Call for evidence outcome

Summary of responses and government response

Updated 24 March 2026

Introduction

The government has set ambitious targets and objectives for environmental restoration and nature recovery in our revised Environmental Improvement Plan (EIP). Nature is foundational to our economy and society, providing the:

• food we eat
• water we drink
• air we breathe
• places we work and relax
• natural resources we depend upon for much of our energy, construction and manufacturing

The decline of nature and the services it provides therefore poses a severe risk to our economic growth and resilience. Nature recovery is imperative for our whole economy, and that is why the first commitment in our EIP is to mobilise private investment and finance to restore and protect nature in England. While every part of our economy relies on nature to some extent, there are some sectors which depend and impact upon our shared natural capital more greatly than others.

In order to understand how best to support and incentivise businesses in these sectors to invest in nature recovery, Defra ran a call for evidence from 12 June to 7 August 2025. The call for evidence received 169 responses, and the government is grateful for the time and energy that has gone into providing this evidence and insight.

This document summarises the main messages from respondents and the government’s response, followed by a full summary of all responses.

Main messages from respondents and government response

The call for evidence was structured in 2 parts. The first part sought views on policy approaches to increasing private demand for nature services, including proposed cross-cutting policy objectives. The second part asked for evidence on barriers to investment and effective policy interventions across a range of specific sectors and nature services. These included:

• the water sector
• the agri-food chain
• flood risk management
• nature-based carbon capture
• recreational services

Part 1: Policy approach (questions 1 and 2)

There was broad support for our proposed 4 policy objectives:

• business certainty (90 out of 104)
• innovation (89 out of 104)
• economic growth (79 out of 106)
• fair and proportionate burden sharing (84 out of 105)

Many respondents gave feedback and further suggestions on objectives. Responses also provided a wealth of views and insights as to effective policy approaches to encourage private sector action on nature. The main messages we have drawn from responses are set out below with the government’s response.

Message 1

Environmental improvement should be a policy objective in its own right, and any objective centred on economic growth should also focus on long-term, sustainable gains that must be underpinned by nature recovery.

The government recognises that nature is the foundation of our health and wellbeing, our economy and our communities, and is one of our greatest sources of national wealth. Our updated EIP sets out how we will work with nature to build the homes we need, deliver clean water, secure our food supply and meet our environmental goals, and will leverage public and private investment in green industries to raise living standards, create good jobs and boost productivity.

Message 2

A coherent, joined up and predictable long-term policy framework for nature recovery, including setting expectations of the role of the private sector, is critical to guide investment and provide the certainty that businesses and investors need to act.

The government recognises the importance of policy certainty in supporting and de-risking action by the private sector.

In December 2025, we published an updated EIP, setting 5-year targets and a roadmap to tackle the nature and climate crises. It recognises that economic sectors and businesses which benefit from nature should take responsibility for its restoration, and emphasises the opportunity for UK businesses and financial services to harness innovation and efficiency to mobilise flows of nature-positive investment.

We are also supporting the Nature Positive Pathways programme. Led by the Green Finance Institute, World Wide Fund for Nature (WWF) UK and industry, this will set out the tangible actions that business can take, starting with the agri-food, built environment, and water sectors, to guide investment in the nature-positive economy.

We have published a Land Use Framework, providing the framework for long-term and joined-up decision making on land use. This draws on findings from this call for evidence and last year’s land use consultation, including on the role for private investment and the support needed by land managers to deliver the scale of land use change we need to see in England.

Message 3

Reliance on voluntary action by the private sector will not be sufficient: regulatory levers, disclosure standards, and other incentives are needed to ensure nature recovery at scale. Biodiversity Net Gain (BNG) was widely noted as an effective regulatory lever for driving demand.

The government values the contribution of voluntary and philanthropic actions, while recognising that stronger signals are needed to unlock greater demand and provide confidence to investors. This is why the revised EIP commits to regulatory reform to encourage innovation and investment from businesses and to ensure those using natural assets contribute to the cost of restoring nature. It also sets out a range of activities being undertaken by government to strengthen the incentives for business to invest in minimising and compensating for their environmental impacts, and to deploy nature-based solutions to increase supply chain and infrastructure resilience.

The government is committed to BNG as an important mechanism to deliver nature-positive development. As of March 2026, the off-site BNG market has secured over 6,000 hectares of land for nature. In due course we will publish government’s response to the consultation on improving BNG for minor, medium and brownfield development, as well as more detail on how BNG will apply to Nationally Significant Infrastructure Projects (NSIPs) and a further consultation on a targeted, residential brownfield exemption.

Earlier this year we issued the Sustainability Reporting Standards (UK SRS), based on international standards. The Financial Conduct Authority has launched a consultation on incorporating the UK SRS into its disclosure requirements for listed companies, and we will consider whether to also introduce requirements for non-listed entities. The government has also consulted on climate-related transition plan requirements and whether nature should be integrated into these plans.

Message 4

Government has a vital role to play in de-risking early investment in nature markets through blended finance, and should develop mechanisms to de-risk nature investment at scale, learning from successes in supporting the renewable energy sector.

The government is committed to increasing private investment through blended finance approaches. This includes our commitment to invest £30 million of risk capital in the Big Nature Impact Fund – a new, private sector blended impact fund which will invest in high-integrity woodland creation, peatland restoration and BNG habitat bank projects that can provide a return on investment. Finance Earth, the fund managers, are aiming to secure enough investor commitments to enable a first close and launch the Fund in April 2026. The fund supports the England strategy of the UK Nature Impact Fund platform, aiming to raise at least £90 million of investment and deliver long-term, risk-adjusted financial returns and measurable impact for a range of professional investors.

The government is scoping how else it can best deploy its public finance to lever in private investment at landscape scale, building on learning from the Landscape Recovery programme.

Message 5

Robust governance of nature and carbon markets is critical to ensuring they develop with integrity, allowing suppliers, buyers and investors to enter markets with confidence. Standards play an important role.

In summer 2025, we consulted on further measures to strengthen high integrity voluntary carbon and nature markets – both here in the UK and internationally, responding to calls for greater clarity on how these markets will be governed. A summary of responses will be published shortly, and the full government response in due course.

We are continuing to support the British Standards Institution (BSI) to develop a suite of Nature Investment Standards. An Overarching Principles Standard was published in 2025, and this month the BSI published standards to support biodiversity and nutrient markets, with accompanying guidance. A new Community Benefits standard was released for consultation, which will provide a code of practice to help nature projects engage with communities. We also set out plans for a system of formal assurance against the standards framework.

Part 2: Outcome and sector-specific measures (questions 3 to 30)

Clean and plentiful water – cleaning up rivers, lakes and seas (questions 3 to 7)

As barriers to greater private investment in water outcomes, responses highlighted the current fragmented governance and regulatory regime, rigid frameworks governing water company investment, and limited incentives for investment in nature-based and preventative solutions. Responses suggested that government should pursue a more joined-up regulatory regime, better collaboration across the water sector, improved data monitoring and a shift to flexible, outcome-based approaches and catchment-scale planning, with many responses citing the recommendations from the recent Independent Water Review.

Nature-based solutions delivered by water companies were seen as an important source of finance for nature, which also have significant potential to attract co-funding from other sectors due to the multiple benefits they provide.

In January 2026, the government published the white paper, ‘A new vision for water’, which sets out once in a generation reforms to transform the water system for good. Our reforms will address many of the points raised in response to this call for evidence. For instance, the white paper introduces a new powerful single regulator and Chief Engineer, as part of stronger, prevention-first regulation and a whole sector approach for tackling water pollution and protecting the environment. We will also reform strategic guidance to the sector, expanding the current Strategic Policy Statement to cover long term priorities and targets for the wider water system.

We are also working to embed the concept of constrained discretion into the reset of water regulation. This will empower the regulator with greater flexibility to consider which approaches will support the best outcomes for people and the environment, including nature-based solutions. And we are shifting focus towards preventative ‘pre-pipe’ solutions, such as rainwater management and tackling sewer misuse. These changes are more sustainable, deliver wider benefits like reducing flood risk and increasing biodiversity, and will provide better value for money for customers. We will deliver an improved holistic water planning model, consolidating existing water industry plans and processes into 2 core planning frameworks – one for water environment and one for water supply. An enhanced, better joined up regional water planning function will enable a more holistic approach to water environment and supply planning which supports delivery of national strategic objectives, including nature recovery, while enabling regional and local priorities to be realised.

One of the aims of the regional planning function will be to help identify lower-cost and higher-impact solutions to improve water quality and supply, which will enable a greater uptake of preventative interventions and nature-based solutions where appropriate. A Regional Water Planning Steering Group has also been established to oversee piloting and early rollout of strengthened regional and catchment planning in every region in England, drawing on existing best practice and innovation. This will include doubling funding to the 108 Catchment Partnerships.

