A voice for private finance in UK Nature Policy: A summer of active engagement

A voice for private finance in UK Nature Policy: A summer of active engagement

Public policy can play a powerful role in shaping and incentivising progress towards sustainable development and addressing long-term systemic risks by setting the rules of the game and creating a level playing field for companies. This is why policy engagement is an important complement to our dialogue with companies and funds.

Recently, our engagement activity has included extensive policy engagement on nature - submitting responses to three consultations as part our role in the Finance for Biodiversity Foundation’s (FfB) United Kingdom Policy subgroup. This group consists of five investor members and as a group, we advocate for effective regulation and policies in the UK that will support the ambitious implementation of the Global Biodiversity Framework⁽¹⁾.

1.    Expanding the role of the private sector in nature recovery

The Department for Environment, Food & Rural Affairs issued a call for evidence in June on expanding the role of the private sector in nature recovery⁽²⁾ to support the further development of policies to protect and improve nature. 

Feeding into the cross-cutting principles that could govern policy development in this area, we emphasised how a lack of certainty over the long-term direction of policy can create barriers to investment as the risks and opportunities are difficult to predict. We called for the introduction of clear national transition plans and sectoral pathways that align with statutory biodiversity and climate targets. We also encouraged a whole-of-government approach to addressing nature, which would see cross-departmental collaboration to coordinate the design and implementation of policy, as well as close collaboration with regulators and central banks. 

We also outlined what actions we see as most effective and efficient, both on reducing activity that is currently harming nature, and increasing private sector investment in nature restoration. Two of our suggestions were to require companies and financial institutions to assess, monitor and disclose their nature-related impacts and dependencies and to mandate nature transition plans.

We highlighted the key challenges to investing in nature-based opportunities, including a misaligned risk-return profile and a lack of meaningful monitoring metrics. We also shared details on how we integrate nature in our investment strategy, how nature and climate policy can be better integrated and details on what policymakers can do to help scale international nature investment. 

2.    Assessment of the UK’s alignment with the Global Biodiversity Framework

Greenbank also submitted a response to the Joint Nature Conservation Committee, an adviser to the UK Government that is conducting a stakeholder assessment on the UK Government's progress towards its nature-related targets and alignment with the Global Biodiversity Framework commitments.

For different target areas, we were asked for our assessment of overall UK progress, key challenges for implementation, and potential solutions. The targets covered in the assessment were:

• Target 14 – Integrate biodiversity in decision-making at every level. 

• Target 15 - Businesses assess, disclose and reduce biodiversity-related risks and negative impacts.

• Target 18 – Reduce harmful incentives by at least $500 billion per year, and scale up positive incentives for biodiversity. 

• Target 19 – Mobilise $200 billion per year for biodiversity from all sources, including $30 billion through international finance.

In most areas, we acknowledged that progress had been made but at an insufficient rate and provided details on where we would like to see the UK Government go further, including adopting a more joined up approach across Government and implementing measures that would mandate companies and financial institutions to assess and disclose their nature-related risks and opportunities and produce a nature transition plan. 

For the target focused on eliminating, phasing out or reforming incentives and subsidies which are harmful for nature, we noted that no significant progress had been made. We noted that government can use fiscal policy to ensure that national budgets do not support activities harmful to nature, particularly by reforming damaging subsidies. We recommended that a comprehensive mapping of current subsidies and their impact on nature is carried out. 

3.    Integrating nature into transition plans

We also submitted a response to a consultation issued by the Department for Energy Security and Net Zero on options to take forward climate-related transition plan requirements to provide the market with credible and decision-useful information. 

We emphasised that transition plans should integrate nature, alongside climate change, as the two issues are inextricably linked. These transition plans would describe how a company intends to reduce its negative impacts on biodiversity and shift towards positive actions for nature, alongside plans to address climate-related risks and opportunities – all with clear actions and targets set out. 

We outlined the range of benefits that combining the two issues in the transition plans would unlock, including being more cost effective and efficient for businesses and allowing investors to have a more strategic view of the combined risks and opportunities. We also recognised some challenges and opportunities, including that nature transition plans are less mature than those for climate and that best practice guidance would be required to be developed in parallel to support companies to take a combined approach. 

We will be monitoring the outcomes of each of these consultations in the coming months and will be continuing to look for the right opportunities to share our voice, both via the Finance for Biodiversity UK policy subgroup but also via our ongoing membership of the Green Finance Institute’s UK Financial Institutions for Nature group. 

 

Footnotes

• (1) Kunming-Montreal Global Biodiversity Framework – A non-legally binding agreement adopted in December 2022 by 196 countries under the UN Convention on Biological Diversity. Its vision is to halt and reverse biodiversity loss by 2030, putting nature on a path to recovery by 2050. See: 15/4. Kunming-Montreal Global Biodiversity Framework
• (2)  Expanding the role of the private sector in nature recovery: call for evidence - GOV.UK