News: Nature Finance Impact Hub Newsletter (Q3 23/24)
Spring Edition
It continues to be a bumper time for nature finance news, with more pilot projects demonstrating the feasibility of nature restoration through blended finance. In this edition of the Nature Finance Impact Hub quarterly, we’re going to shine the spotlight on some projects that are exploring nature markets and share the news of more organisations pledging resources to regenerative farming. We’ve also got an update from the Hub that now includes the Landscape Recovery Round 2 projects.
To kick off, here are a few updates on market-shaping initiatives. Firstly the BSI Natural Capital Standards recently released their first version of the Overarching Principles and Framework for Nature Markets. Sponsored by the Department for Environment, Food and Rural Affairs (Defra), this first version has been created to gather feedback for further refinement. The framework provides the requirements for the design and operation of generating, storing, and trading high-integrity nature units. It intends to establish a framework that supports high-integrity trading and positive environmental outcomes, whilst protecting against negative consequences and greenwashing. The principles outline important items such as transparency, governance and identifying the various benefits from nature. Further principles are given on specific processes within the nature markets, including selling units, purchasing units and trading processes. The transparency principles identifies the importance of making material information available to market stakeholders, aligning with one of our core ambitions of the Nature Finance Impact Hub. Overall, the framework presents a promising starting point to implementing high-integrity nature markets. However, the ultimate success will depend on its application and execution, and further development from ongoing stakeholder engagement and feedback.
Secondly, Defra’s nature markets framework progress update was distributed earlier in March. From a data and forecasting perspective, the offsite BNG market is suggested in the document to be worth between £135 million and £274 million annually (and for more information on offsite BNG check out the blogs hosted by our BNG Finder). The update also drew attention on the Woodland Carbon Code and the Peatland Carbon Code, with unit prices increasing 70% across two years for the former. For the Peatland Carbon Code, as at the end of February 2024, there are 244 projects in the UK, with 81% located in Scotland. This complements data contained within the Nature Finance Impact Hub, as projects aligned with these codes on an annual basis.
We’re also seeing a need to develop greater detail and clarity on alternative avenues for leveraging private and blended finance for natural capital projects. The Green Finance Institute released a paper on Financing Natural Flood Management, which when complemented with data, will help to increase transparency on the financial viability of these ventures.
Project Highlights
Photo by Accelar
Accelar has been supporting the Loch Lomond and Trossachs Countryside Trust with discovering the financial opportunities available for their Facility for Investment Ready Nature in Scotland (FIRNS) funded project, Wild Strathfillan. The project aims to restore a range of habitats across the landscape, including montane scrub, Caledonian pinewoods and wetland habitats. Learn more about the project here.
Tayvallich, Highlands Rewilding. Source: here.
Another notable FIRNS funded project is the Highlands Rewilding’s Joint Ventures for Scalable Community Benefits. Highlands Rewilding is an established organisation in Scotland already pioneering nature restoration and nature-based solutions. The FIRNS project is aiming at creating a series of investment-ready business plans for community joint ventures that will highlight the ecosystem services and significant environmental benefits created through rewilding.
Hadrian's Wall Landscape Recovery Project, Northumberland National Park. Source: here.
In England, the Landscape Recovery Round 2 successful projects were announced at the end of last year. The Hadrian’s Wall Wetland Landscape Recovery Project was spotlighted by Defra in their announcement, with Hadrian’s Wall renowned for its cultural and historical significance globally. This project, based in the Northumberland National Park, aims at improving water quality and biodiversity, whilst supporting collaboration between farmers.
Nature Finance in the News
Morrisons launches network to support farmers through net-zero transition
Another organisation aiding it’s supply farms to transition to environmentally sustainable practices is Morrisons, through their 'Sustainable Farm Network'. In collaboration with Harper Adams University, the scheme offers education and practical advice to 70 initial farmers, focusing on soil quality, water stewardship, emissions, and biodiversity and offering financial rewards and research opportunities. This commitment aids in Morrisons’ pledge to achieve net-zero carbon emissions from its operations by 2035 and reduce supply chain emissions by 30% by 2030.