Our Transition Plan, to be published in due course, will set out the path to this new system, with an accompanying interim Strategic Policy Statement for Ofwat and ministerial direction for the Environment Agency, to set out how changes will happen and who is responsible. These reforms will underpin a new Water Reform Bill to be introduced during this Parliament, setting the foundation for long-term change.

Nature-based carbon reductions and removals (questions 8 to 12)

Responses on nature-based carbon emphasised the need to strengthen the incentives for buyers and address concerns about price unpredictability in these markets, and recommended government-backed de-risking measures to build demand for nature-based carbon. The importance of standards and market governance was also raised.

The government is exploring the creation of a £250million Woodland Carbon Purchase Fund – a new initiative to provide upfront demand for woodland carbon. This fund would purchase carbon units from English woodlands under the Woodland Carbon Code. We are currently testing the design with the market.

We are also working closely with the BSI and industry experts to develop a market-ready standard that will support the growth of a variety of nature-based carbon markets. This standard will be simple enough to be accessible to market participants, while also guarding against greenwash to ensure investor confidence.

Many respondents called for the inclusion of woodland carbon in the Emissions Trading Scheme (ETS). The UK ETS Authority (consisting of the UK, Scottish and Welsh governments and the Northern Ireland Department of Agriculture, Environment and Rural Affairs (DAERA)) has committed to integrating engineered greenhouse gas removals into the UK ETS, aiming for the system to be operational in 2029, with legislation in 2028. This is a significant step in building a long-term, credible market for removals. The authority has not yet made a decision on the inclusion of woodland carbon removals, but has noted that evidence we provided suggests there is a clear case for their inclusion.

Responses also discussed how to support growth of a sustainable domestic timber market. We are investing £1 billion in tree planting and support to the forestry sector over this parliament. We are working with investors, insurers, industry and local authorities to encourage the use of timber in construction and deliver priorities set out in the Timber in construction Roadmap. We have published standards for residential construction, announced plans to support the development of standard house designs, and set out plans to increase the use of bio-based materials in school construction. We have reviewed the Timber Procurement Policy, which requires all government procurers and suppliers to prove legality and sustainability of timber, and have for the first time accepted Grown in Britain as a recognised certification standard.

Access to nature – supporting tourism, recreation and wellbeing (questions 13 to 17)

Responses suggested combining various sources of private finance with public funding to support nature recovery in protected landscapes, including local business contributions, regulated investment (for example, by water companies) and nature markets. However, they emphasised the important role of core public funding for National Park Authorities and National Landscapes teams, with several saying that protected landscapes need more support to mobilise private finance. There was broad support for the ‘polluter pays’ principle, but views on ‘beneficiary pays’ were mixed, with many suggesting that businesses ought to pay for the benefits they gain from nature but that charges for individual visitors should be avoided.

Our protected landscapes contain half of our most important land for nature. We are supporting National Parks Partnerships and the National Landscapes Association to catalyse private investment into nature. They have built the foundations for, and are driving investment into, large-scale nature recovery projects across England’s National Parks and National Landscapes. This has included developing a combined pipeline of over 100 investment-ready nature projects, representing 242,379 hectares. For National Landscapes, the Your Natural Partner platform houses this portfolio of nature recovery and community projects in one place – making it easier for potential investors to find credible partners that deliver for communities, climate, nature, and the economy. We are continuing to work with National Parks Partnerships and the National Landscapes Association and will draw on responses to this call for evidence to inform the next stage of accelerating investment into protected landscapes.

Many responses called for more clarity on our approach to delivering 30by30. The government is developing a 30by30 Delivery Plan, to show how we will lead, support and inspire action across England. National Parks and National Landscapes will provide the backbone to 30by30 in England, having the potential to contribute approximately half of the national target. This will be driven by the Protected Landscapes Targets and Outcomes Framework, as well as further action to ensure that these special places are wilder and greener.

Responses also made recommendations for mobilising private finance for urban green spaces to improve access to nature, including more government support for local and combined authorities to develop appropriate business models and to leverage the health benefits of nature. In the updated EIP, the government committed to establishing a metric on the number of people accessing green or blue space for nature-based activity to improve health, helping to track the impact of green social prescribing (GSP). We also committed to creating a nature for health investment partnership by the end of 2026; to develop investment pathways to create new markets; and to drive integrated funding models for nature-based solutions that deliver health benefits and economic growth. We are currently developing wider policy to improve access to nature, working closely with stakeholders, following commitments made in the EIP.

Defra is running place-based delivery pathfinders with National Park Authorities and Mayoral Combined Authorities. These are testing how Defra Group delivery partners can work together more effectively. The West Midlands Combined Authority (WMCA) Pathfinder is focused on the sustainable delivery of WMCA’s Local Nature Recovery Strategy (LNRS), through combining public and private funding streams to deliver a pipeline of investment-ready projects.

Flood management (questions 18 to 20)

Responses suggested that various sectors which either contribute to flood risk or benefit from flood risk reduction ought to contribute to natural flood management (NFM). Utilities, construction, insurance providers and intensive agriculture were particularly emphasised, but all businesses in downstream parts of catchments were seen as potential sources of funds. There was broad agreement that in order to scale up NFM, government needs to provide clear policy and regulatory signals, to strengthen incentives for NFM (such as through the use of outcome-linked payments), and support multi-beneficiary investment through catchment-scale partnerships and blended finance.

In October 2025, following consultation, we announced major changes to our flood and coastal erosion funding policy. As part of these reforms, the new Flood and Coastal Erosion Risk Management (FCERM) programme starting in April 2026 will have a strategic objective to use public money to unlock additional contributions from public, private and charitable sources. Partnership contributions will be taken into account in assessing the value for money of projects, meaning that projects with greater additional contributions will have a higher chance of being prioritised for government funding.

We have also set a strategic objective to help tackle the under-representation of NFM projects in the investment programme. A minimum of 3% of FCERM investment will go to NFM over the next 3 years and a minimum of 4% over the next 10 years. We will be investing at least £300 million in NFM over 10 years – the highest figure to date.

Sustainable land use and food production (questions 21 to 25)

To drive environmental performance in the agri-food sector, responses emphasised the need for:

• clear policy
• targets and standards
• fair distribution of the costs of nature recovery across supply chains
• more stringent requirements to disclose data on nature impacts and risks
• higher environmental and animal welfare standards for food imports
• blended finance
• accurate and accessible environmental data

Circular economy approaches were recommended in wider bioeconomy sectors such as timber, paper and textiles, and stronger sustainability standards for biomass were suggested.

In December 2025, we announced plans to boost landscape-scale nature recovery across England through our Landscape Recovery Scheme. These plans were backed by a down payment of £500m for the first tranche of projects, which are set to deliver large scale nature recovery. We expect future tranches to be delivered with further funding allocations. Landscape Recovery is designed to enable farmers and land managers to combine revenues from public and private sector funding to deliver environmental outcomes.

Later this year we will publish a Farming Roadmap setting out how farming will, must and can evolve in response to changing markets, technologies and environmental pressures – and how government will support that transition. It will set the course for farming in England for the next 25 years. Our aim is to maintain food production, meet our environmental outcomes, and deliver a thriving and profitable farming sector.

The new Farming and Food Partnership Board, announced in response to the independent Farming Profitability Review, will champion sustainable productivity, food security and the profitability of farming and food sectors. Sector-specific plans will look at how to boost productivity, reduce costs, and support access to new markets in ways that align with health and environmental goals, starting with a pilot plan for horticulture. Agri-food is also one of the first sectors being explored through the Defra-supported Nature Positive Pathways programme, with a first draft to be published in 2026.

We are addressing data challenges through the FDTP. We have published a recommended methodology for product-level greenhouse gas footprinting in agri-food, and have commissioned the development of guidance on assessing and reporting farm-level greenhouse gas emissions, to support users to select appropriate tools. We are supporting access to high quality environmental impact data, including developing a new public tool to make data easier to find and use – due to launch in 2027. In early 2026, we commissioned new research to develop proposals for the infrastructure and governance required for data sharing in agrifood supply chains.

We are committed to transitioning towards a circular economy where resources are kept in use for longer and waste is designed out. We have convened a Circular Economy Taskforce and we intend to publish a Circular Economy Growth Plan that will set out the biggest opportunities in sectors across the economy, including:

• agri-food
• built environment
• chemicals and plastics
• electrical and electronic equipment
• textiles
• transport

The government supports the use of sustainable biomass and operators only receive subsidies for biomass that meets our sustainability criteria. In December 2025, the Department for Energy Security and Net Zero (DESNZ) launched a consultation seeking views on the development of a common biomass sustainability framework. This includes proposals for strengthening existing biomass sustainability criteria as well as improvements to current monitoring (or measurement), reporting and verification (MRV) practices – a response will be published in due course.

International nature finance and access and benefit-sharing (questions 26 to 30)

Responses provided insights into how businesses approach management of their international nature-related risks and impacts, with calls for better data, coherent standards and metrics and clear guidance, as well as for clarity on how nature will feature in future UK reporting obligations. Responses also discussed the risks and opportunities associated with investment in biodiversity in lower income countries and views on engaging in international biodiversity and carbon markets, highlighting the need for greater international standardisation and robust measurement frameworks.

