The Environmental Industries Commission (EIC) has welcomed the opportunity to engage in the consultation on the operation of natural capital markets in the United Kingdom, a critical initiative aimed at harnessing private investment for genuine nature recovery.

In response to this consultation, EIC and its members have provided valuable insights into how these markets can align investments with environmental benefits, ensure high-integrity outcomes, and mitigate risks such as greenwashing and environmental offsetting.

Natural capital comprises renewable and non-renewable natural assets, including ecosystems, that provide a flow of benefits to people. The UK government's goal is to leave the environment 'in a better state than we found it' and reverse global biodiversity loss by 2030.

To achieve these objectives, the government has outlined various policy actions, including the development of natural capital markets and the introduction of a UK Green Taxonomy.

Genuine Net Gains for Nature

One of the core challenges addressed in the EIC's response is how to ensure that investments in natural capital markets result in genuine net gains for nature. EIC members emphasise the importance of clear criteria, comprehensive baseline assessments, and long-term monitoring to track the performance of projects. These measures, when properly implemented, can contribute to positive outcomes for biodiversity, ecosystem health, and ecosystem services.

Addressing Risks:

To prevent greenwashing, where investments are falsely presented as environmentally beneficial, and to avoid the offsetting of natural recovery in the UK against environmental degradation elsewhere, the EIC underscores the need for stringent criteria, independent verification, and transparent reporting.

By implementing a "do no harm" principle and differentiating between local nature recovery and offsetting practices, the EIC aims to ensure that natural capital markets are vehicles for genuine environmental progress.

The Role of the UK Green Taxonomy:

The proposed UK Green Taxonomy, issued alongside the Nature Markets Framework, holds significant potential to guide high-quality investments that genuinely benefit nature.

EIC members emphasise that the taxonomy should align with nature recovery goals, include additionality criteria, and mandate accurate financial disclosures that consider the entire lifecycle of investments.

Collaborative Efforts:

The EIC's response highlights the importance of collaboration among stakeholders, including member companies, policymakers, environmental experts, and local communities, to shape policies and mechanisms that advance nature recovery and promote sustainable finance.

Read EIC’s submission here.

To get involved in the work of the EIC Nature and Biodiversity Taskforce, please contact Sapphire Metcalf. 

Find out more about the EIC Nature and Biodiversity Taskforce.