New Housing Developments to Deliver Nature Boost in Landmark Move
England’s new Biodiversity Net Gain (BNG) mandate officially launched for all major housing developments on the 12th of February this year. BNG requires developers to ensure a 10% uplift in biodiversity for major projects, encouraging the built environment sector to prioritise nature conservation by avoiding harm to nature. BNG aims to help the government’s commitment to halt species decline by 2030. Its phased implementation extends to small sites from April 2024 and Nationally Significant Infrastructure Projects by 2025, with £10.6 million allocated in funding for Local Planning Authorities to aid in local BNG integration.
Unilever Launches Regenerative Farming Initiative
Also following the theme of committing to sustainable farming initiatives is Unilever. Through introducing a regenerative agriculture programme for mustard and mint farmers, this programme will see Unilever provide expertise to farmers based in Norwich and Peterborough. Unilever aims to implement practices focussed on minimising emissions and water usage, utilising methods such as low-carbon fertiliser and timed digital water irrigation systems. Simultaneously, the program aims at boosting crop yields and enhancing resilience.
Innocent Drinks pledges £1m for regenerative farming projects
Innocent Drinks has pledged £1 million for regenerative farming projects to enhance sustainable practices and secure long-term ingredient supplies. Launched as an expansion of its Farmer Innovation Fund, grants ranging from £20,000 to £500,000 will be awarded. The initiative supports ingredient suppliers in transitioning to low-carbon farming and boosting biodiversity on farms.
UK Nature-Related Risk Analysis Update
In 2023, the Green Finance Institute (GFI), led in collaboration with several institutions a pioneering project to analyse the financial risks associated with nature degradation and ecosystem service erosion in the UK. This project aimed to assess the materiality of nature-related risks to the UK economy and financial sector. The analysis provides insights into UK banks and insurers dependencies on ecosystem services, estimates the upstream and spatial exposure of these dependencies, and offers scenarios integrating extreme nature and climate risks into the UK economy. The methodology developed allows for the estimation of the impact on UK GDP and calculates the value at risk for typical lending and investment portfolios. The full report, including GDP impact estimates, is scheduled for publication in April 2024 with a provisional update provided by GFI here.
Funding Opportunities & Market Development
Natural Flood Management funding programme
In September, Defra and the Environment Agency announced a £25 million funding for improving flood resilience through a new NFM programme. The list of the successful 40 projects has been announced, with a mix of communities and habitats set to benefit. The Environment Agency is managing this distribution of the investment in natural flood management, with the funds supporting community groups, environmental charities, and councils. Soil and land management, woodland development, and swale and pond creation are some of the interventions being implemented. The scheme will support projects across the country until March 2027.
Projects for Nature online platform
A major step for private investment into nature recovery projects, the Defra-developed Projects for Nature platform went live this month. The platform provides private investors with the opportunity to support 25 projects across England, with Defra matching any corporate investments made. The first capital injection of £250,000 has been made by Lloyds Banking Group, supporting 3 projects. The platform was announced alongside an update on the Nature Markets Framework, summarising progress made in the last year across markets including BNG, Nutrient Mitigation, and voluntary carbon codes.
As part of updates announced on the 1-year anniversary of the Environmental Improvement Plan’s publication, the government has published the recipients of £7 million of awards to improve lowland peat soils. There are 34 projects targeting the improvement of water management on lowland peat regions, a critical requirement given only 1% of lowland peatlands in England currently remain in a near-natural state. These pilots will deliver on the recommendations of the Caudwell report, published in June 2023.
Impact Hub Data update
Key numbers:
167
Projects under development
29
Countries
91
Nature positive green finance projects
17
Ecosystem services
10.1M
Tonnes CO2e captured
8.0M
Hectares conserved
1.9M
Hectares restored
Landscape Recovery Projects:
The start of 2024 has seen the announcement of the successful Landscape Recovery round 2 projects across England. With these 34 new projects, the total number of nature recovery pilots under this grant scheme has risen to 78, with the distribution shown in the map below. The Impact Hub now captures data for 167 projects that are either actively attracting private or blended finance, or under development. Take a look at the map below or via the interactive link here to get more details!
Call for projects
We are constantly looking for new data on exciting projects to add to the Hub which will help natural capital investors seeking opportunities and outcome benchmarks, as well as build confidence for landowners and project developers who are interested in leveraging green finance for nature. If you would like to submit your project to the Hub, please fill out the short form here.