The government is continuing to fund the Green Finance Institute to progress market capacity building and uptake of Taskforce on Nature-related Financial Disclosures (TNFD) through the TNFD UK Consultation Group. This is evolving to include a pilot program on integrated nature transition plans, with 15 businesses already signed up. We are also looking forward to the imminent work of the International Sustainability Standards Board on nature standard setting, which will draw on the work of the TNFD, set the stage for global nature disclosures and inform the path to integration in UK policy and regulation. 

The UK continues to back the International Advisory Panel on Biodiversity Credits (IAPB), an independent global initiative to shape and scale the development of high-integrity biodiversity credit markets and encourage enabling policy and regulatory mechanisms.

The UK was one of the first countries to join the IAPB’s Nature Credit Policy Forum, launched in November 2025. This forum provides a platform for governments to cooperate and build coherent policy, aiming to drive greater standardisation of nature market credits and unlock demand at scale.

We are also supporting the development of high integrity nature-based markets, improved nature data and disclosure readiness in Africa, through our support for Financial Sector Deepening Africa (FSD Africa) – a development agency and asset manager dedicated to the development of domestic financial markets and mobilisation of long-term capital to meet Africa’s development needs. And we are supporting the United Nations Development Programme (UNDP)’s global Biodiversity Finance Initiative (BIOFIN), which helps countries design and implement evidence-based biodiversity finance solutions to catalyse private investment in nature across Latin America, Africa and Asia.

As a Party to the Nagoya Protocol, the UK is supporting the fair and equitable sharing of benefits from the use of genetic resources by UK companies and researchers. We have also taken an active role in driving forward the implementation of the Cali Fund, one part of the multilateral benefit sharing mechanism agreed by Parties to the Convention on Biological Diversity. Alongside Chile, the UK launched the Friends of the Cali Fund as a global initiative between countries and the private sector to facilitate the effective implementation of the fund, and supported Tierra Viva AI, a UK start-up company, to make the first contribution to the Cali Fund.

At the 12th meeting of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) in February 2026, 152 governments including the UK approved a methodological assessment of the impact and dependence of business on biodiversity and nature’s contributions to people. We will continue to look at how we can support businesses to understand and address their impact on nature through their supply chains, including through the TNFD, and consider the implications of this report for the UK.

Summary of responses

A total of 169 responses were received. These were in the form of written submissions, with some respondents providing additional evidence such as case studies or reports. Responses were received from a range of organisations and individuals. These have been grouped into categories as follows.

Table 1. Number of respondents from different sectors and industries

Sector or industry	Number of respondents
Nature service providers (landowners managers, habitat banks)	28
Nature market consultants, project developers and intermediaries	27
Agriculture sector organisations	17
Other non-government organisations (NGOs) and advocacy groups	17
Financial sector and investors	16
Construction, infrastructure, energy and waste	16
Universities and research institutions	9
Water industry	8
Food and drink or retail sector	7
Public sector (national and local bodies)	7
Individuals	7
Other industries	5
Other landowners	3
Other	2

Section 1. Policy principles and objectives

Q1. Do you agree with each of the 4 objectives?

112 respondents answered this question. Of these, 103 agreed with all 4 objectives and 9 disagreed. 84 of those who agreed with the objectives provided comments including suggested adjustments to the objectives, qualifications and proposals for additional objectives.

The 4 objectives were:

1. Economic growth

Everything we do must support sustained and resilient growth.

2. Business certainty

Businesses require long-term certainty on the rules which will govern their sectors and a level playing field to invest at greater scale.

3. Innovation

New policy should not be overly prescriptive, administratively burdensome or inflexible in adapting to change.

4. Fair and proportionate burden sharing

We are considering several approaches to determining which sectors could and should invest more. These include:

• prevention
• rectification at source
• polluter pays
• beneficiary pays
• fair burden sharing

Table 2. Number of responses supporting the 4 objectives

Objective	Support	Partially support	Do not support
Economic growth	79	22	5
Business certainty	90	13	1
Innovation	89	13	2
Fair and proportionate burden sharing	84	18	3

Objective 1. Economic growth

In comments, many respondents emphasised that the economy depends on a thriving natural environment, with several referencing the Dasgupta review and the wide range of economic and social benefits derived from nature including public health and wellbeing, food security, climate resilience and flood protection. The historic impact of economic growth in terms of nature degradation was frequently raised, with many stressing the importance of focusing on sustainable, resilient or nature-positive growth – taking account of natural capital and incorporating nature into economic and financial decision-making, rather than relying solely on gross domestic product (GDP).

Some respondents also saw business opportunities for growth in the development of nature-positive industries, nature markets, sustainable food production, forestry and a move to a more circular economy.

Objective 2. Business certainty

Many respondents stressed the importance of a clear policy and regulatory framework, with long-term certainty particularly important because of the time horizons involved in nature recovery. Several also raised the importance of flexibility within this framework, and the need to adapt policies to environmental change and new evidence.

Many respondents called for more policy clarity on important aspects of nature markets, including market rules and standards, stacking rules and legal implications, and some wanted to see more consistent messaging from government on the importance of nature restoration. Finally, many respondents raised the need for policy alignment across government, citing existing fragmentation and conflicting incentives in areas including:

• agriculture
• housing and infrastructure development
• planning and corporate reporting

Objective 3. Innovation

Many respondents said the right regulatory environment is crucial to enable the innovation necessary for nature’s recovery. Several proposed that regulation should focus on outcomes rather than mandating specific processes, giving businesses the flexibility to find the best solutions, and should not be overly burdensome on business. Several emphasised that innovation is needed not only in technology but in business models, blended finance mechanisms and governance. Examples were given spanning:

• organic farming
• nature-based solutions
• financing approaches for flood management and rewilding
• innovative technology for environmental monitoring
• innovation in governance approaches such as community-led land stewardship and investment models

Objective 4. Fair and proportionate burden sharing

While many agreed with the objective, respondents asked for more clarity on how the polluter and beneficiary pays principles would be applied in practice, noting that attribution is difficult in complex multi-stakeholder systems. Respondents were mixed in their views on specific principles, with some emphasising the importance of ‘polluter pays’ and others recommending that all 5 principles from the Environmental Principles Policy Statement should be included (including the precautionary principle and integration principle) or seeing a greater role for ‘beneficiary pays’ approaches.

Many shared evidence on disproportionate burdens currently falling on particular actors such as farmers, taxpayers or small and medium enterprises (SMEs), and raised the importance of fair burden sharing across supply chains, or highlighted that some sectors are disproportionately regulated.

Environmental improvement

Many respondents called for an additional priority objective to be adopted focusing on environmental improvement or nature recovery.

Q2. Is there evidence from existing domestic or international policies which the government can learn from regarding: (a) the benefits of policy action to increase private sector investment in nature? (b) the policy actions that are most effective and efficient at increasing private sector investment in nature? (c) the risks of policy action to increase private sector investment in nature?

94 respondents answered this question.

Benefits of policy action to increase private sector investment in nature

The most commonly cited benefit of policy action was increased funding for nature recovery, which was recognised as essential. Several responses also highlighted the benefits for growth, given the dependence of a significant proportion of GDP on nature. Others noted the many societal benefits that flow from nature recovery and the fact that nature-based solutions can be a cost-effective way to deliver goals such as flood risk reduction.

Policy actions that are most effective and efficient at increasing private sector investment in nature

Compliance requirements

A notable theme was the importance of compliance requirements rather than reliance on voluntary action. The certainty provided by clear regulatory requirements was said to be beneficial for businesses, enabling them to plan with confidence, and also for investors and lenders who can be sure of ongoing demand.

BNG was the most commonly mentioned policy, with many respondents describing it as effective and world-leading and noting that the investment generated dwarfs that of voluntary markets. Several respondents recommended developing new compliance markets. Several also cited examples of extended producer responsibilities which require business to internalise their environmental costs, such as the requirement placed on pharmaceutical and cosmetics industries to contribute to wastewater treatment costs under the EU’s Urban Wastewater Treatment Directive.

In addition many respondents proposed that mandatory disclosure or reporting requirements for environmental impacts would be very impactful, for example, by making the TNFD mandatory, and several recommended the inclusion of nature-based carbon, in particular woodland creation, in the UK ETS, to drive up demand through a regulated regime.

De-risking investment

The second main theme was the important role government plays in de-risking private investment in nature, while markets are emerging. Respondents recommended blended finance both to support early stage projects and the development of business models, with the Natural Environment Investment Readiness Fund (NEIRF) and Landscape Recovery cited as positive examples, and to catalyse private finance at scale, with the US Climate Smart Commodities Fund noted as an example which raised 6 times in private capital what it cost in public spending. To facilitate blending of finance, some recommended that government payments to farmers should be targeted to outcomes rather than activities, allowing other outcomes to be purchased without any double counting.

