Roadmap launched to help close UK's £5.6bn nature finance gap

The Broadway Initiative has co-published a new report outlining how the UK can overcome barriers to private investment needed to fill an annual £5.6bn financing gap for nature recovery.

Developed with over 300 experts from across government, business, finance, and the environmental management sector, the report warns that the current financing gap cannot be filled by public and philanthropic funding alone, with more support needed from the private sector.

However, it outlines how “systemic undervaluation of nature”, a lack of tested revenue streams and standards, misaligned and complex environmental regulation, and expertise and capacity gaps are making it difficult to price and manage the risks of investing in nature.

The report states that “the risks of investment at scale currently outweigh the returns”, and provides a roadmap to unlock barriers and deliver high-integrity environmental markets that drive private investment and nature recovery across the UK.

It sets out a framework to modernise regulation, leverage public expenditure and secure large-scale private investment in nature and biodiversity each year by 2030.

David Young, senior fellow at the Broadway Initiative, of which IEMA is an alliance partner, said: “We need to put nature recovery onto a sustainable financial footing.

“Well-designed and regulated markets can provide farmers and landowners with the incentives to integrate nature with agriculture and other land uses.”

The report has been informed by views and contributions from more than 50 organisations, in addition to devolved governments committed to working with the Financing Nature Recovery UK coalition.

The recommended delivery plan for UK and devolved governments focuses on three critical areas:

• Market design: including the need for new drivers for investment in nature recovery, such as nature-based targets, reform of existing regulations to remove barriers to private investment, and new institutional arrangements to regulate and provide independent market oversight.

• Market governance: to establish consistent and rigorous standards for measuring and accrediting the environmental service nature-based solutions provide, and the improvement of data needed to ensure private investment delivers real environmental improvements.

• Market operation: to provide the market infrastructure needed for efficient trade in environmental services, the provision of concessionary and de-risking capital, and mechanisms for local market delivery that provide opportunities for local businesses and benefits for local communities.

It follows the landmark Dasgupta Review of The Economics of Biodiversity, commissioned by HM Treasury, which called for changes in how we think, act and measure economic success to protect and enhance prosperity and the natural world.

Dr Rhian-Mari Thomas, CEO of the Green Finance Institute, said: “We know that private finance must be mobilised into nature restoration and nature-based solutions if we are to meet our UK biodiversity and climate mitigation and adaptation goals.

“We also know the barriers to unlock, the incentives to create and the market infrastructure that needs to be put in place to ensure this happens at pace, at scale and with high integrity. Now we need the collective effort to turn recommendations into action.”