markets in the UK, with the intention to combat corporate greenwashing and support high-integrity, science-based activities in lieu of relevant policy and regulation.
Fund manager Finance Earth developed the principles alongside the Royal Society for the Protection of Birds (RSPB), the National Trust, The Wildlife Trusts, the Woodland Trust, and investment manager Federated Hermes.
“Enshrined in the principles is the need for projects to be science-based, transparent and verifiable, ideally in perpetuity and benefiting local communities as well as society more broadly. There are also stipulations about who the producers of the credits will do business with, ruling out those companies dependent on environmentally damaging activities such as fossil fuel extraction,” James Alexander, chair at Finance Earth, said in a statement.
The principles aim to assist with the current policy gap and enable market actors to see clearly what best practice looks like.
They comprise seven key points for the supply-side:
- Science-based nature recovery – led by science and deliver net gains;
- Environmental and social safeguarding – minimise leakage and adverse impacts on communities;
- Additionality – new, verifiable environmental outcomes that would not otherwise happen;
- Permanence and financial prudence – aiming for perpetual benefits and reducing reversal risk;
- Seek co-benefits – maximise co-benefits for communities and society;
- Verifiability – reliable and independently measurable environmental gain through MRV processes;
- Transparency – public disclosure of outcomes to maintain accountability and build wider trust in markets.
In addition to the supply principles, the organisations provided two principles for demand-side measures:
- Buyer screening criteria – buyers must evidence a transition plan if they are in environmentally damaging sectors, such as fossil fuel extraction or unsustainable agriculture, e.g. deforestation-linked palm oil;
- Commitment to best practices – such as following the mitigation hierarchy, reporting to Taskforce on Nature-related Financial Disclosures, and adhering to a Paris Agreement-aligned net zero strategy.
The principles place a strong emphasis on buyers aligning with the Science Based Targets Initiative (SBTi) and are designed to be used by market actors to aid their own policy development within companies, rather than acting as an overarching approach to nature markets, the organisations said.
Finance Earth, in partnership with Federated Hermes, will manage the government-backed UK Nature Impact Fund that aims to stimulate institutional investment at scale in high-quality nature restoration projects across the UK. The fund intends to adopt the principles to apply them across all of its activities in British nature markets.
There are a number of emerging nature finance opportunities in the UK including biodiversity units, carbon credits, nutrient credits, and natural flood management payments.
The group said that the principles are needed due to concerns around poor quality or low-ambition schemes creating a “wild west” of greenwashing and missed opportunities for positive outcomes.
In March, the UK government issued its own “Core Principles for Market Operation” within its Nature Markets Framework, as a first step in guiding the plethora of environmental market standards and approaches that are emerging in the country.
Standards organisation BSI is now working on developing government-backed nature investment standards alongside the UK’s devolved administrations.
Meanwhile, the Department for Environment, Food and Rural Affairs recently delayed biodiversity net gain (BNG) becoming mandatory by three months. This has stalled the establishment of a compliance market for biodiversity units until the new year, suggesting policy is struggling to keep pace with market development as biodiversity units are already being voluntarily traded.
BNG, as the UK’s flagship nature market, has also been accused of having fundamental gaps in governance for more than a quarter of units that will be generated.
By Tom Woolnough – tom@carbon-pulse.com
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