Many responses also recommended that government provide revenue support (such as guarantees or long-term offtake agreements) to guarantee a minimum rate of return as markets scale up, often citing the success of Feed-In Tariffs and Contracts for Difference in the renewable energy sector. Some warned that without this kind of support for markets to achieve long-term viability at scale, government’s investment to date in early-stage projects could be ‘stranded’.

Policy and regulatory framework

Many responses emphasised the importance of the overarching policy and regulatory framework governing private investment in nature, noting that this needs to be both clear on important issues (such as legal treatment of carbon and nature credits, how markets can be combined and the support which government will offer), and consistent over the medium to long term, particularly as returns from nature-based solutions are realised over long time horizons.

Frequent changes or weakening of policy intended to drive demand for nature services, such as BNG, was seen as destabilising and likely to deter investment. Policy also needs to be joined up, to ensure that different markets and priorities work together, that a strategic approach is taken to land use, and that economic and environmental regulation work together. Many responses said that nature needs to be better embedded in economic strategies and decision-making.

Some recommended more flexible, outcome-focused regulation enabling the best solutions to be found to deliver on multiple goals including for nature. Many responses said it is vital that government provides clarity on the priority outcomes the government is seeking to deliver for nature, for example through the National Biodiversity Strategy and Action Plan, EIP and other products such as sector roadmaps.

Finally, some responses focused on the scalability of policy interventions, especially in a context of limited public funding – emphasising that the government needs to focus on investment that can best catalyse widespread change.

Standards and governance

Many responses noted that any market mechanism must be underpinned by robust, transparent standards and governance (including the use of registries, verification systems and mechanisms to enforce standards). Respondents saw this as vital to ensure integrity, give confidence to buyers and investors that they are buying genuine outcomes and mitigate the risk of real or perceived greenwash.

In addition to BNG, the Woodland Carbon Code and Peatland Code, were cited as domestic exemplars, noting that government backing and regulatory recognition provides credibility and a marker of quality which have successfully attracted buyers. However, it was also noted that volumes of finance flowing through these markets remain small.

Several responses recommended the development of additional standards to support voluntary market development in areas such as flood risk reduction, water quality and the marine environment, and called for standardisation where schemes have proliferated. In addition to government-backed schemes, private certification schemes, particularly those applying to farms, were also cited as having incentivised corporate stewardship.

Other themes

Other policy actions which respondents said were effective include:

• a landscape, catchment or regional approach to market development (citing various examples of successful initiatives at this scale), including supporting the role of regional authorities as important actors
• support for brokers, advisory and other actors who could support market development
• establishment of and support for impact investment platforms
• removal of harmful and perverse subsidies
• the development of transition plans with industry buy-in

Risks of policy action to increase private sector investment in nature

The most commonly mentioned risk was that fast-growing markets without sufficient governance in place could lack integrity, leading to greenwashing and a lack of real environmental benefits. Other risks associated with rapid market development were price instability (potentially leading to speculative behaviour or finance dropping away), market fragmentation and double counting or conflicting claims.

A second set of risks concerned markets which are poorly designed and coordinated, again leading to negative or insufficient environmental outcomes. Without holistic policy there is a risk of perverse incentives, for example, encouraging monocultures, and of encouraging short-term and piecemeal investments which failure to deliver lasting, landscape-scale nature recovery alongside other land uses. Respondents also noted that while regulation of markets is important, poorly designed regulation could overburden either suppliers or buyers, risking disengagement.

The third main risk highlighted was around negative distributional impacts. Some responses highlighted the risk that the benefits of private investment in nature become concentrated in the hands of large landowners at the expense of smaller landholders, tenants or communities – these groups may be excluded from markets due to rules and costs of entry, and could be negatively affected by changes in land use and ownership.

Section 2. Outcome and sector-specific examples and questions

Outcome 1: Clean and plentiful water – cleaning up rivers, lakes and seas

Q3. Which sectors could and should contribute as part of a catchment-based approach to water management for nature recovery?

76 respondents responded to this question. They told us the following sectors could and should contribute.

Table 3. Sectors mentioned in responses*

Sector	Number of responses
All sectors in the economy	9
Sectors that depend on nature	37
Sectors which impact nature	34
Agriculture, forestry and fishing	57
Utilities	55
Construction	42
Manufacturing	37
Transport and storage	32
Wholesale and retail trade	21
Financial and insurance activities	21
Professional, scientific and technical	19
Public administration and defence	16
Arts, entertainment and recreation	13
Information and communication	10
Health and social work	8
Mining and quarrying	6
Accommodation and food services	5
Other services	5

* With the exception of the categories “All sectors in the economy”, “Sectors which depend on nature” and “Sectors which impact nature”, sectoral categories used are based on the UK Standard Industrial Classification of Economic Activities (SIC) from the Office for National Statistics. Sectors mentioned in fewer than 5 responses are not included. Respondents answered with free text so could mention multiple sectors.

Many respondents agreed that all businesses which use water or create risks to water quality and ecosystem health, for example, through pollution, abstraction or water consumption, should be required to make proportional contributions to mitigating these impacts, in line with the ‘polluter pays’ principle. Many also agreed that cross-sector collaboration is critical in driving nature recovery and ensuring a healthy water environment and a clean, resilient water supply.

The sectors and businesses most mentioned within the categories above were:

Major water users:

• agriculture and forestry
• landowners
• water companies
• bottled water companies
• housing and infrastructure
• manufacturing and industry
• technology and innovation sectors (for example, data centres)

Sectors with indirect impacts on the water environment or exposure to water-related risks:

• insurance companies
• transport
• retail and logistics
• recreation
• finance and investment managers
• commercial and industrial warehousing

Less frequently mentioned sectors included mining, chemicals, cosmetics and pharmaceuticals sectors.

Q4. What are the barriers to incentivising sectors that depend on the water system to invest in water outcomes? What actions are needed by government to address these barriers?

72 respondents answered this question, identifying the following barriers and recommended actions.

Governance and regulatory barriers

Respondents highlighted governance and regulatory barriers both for the water sector and for other sectors which impact on the water system.

Many responses described the lack of a clear strategic direction for the water sector to generate water outcomes, and called for this to be set out in long-term strategy and targets. Some said that there was an absence of regulatory incentives for nature-positive action in the water sector, for example noting that current regulation focuses on grey infrastructure, and many respondents recommended giving water companies more flexibility to use nature-based solutions, for example by moving to outcome-based regulation. In addition, several respondents suggested that Sustainable Drainage Systems (SuDS) should be made mandatory in new developments.

Fragmented governance in the sector was also considered to be a barrier, with responsibilities for planning, flood risk and water outcomes spread across different regulators and agencies. Regulations for water monitoring, supply and storage were described as siloed, each with its own particular requirements, which was said to place difficult and contradictory demands on a range of organisations.

In addition to addressing the complexity of regulation, some responses called for expectations and responsibilities for all relevant sectors to be set out clearly, to provide clarity and embed shared accountability for meeting outcomes. It was also recommended that spatial priorities should be set through the Land Use Framework and Spatial Development Strategies, which could in turn be integrated into water company regulations and guidance for local planning authorities. The catchment scale was identified as crucial for cross-sector action in both defining and delivering water outcomes, and responses said that catchment-level governance also needed to be strengthened and clarified.

Incentives for investment

Many responses also highlighted that incentives for private sector investment in water outcomes are weak. Many businesses were said to be unaware of their impacts or dependencies on nature and the water environment, and the water-related risks they face. As a result they may take clean water for granted and do not recognise the business benefit of investing in nature-based solutions, particularly where the links are less obvious such as the role of woodlands. This was said to be particularly true where supply chains are complex, and due to the challenges of tracing downstream impacts on the water system from upstream actions. Some suggested that there should be greater incentives for the range of organisations which depend on water to invest in it, including agriculture, pharmaceuticals, manufacturing industries, energy and housing

Some responses suggested that this should be addressed through measures to require water stewardship or mandatory corporate reporting requirements on water consumption, as well as using frameworks such as the TNFD. It was also observed that some incentives currently work against sustainable water use, with Large User Tariffs, or ‘bulk tariffs’, which provide lower tariffs for higher water consumption, considered particularly unhelpful.

Other responses said that businesses find investment in water outcomes and nature recovery hard to justify due to upfront costs and the lack of sufficient or measurable financial returns. Some responses suggested that the evidence base for water investment and nature-based solutions needed to be improved, and frameworks developed to measure, monitor and monetise water outcomes to show the benefits of investing in nature. Suggestions included the development of standardised investment models, codes and outcome-based contracts for water related nature-based solutions.

Methodologies and data

To underpin efforts to strengthen the incentives for investments, improved and standardised monitoring to demonstrate impact was recommended. Responses highlighted difficulties in measuring and quantifying the impact of actions to improve water outcomes, and said more evidence is needed on the range of benefits of such actions – not just on water quality and quantity but wider benefits such as flood and drought resilience, biodiversity, carbon storage and health – to build confidence in returns on investment. They also noted that in complex natural systems and watersheds, it can be challenging to attribute outcomes (and thus contributions) to specific interventions or investors. Methodologies to do this were seen as vital to enable cross-sector collaborative investments in catchments.

The fragmented nature of regulation was also said to create problems with inconsistent, incomplete and inaccessible data on important water metrics and outcomes. It was suggested that regulators should be funded to deliver a comprehensive monitoring regime, with greater coverage and alignment across freshwater, transitional and marine waters and including a wider range of pollutants. Responses also suggested that a better catchment monitoring and data sharing framework is needed, bringing together data from a variety of sources including citizen science, to build a comprehensive picture of our water environment and target effective improvements for rivers and nature.

Q5. What activities by water companies that support nature recovery have potential to attract additional private-sector investment?

65 respondents answered this question, with responses focusing on the following themes.

Nature-based solutions

Most responses noted that a range of nature-based solutions as well as farm management practices could attract additional private sector investment, including:

• peatland restoration
• nutrient management
• wetland creation and river restoration
• rainwater management
• regenerative agriculture
• woodland creation
• tree planting in riparian buffer zones
• improved silage and slurry management
• over-winter cover cropping
• the creation of buffer strips

Water companies were said to be well positioned to lead such investment due to their operational activities in landscapes and catchments, and their ability to act as “anchor” investors. Other buyers could be attracted either by direct benefits (for example, to local water quality or availability, soil health, reduced flood risk or enhanced opportunities for recreation and tourism), or by nature market opportunities such as carbon or biodiversity credits.

Projects that involve partnership delivery with farmers, community groups and local authorities were said to be especially attractive to investors. Long-term maintenance funding for nature-based solutions was noted to be essential for investor confidence, and water company investment could provide some guarantee of this.

Catchment scale

The catchment scale at which water companies operate was often said to be critical to bringing different organisations together to pay for nature-based solutions and to provide the scale of impact needed for investment. Responses cited examples of collaboration between various organisations as a way of bringing in additional investment, including:

• water companies
• insurers
• investors
• food companies
• large corporates with water dependencies
• infrastructure organisations
• community groups
• landowners and farmers

Respondents also gave examples of successful catchment and landscape-scale schemes which match projects with buyers. Some suggested that aggregating multiple projects and benefits across catchments reduces risk and attracts private investment. The use of blended finance to support catchment partnerships was also recommended, with one example cited in which £3 of investment from non-governmental funders was brought in for every £1 of government investment.

Strategic collaboration with water companies as anchor investors

Some responses said that there is great potential for water companies to play a strategic role in nature-based water management and to catalyse other investment. This is because water company investment is substantial and regulated in a way which de-risks investment for other companies. There was said to be potential for water companies to collaborate with a range of other organisations to co-fund nature-based solutions. However many noted that investment in nature-based solutions by water companies is not often packaged in a way that enables such co-investment.

The use of formal co-benefit frameworks was suggested as an effective way of attracting private investors, including through the Asset Management Period process. For example, Ofwat’s Mainstreaming Nature-based solutions Common Value Framework was recommended as a tool for assessing the range of benefits provided by nature-based solutions, enabling water companies and regulators to assess value consistently and transparently and market benefits to possible buyers. Better guidance on the stacking of co-benefits was also recommended, as well as training farmers and land managers to give investors greater confidence in credit quality.

Enhanced environmental monitoring

Finally some respondents said that the development of enhanced environmental monitoring and datasets, that support both regulatory compliance and innovative environmental services, could help attract more investment into nature-based solutions by providing greater certainty for buyers and investors with respect to outcomes.

Q6. What should our priorities be when assessing the benefits of environmental enhancement measures proposed by the water sector?

64 respondents answered this question.

The 2 main priorities proposed in responses were to ensure that environmental improvements are measurable and verifiable, and an increased focus on actions with multiple benefits (including at catchment or landscape scale). A smaller number of responses proposed other priorities which are outlined below.

Tangible environmental outcomes or benefits

Tangible environmental outcomes and improvements were widely considered a priority, meaning that improvements should be measurable, with transparent baselines and robust MRV mechanisms in place, and that activities which deliver substantive, long-term improvements to catchment health should be prioritised.

Some responses noted that environmental outcomes within the water sector must be achieved using actions that are legally compliant and should contribute to national environmental targets, such as those embedded in the Environment Act, EIP, and Water Framework Directive.

The need was raised for more consistent and integrated regulation across multiple environmental outcomes, including a move to outcome-based regulation, to enable a holistic approach to assessing and valuing environmental benefits alongside other criteria.

Multiple benefits

The other main priority proposed was to focus on environmental improvements with multiple benefits, including benefits for the local community or wider public (such as recreation and health) as well as biodiversity, climate resilience, water quality and availability, flood mitigation and carbon sequestration.

Some responses suggested that multiple benefits should be assessed and measured using a common, government mandated framework, and some raised the importance of consultation and co-design with stakeholders.

Value for money

Some responses said that long-term value for money should be a consideration, highlighting that nature-based solutions often deliver better long-term value than grey infrastructure, with assessments including life cycle costs of the measures proposed.

Alignment with policies and targets

Some responses proposed prioritising measures for water outcomes and nature recovery with respect to their alignment with, or contribution to, national policies and environmental targets, including:

• Environment Act targets
• the Environmental Improvement Plan
• national site condition targets
• international nature targets
• the UK Marine Strategy
• the Water Framework Directive regulations
• the 30by30 commitment

In addition, some suggested that measures should align with local priorities as expressed in LNRS, local spatial development plans and catchment plans.

Effective evidence base

Finally, some responses said priority should be given to evidence or science-based measures using proven technologies. A robust evidence base with appropriate modelling and risk analysis was considered important in identifying and prioritising high impact interventions to ensure credibility and resilience. The development of a universal water metric to measure nature-based activities was suggested.

Q7. How can the water sector ensure that opportunities to deliver multiple benefits are considered from the start of investment planning and decision-making?

67 respondents answered this question and made the following main recommendations.

Catchment planning

Responses emphasised the importance of catchment-level assessments and integrated catchment planning with nature-based solutions built in early. This was said to be critical to delivering multiple benefits and identifying synergies across outcomes for water quality, habitat creation, flood mitigation and access to nature.

An approach to water planning that considers the overall outcomes for the catchment and the full range of investment drivers up front was said to provide more opportunity for the uptake of nature-based solutions rather than single-purpose grey infrastructure, and to help maximise the benefits delivered.

Early stakeholder engagement

Many responses said that inclusive and comprehensive stakeholder engagement at an early stage in a project is essential. They emphasised that stakeholders including water companies, developers, insurers, farmers, land managers and communities, should be included at the beginning of investment planning, so that multiple perspectives, needs and benefits are considered and integrated solutions can be designed that align water sector goals and landowner and land manager objectives.

A collaborative approach was also said to improve the likelihood of project success, with the potential to unlock co-financing opportunities, enable blending of multiple sources of funding, and maximise local knowledge and commitment, resulting in better project design and stewardship.

A natural capital approach

Many responses recommended adopting a natural capital approach at the start of investment planning, to quantify the range of goods and services provided by ecosystems. They said that this would help the water sector find opportunities to deliver multiple benefits and enable planners to more comprehensively appreciate and consider the value of nature and its contribution to different land management outcomes.

A natural capital approach was also said to enable payments for landowners and land managers to be designed according to the value of the nature-based projects they deliver, strengthening incentives for them to supply land for this purpose.

Integrated data assessment tools

Responses highlighted that wider use of integrated data assessment tools – which track multiple environmental, social and economic outcomes over time – would be useful to inform decision-making. A number of specific tools were recommended which could allow planners to more comprehensively understand environmental impacts, focus on priorities and make investment decisions that deliver multiple benefits. For example, digital software which projects data layers onto maps can be used to visualise the impacts of different policy options for analysis.

It was also noted that an agreed evidence base across the water sector would help standardise the evaluation of co-benefits, helping to attract private sector investment where stacking is allowed.

Joined up, outcome-focused policy and regulation

As with previous questions, responses also said that disjointed policy and fragmented, overly complex regulation is a barrier to delivering approaches which generate multiple environmental benefits. A more consistent regulatory framework was recommended, to support positive actions and outcomes for nature and enable businesses to invest and plan long-term. Long-term policy and strategy was said to be vital to provide clarity to water companies investing in environmental outcomes.

A shift to outcome-based regulation was recommended by several respondents to enable more use of nature-based solutions by the water industry, suggesting that water companies need to be empowered to work with stakeholders and deliver outcomes more flexibly, without always relying on grey infrastructure. Some suggested that targets should be set at the national level and apportioned to catchments, and that these targets should not only focus on water quality but also other environmental benefits such as biodiversity and carbon.

Other responses raised a need for clearer design criteria and stacking rules in nature markets, so that all nature services can be incentivised, and suggested greater alignment of water sector policy with LNRS and the Land Use Framework.

Outcome 2. Nature-based carbon reductions and removals

Q8. What are the reasons why businesses fund or buy nature-based carbon through insetting agreements or markets such as the Woodland Carbon Code and Peatland Code?

72 respondents answered this question. They identified 5 main reasons why corporations buy nature-based carbon credits:

• to meet voluntary environmental and social commitments
• for reputational gain with stakeholders and customers
• to fulfil regulatory reporting requirements
• in anticipation of future regulatory requirements
• in anticipation of carbon credits increasing in value over time

Responses indicated that corporate buyers view the Woodland Carbon Code and Peatland Code in particular as high quality. In their view the schemes offer high-integrity, verified and quantified carbon solutions, as well as generating broad ecosystem and social benefits beyond carbon. Buyers recognise the value of investment in projects generating visible local impact, and prefer nature-based offsets and removals to engineered offsets and removals.

Respondents also noted that insetting can offer corporations operational and supply chain resilience benefits, for example through reduced disruption risks (such as improved soil health) and to safeguard against future volatilities in nature-based carbon removal markets.

Q9. What are the barriers for businesses in buying nature-based carbon through markets such as the Woodland Carbon Code and Peatland Code?

78 respondents answered this question. They highlighted issues to do with market complexity and uncertainty, a lack of incentives to buy nature-based carbon, and the attractiveness of alternatives as important reasons why businesses do not invest.

Market complexity and uncertainty

Respondents cited the high complexity of engaging with nature markets (for example, a lack of central marketplace, uncertainty regarding how to account for carbon credits) which creates a significant administrative burden for buyers. Combined with a lack of technical expertise this prevents corporate buyers from engaging in nature-based carbon markets. Corporate buyers are hesitant to purchase Pending Issuance Units due to lag-time on making green claims.

Respondents also highlighted the limited supply of high-integrity, verified UK credits available, noting that supply is fragmented, there is a lack of clear and stable pricing, and no codes exist for alternative nature-based carbon such as saltmarsh or seagrass. Both corporate buyers and investors are uncertain around standards, methodologies, permanence, stacking co-benefits and integration with other schemes, and fear the reputational risk of being associated with greenwashing.

Lack of incentives to buy nature-based carbon

Respondents noted that nature-based carbon markets are voluntary and therefore lower priority, exacerbated by a lack of clear government direction on their use. Businesses often do not see sufficient demand from their stakeholders or the public to justify buying credits. A particular limitation facing investment in peatland restoration was highlighted in that existing science-based emissions targets do not value emissions avoidance from peatland restoration, instead focusing on emissions removals solutions.

Attractiveness of alternative solutions

Some corporate buyers expressed a preference for insetting within their own supply chain, rather than purchasing credits, while others noted that cheaper alternatives to the Woodland Carbon Code and Peatland Code are available in international markets.

Q10. How can government ensure policies to support tree planting are also effective in unlocking private finance for woodland carbon?

69 respondents answered this question. Responses called for support to increase the financial viability of tree planting for woodland carbon, from both supply-side and demand-side perspectives. The main themes included incentivising high-integrity actions, simplifying and standardising carbon markets, and increasing private finance demand.

Support for financial viability (supply side)

Respondents proposed various measures by which government could support the viability of tree planting projects. These include provision of finance both through blended public-private partnerships, and early stage funding and support for project establishment. Carbon credit warehousing was suggested as a mechanism whereby government could store credit for timely future sales.

The need to provide more certainty on prices and outcomes was also raised, as were calls to facilitate more stackable credits. Finally, the creation of financial incentives was suggested, for example through tax reliefs.

Increase demand for woodland carbon units (demand side)

Respondents noted that to increase demand for woodland carbon units will requires clear, consistent policy and regulatory systems. Specific measures suggested included the development of green public procurement standards, creation of mandatory demand for credits or mandating investment in mitigation.

Simplify and standardise carbon markets

Respondents made various suggestions aimed at simplifying and standardising carbon markets to ensure integrity and reduce barriers to entry. These included:

• providing clear guidance around legal frameworks and ownership
• developing simple integrated processes across codes
• ensuring integrity through stronger monitoring and accreditation processes
• developing standardised metrics and indicators for carbon accounting and disclosures

Respondents also recommended more alignment of processes and regulation across the devolved nations and updated registry systems.

Other suggestions

Respondents made a number of additional suggestions including:

• designing tree planting schemes to incentivise high integrity
• reviewing land use and planning regulations to reduce frictions
• supporting research and development and innovation into effective tree planting approaches
• supporting workforce and skills pipelines to address skills gaps

Q11. Which sectors could be further incentivised to use, reuse and recycle timber as a low-carbon material?

41 respondents answered this question, mentioning the following main sectors.

Table 4. Sectors mentioned in responses*

Sector	Number of responses
Construction	34
Manufacturing	19
Administrative and support services	13
Agriculture, forestry and fishing	12
Transport and storage	9
Wholesale and retail trade	8
Health and social work	8

* Sectoral categories used are based on the SIC from the Office for National Statistics. Sectors mentioned in fewer than 5 responses are not included. Respondents answered with free text so could mention multiple sectors.

In general, responses suggested that targeted incentives, procurement standards, adjustments to planning policy, lifecycle carbon accounting, tax relief for recycled timber use, and standardised material labelling schemes highlighting carbon and nature savings of recycled products would all accelerate timber uptake, re-use and recycling across sectors.

Many responses said that the construction industry has particularly high potential to scale up the use, re-use and recycling of timber, if the right infrastructure and incentives are in place. Furniture and manufacturing, packaging, logistics, retail and events furnishing were also identified as sectors which could be incentivised to make greater use and re-use of timber, by replacing plastics with engineered wood products and promoting circular economy design using reclaimed or certified sustainable timber.

Q12. How could businesses which emit greenhouse gases or have negative impacts on biodiversity be further incentivised to fund or buy nature-based carbon reductions and removals, in line with the polluter pays principle?

72 respondents answered this question, raising the following main themes.

Measures to drive corporate demand for nature-based carbon

A range of measures were suggested to increase demand for nature-based carbon. These included mandatory measures such as nature-based accounting and disclosures or requirements for offsetting, as well as stronger accountability for corporates for pollution and for claims made regarding insetting or contributions to environmental targets.

Some recommended that standards for offsetting and insetting could be built into corporate reporting requirements and guidance and transition plans. Direct financial incentives were also suggested, which could be both positive (for example, tax reliefs) or negative (for example, penalties for failures), and clear standards for procurement – including by government – could drive up demand.

Some responses proposed softer measures such as recognition schemes for organisations that meet standards, and efforts to increase awareness of the role and value of nature-based reductions and removals.

Development of standardised markets

Responses also recognised that buyers want to be sure that credits have integrity and that credit markets need to function effectively. Recommendations to achieve this included the development of standardised metrics for nature-based mitigations and guidance for the use of nature-based credits, including on legal frameworks and ownership. Accreditation that verifies and certifies nature-based reductions or removals was recommended.

Several responses called for rules to ensure markets are integrated and interoperable and for greater stacking of credits and benefits to be enabled. On the supply side, some emphasised that barriers to entry to carbon markets need to be reduced, especially for smaller suppliers.

Targeted investment

Finally, some responses called for targeted public investment to support:

• research and development to strengthen the evidence base that links land management with impacts
• innovation
• public-private partnerships for landscape-scale restoration
• skills and training among those delivering restoration

Outcome 3: Access to nature – supporting tourism, recreation and wellbeing

Q13. What measures could be used to increase and diversify funding to ensure our Protected Landscapes are sustainably resourced?

61 respondents answered this question, proposing the following measures in particular.

Public funding

Many responses emphasised the vital role of public funding in supporting Protected Landscapes, both core funding and grant schemes such as Farming in Protected Landscapes. Several noted that Protected Landscape bodies need support and resourcing to diversify funding sources, as they will need to play a vital role in attracting and managing flows of private finance while also developing, assuring and aggregating a strong supply pipeline of nature-related services. However, it was said that many currently lack the resources to play this role.

Blended finance

There was a lot of support for blended finance models, building on existing schemes such as Local Investment in Natural Capital and Landscape Recovery. Responses proposed a range of de-risking mechanisms such as:

• public finance guarantees
• matched funding
• green (or blue) bonds
• seed capital for a new protected landscapes fund

Several argued that sustainable resourcing of Protected Landscapes will require a diversified funding model, bringing together public funding with a wide range of sources of private investment, which could include:

• sale of biodiversity or carbon credits
• tourist or visitor charges
• contributions from local businesses
• corporate sponsorship
• new local taxes
• investment from regulated sectors, potentially driven by specific mandatory performance commitments

Charities and philanthropic organisations were also noted as important sources of funding in some responses.

Partnerships

Many responses emphasised the importance of partnerships to accelerate green finance, both the work of nationwide partnerships and local or regional initiatives bringing together a range of stakeholders to coordinate investment and nature recovery.

Several emphasised the need for an element of local or community governance over the management of protected areas. A small number highlighted the need for greater clarity over the respective powers of protected landscape bodies and local authorities. At the same time, it was also suggested that a centralised national platform to match projects in protected landscapes with potential investors could enhance flows of private investment.

Biodiversity and carbon markets

Several responses suggested that there could be a greater role for sales to carbon and biodiversity markets from protected areas, but some emphasised the need to strengthen incentives for both buyers and sellers for this to happen at scale.

Suggestions to achieve this included allowing a greater degree of stacking between markets, and that more needs to be done to encourage businesses to buy carbon offsets from high quality domestic projects.

It was noted that current rules for BNG do not favour investments in protected landscapes as they tend to be geographically distant from developments. Voluntary biodiversity credits were suggested as a potentially significant source of revenue, though the market is currently at an early stage of development.

Other suggestions

A smaller number of responses made additional suggestions, including noting that it was important to support traditional livelihoods and agriculture in protected landscapes, alongside nature recovery.

Q14. Would you support greater application of the beneficiary pays principle in Protected Landscapes?

51 respondents answered this question. 20 expressed support for application of the principle, 8 did not support it and 23 answers were mixed or offered partial support with caveats.

Applying the principle to businesses

Many responses drew a distinction between applying the beneficiary pays principle to businesses versus individuals. There was significant support for the idea that those businesses benefitting commercially from protected landscapes ought to contribute to their maintenance, but it was noted that there are currently few formal mechanisms to enable this. Beneficiaries mentioned include:

• tourism operators
• water companies
• infrastructure operators
• insurance companies
• developers
• large estates
• retailers or other businesses who use the landscapes as part of their branding

Possible mechanisms suggested include:

• payment for ecosystem services schemes
• local levies
• access fees or co-funding arrangements

Some suggested that payments should be made directly to the relevant land managers, for example, payments to farmers adopting catchment-sensitive methods. Several responses warned however that a beneficiary pays model should not be designed in such a way as to give people licence to cause environmental damage, or to remove responsibility from polluters.

There were different views on whether business contributions should be mandatory or voluntary, with responses suggesting that a mandatory approach would raise more money and could do more to drive sustainable practices but could also discourage businesses from operating in protected landscapes or cause existing businesses to fail. For voluntary contributions to be incentivised, responses said that businesses need to be able to see the benefits of action more clearly.

Visitors and tourists

Many responses said that the beneficiary pays principle should not be applied to members of the public, for example through entry fees, to ensure that protected landscapes and nature remain accessible to all, in line with their founding purpose. Many said that visitor charges would harm efforts to increase the diversity of visitors, and emphasised that any beneficiary pays scheme must not compromise public access or disadvantage low-income groups.

Some, however, did feel that it would be reasonable to charge visitor fees or a tourism tax to fund measures such as fences, paths and waste removal, or suggested charges for car parking or road use. Some favoured a very limited form of permitting for activities which cause particular environmental harm. Voluntary visitor donations were also mentioned as a potential source of funds.

Public funding

Several responses emphasised that even if beneficiary payments are sought, they should supplement and not replace what these respondents see as the role of core public funding in delivering public goods through protected landscapes, including:

• nature recovery
• climate resilience
• access to nature and cultural heritage

Quantifying benefits and fairness

Several respondents also raised issues to do with quantifying and attributing benefits, noting that this can be challenging particular for indirect benefits, but that where payment is expected for specific benefits these need to be defined transparently. Many respondents emphasised that the beneficiary pays principle needs to be applied fairly, with safeguards to avoid unintended social or environmental consequences.

Stakeholder engagement and clear frameworks may be needed to define beneficiaries, quantify values and share contributions in an equitable way. Several respondents emphasised that revenues should be used transparently and reinvested locally.

Q15. Would you support greater application of the polluter pays principle in Protected Landscapes?

53 respondents answered this question. 35 supported application of the principle, 3 did not support it and 15 expressed partial support.

Responses which supported the polluter pays principle gave 4 main reasons:

• to secure funding for nature restoration and management
• to enable internalisation of environmental costs
• to incentivise businesses to reduce environmental harms and adopt more sustainable practices
• to rebalance the burden of paying for nature recovery away from communities and charities

Several responses said that the polluter pays principle should be applied to all landscapes, not only protected landscapes. Responses also raised the following considerations when applying the polluter pays principle.

Design and administration of polluter pays schemes

A range of charging modes were mentioned, including:

• levies or offset requirements on developments
• fines or charges for specific activities such as pollution or illegal extraction
• regulatory penalties for non-compliance with conservation rules, or mandatory contributions to an overall fund for nature recovery

Many responses stressed that polluter pays schemes needed to be carefully designed and administered. Design considerations included clarifying which forms of environmental damage are in scope and quantifying and attributing impacts transparently, which can be difficult in complex systems with diffuse environmental pressures.

Responses also highlighted risks which need to be managed, for example, polluter pays schemes could lead to additional costs being passed on to customers, creating higher costs for local communities. Enterprise might be disincentivised from establishing or expanding in or near protected areas, with negative effects for jobs and local economies, and charges may not be affordable for farmers or small businesses (also putting at risk the environmental benefits the same farmers might be delivering).

Some respondents also noted that the polluter pays principle should be applied with the primary goal of reducing pollution and should not be seen as giving licence to ‘pollute and pay’.

Enforcement and support

An important aspect of the design of schemes is monitoring and enforcement, which is resource-intensive particularly when sources of pollution are small-scale and diffuse. Many respondents therefore said that regulation and enforcement need to be well resourced, with some emphasising that stronger enforcement of existing environmental laws is also essential.

Several also recommended that polluter pays schemes need to be balanced with training, advice and positive incentives for polluters to transition to nature-positive practices, especially farmers and land managers who have the potential to (or may already) deliver significant environmental benefits alongside the pollution they generate.

Fairness

As with the beneficiary pays principle, several responses emphasised that the polluter pays principle must be applied fairly. Considerations included whether it is fair on farmers in protected landscapes to impose charges only within these areas and not outside them, and whether the scope should be limited to pollution as traditionally understood or should encompass other forms of negative environmental impact.

Q16. What are the benefits, and barriers, to businesses investing in actions which help to contribute to 30by30?

61 respondents answered this question.

Many of the issues raised mirrored those which were mentioned elsewhere regarding investment in nature in general, for example, the lack of a strong pipeline of investable projects and a need for standardisation, agreed metrics, early-stage development finance and de-risking to help crowd in private capital. Most responses to this question related to 30by30 on land but a smaller number discussed 30by30 at sea and noted that in the marine environment there are even fewer investable projects and challenges with sparse data, meaning that additional interventions, such as pilots with tailored MRV and public de-risking, are needed.

Benefits of investment

Responses largely said that investment could lead to reputational and environmental, social and governance (ESG) benefits for businesses, with associated market advantages, and in some cases could bring direct operational benefits (for example, for businesses dependent on local water resources) and reduce nature‑ and climate-related risks to operations and supply chains.

Several also highlighted the benefits of access to new revenue streams from nature markets, and alignment with emerging reporting requirements and future regulatory requirements. Some cited the potential benefits in terms of staff wellbeing and retention, particularly if staff could access the landscapes in question for recreation.

Barriers to investment

Weak incentives

Despite highlighting the benefits above, a large number of responses said that currently the incentives for investment are very limited in practice, and are not sufficient to drive investment at scale.

Some said that mandatory levers were needed because expected returns on voluntary investment were poor or highly uncertain, while others focused on stronger incentives for voluntary action such as priority in government procurement, mandatory reporting through the TNFD, or rewards through Environmental Land Management (ELM) schemes.

Lack of guidance and frameworks for 30by30 investment

Responses cited the absence of 30by30 guidance and investments frameworks as specific barriers holding back businesses from investing in 30by30. Gaps identified include clarity on eligibility criteria for land to count towards 30by30, associated standards and metrics, guidance on priority areas and a mechanism for officially logging and measuring contributions to 30by30.

For investors who do not own land, several responses noted that there is no agreed mechanism or framework for investing in 30by30 and no clarity on what actions ‘count’. Several responses suggested that government publish 30by30 guidance and standards, and a clear delivery plan with spatial priorities linked to LNRS and the Land Use Framework, and clarity on the actions expected from businesses in different sectors.

Policy and regulatory uncertainty

Several responses noted that more general policy and regulatory uncertainty is deterring long-term private commitments and supply-side development of projects for investment. Regarding 30by30, responses cited farmer and landowner fears that pledging land could lead to future designation with restrictions on future use and management of the land, as well as administrative and monitoring burdens. This was considered to deter farmers and landowners from committing land, especially as there is no advantage for them in formally pledging land to 30by30 (there may be incentives for taking action for nature recovery, but this can be done without pledging).

Regarding wider policy and regulation, many cited shifting policy on BNG, with some also pointing to planning reforms and pauses to schemes such as Sustainable Farming Incentive (SFI).

Several responses called for strategic alignment of policies across nature markets, ELM schemes, planning, land use and protected areas, linked to the calls for long-term clarity on how 30by30 will be delivered.

Measurement and data

The other main theme noted in responses was challenges related to measurement and data. Several noted gaps and a lack of confidence in data on the underlying condition of the environment, as well as the lack of agreed and transparent metrics and tools for measuring biodiversity, ‘nature-positive’ outcomes or a range of associated co-benefits. Some noted that it is also challenging and complex for businesses to link these outcomes to quantifiable value for their business.

Q17. In order to support access to green spaces in more urban settings, what measures could be used to increase and diversify funding for local parks and natural spaces?

51 respondents answered this question. They highlighted the following main themes and measures.

Public funding, blended finance and the role of local authorities

Several responses noted that due to funding shortfalls, local authorities have cut back funding for green spaces meaning they are unable to make the best use of these spaces, despite many respondents recommending that management of green space should be more strategic and nature-focused (and not just lawns). Similarly while some recommended that new developments should be required or incentivised to provide green spaces, others noted that councils may be disincentivised from taking these on due to the demands of managing and maintaining them.

Some responses suggested measures to enhance or make better use of available public funds. These included:

• increased and ringfenced central funding for nature and green spaces, enabling councils to retain more tax income
• more targeted use of public funds (such as prioritising nature-deprived areas identified in LNRS)
• mobilising volunteers
• using challenge funds or outcome-based funding linked to nature recovery or community wellbeing improvements

Many talked about the need for councils to adopt blended financing models, citing various existing models and recommending seeking finance from a range of actors who might be prepared to (or could be required to) pay for the various benefits provided by nature, such as health, urban cooling and flood risk reduction. These included:

• various forms of local levies and charges
• health sector funding
• utility investment
• developer contributions and offsets
• support from local businesses
• crowdfunding and bond issuance

However several responses noted that this would require the local authority or other stewardship body to have the remit and capacity to attract private finance and develop suitable funding models, which in itself will require a minimum secure level of funding. The model of establishing independent charitable stewardship trusts in new towns was recommended as an effective approach which could be adopted in future new towns.

Other recommendations were that central government should provide funding for combined authorities to develop regional nature market funding models to deliver their LNRS – essentially expanding the existing Local Investment in Natural Capital fund – or provide a short-term capital fund to enable local planning authorities to buy habitat units which could be sold on to developers.

Local levies and charges

Several responses said that greater use of Section 106 agreements and Community Infrastructure Levies would be most suitable to generate funding for nature recovery, and some suggested levies on car parking or regional, local or city level levies on businesses linked to their impacts on nature. It was suggested that income could form a pooled fund for nature or be used to create an investable portfolio of projects to attract further private investment. 

Health and green social prescribing

Many respondents emphasised the health and wellbeing benefits of urban nature and green space and linked this to the potential for health-related funding. Several recommended national action to expand the role of GSP schemes (linked to NHS budgets) and to formally recognise the role of green and blue space in public health, mental health and loneliness strategies. This would create secure long-term funding streams for nature-based programmes in areas of health inequality, with local health bodies empowered to invest in blue and green spaces as part of local health improvement plans. Some also cited opportunities such as local and regional health partnerships to improve green spaces.

Some responses also suggested that private health insurers or corporates might be willing to invest in nature as part of employee wellbeing or ESG strategies, or that businesses might invest in “buying” health outcomes for their employees by investing in local green spaces. It was however noted that clearer quantification of the health-related returns would be needed. This quantification would also allow instruments such as health impact bonds and impact investment schemes to be developed. One recommendation was therefore to support pilot projects to develop valuation approaches and generate unit values.

Sponsorship

Sponsorship by local businesses was another common theme in the responses – both direct financial sponsorship of new or existing green spaces (with potential for brand advertising), but also businesses being encouraged to volunteer resources, skills or staff time (such as volunteer days). Health, fitness and outdoors brands were suggested as possible likely candidates.

Outcome 4: Flood management

Q18. Which of the beneficiary sectors of NFM are best placed to contribute to funding it?

57 respondents answered this question. They proposed that the following sectors could or should contribute to funding NFM.

Table 5. Sectors mentioned in responses*

Sector	Number of responses
Sectors that depend on nature	32
Utilities	46
Financial and insurance activities	39
Construction	31
Agriculture, forestry and fishing	22
Transport and storage	14
Public administration and defence	14
Manufacturing	7
Wholesale and retail trade	6

* With the exception of the category “sectors that depend on nature”, sectoral categories used are based on the UK SIC from the Office for National Statistics. Sectors mentioned in fewer than 5 responses are not included. Respondents answered with free text so could mention multiple sectors.

Most responses agreed that sectors and businesses which either benefit from flood risk reduction or themselves contribute to flood risk, should be part of the solution, with wide agreement that funding should be equitable, transparent and should incentivise long term investment in quality outcomes. Responses suggested a diverse range of investors, in particular where NFM reduces operational risk, infrastructure damage or regulatory exposure.

Two sets of specific sectors emerged among those suggested to be best placed to pay for NFM. The first are seen as the main specific beneficiaries of flood risk reduction or as specific contributors to on flood risk, and include:

• insurance companies
• local authorities
• infrastructure providers (such as highways, utilities and developers)
• intensive agriculture
• high-carbon businesses

The second group was a broader set of all sectors that rely on a steady supply of water and businesses in flood plains or downstream areas of catchments, meaning. those at risk of disruption from flooding, who responses suggested should be incentivised to invest in upstream solutions. Suggestions in this group included a wide range of businesses such as:

• hospitality and tourism
• energy
• food and drink
• retail
• industrial parks
• logistics hubs
• financial services

Respondents noted that a catchment-wide approach to NFM should be funded by all sectors, with an emphasis on those who benefit most, and that revenue streams should fund both the creation and long-term maintenance of NFM including land and soil management.

Q19. What mechanisms could best enable this?

63 respondents answered this question. There was broad agreement that to scale NFM effectively, government should create the conditions for co-ordinated, multi-beneficiary investment, supported by clear metrics, legal clarity, and trusted local delivery partnerships. Priority mechanisms should blend regulatory levers, outcome-based finance, and cross-sector coordination at the catchment scale.

The following main themes were highlighted.

Incentives

Most responses agree that stronger incentives are needed to encourage contributions to funding NFM, with many suggesting a primary focus on water and insurance companies as they are well suited to this role. Actions suggested to enhance incentives included support and guidance for companies to develop a robust business case for investment in NFM, clearer reward structures linking payments to outcomes, and financial incentives such as:

• impact bonds
• insurance premium reductions
• tax incentives
• greater use of outcomes-based contracts

Targeted investment readiness support was also recommended.

Regulation and standards

Many responses noted that a clearer framework of regulations, with measurable standards and codes for NFM in place, would provide greater certainty over the impact of NFM interventions and enable traceability and impact measurement, which would all help create demand for NFM solutions. Many respondents highlighted the benefits of standards and some suggested that developing a UK government-backed NFM standard would ensure high integrity.

Some said that government should consider how changes to how FloodRe operates could accelerate the development of the NFM market, for example using its industry levy mechanism to raise contributions to fund nature-based solutions or buy NFM outcomes. Supportive policy frameworks and planning regulations that recognise and reward nature-based approaches were also said to be essential. Suggested examples included mandatory ecosystem services assessment for planning and in the deployment of private finance, and local levies for planning applications to be invested in NFM.

Partnerships

Some responses said that blended finance for public-private catchment partnerships, potentially with a mandatory element, are vital to prioritising NFM investments that are aligned to national targets and are coordinated across sectors such as agriculture, energy, and development. As a delivery method it was suggested that catchment partnerships within multi-stakeholder platforms could facilitate shared governance and pooled resources across sectors.

Q20. How can mechanisms such as these account for and adapt to the local nature of natural flood management?

48 respondents answered this question, recommending the following approaches.

Local governance

Most responses agreed that location-specific solutions to NFM require locally-led governance and management frameworks to deliver the best outcomes. Restoration efforts that are strategically located and also linked to national priorities were said to have the greatest potential for ecological uplift, creating larger, more resilient habitats.

Partnerships

Many responses emphasised that partnership working will be important to successful implementation of any NFM intervention and deliver greater benefits for communities and landscapes. Combining public seed funding with private contributions was recommended to enable local codesign, linked to national-scale strategic prioritisation of NFM. Responses suggested that these partnerships should have decision making authority at a local level, to prioritise interventions and allocate funding based on community needs and local knowledge.

Metrics

Several respondents said that flexible place-based metrics and robust standards frameworks are needed to build the evidence base for the effectiveness of NFM interventions, and thus help unlock private sector funding. Some noted that performance metrics reflecting local environmental goals could also be applied to justify investment outcomes and support nature recovery.

Incentives

Many responses emphasised the importance of having the right incentives in place. Several said that payment mechanisms for NFM should be structured on a payment-for-outcomes basis, with government spatial targeting mechanisms used to adjust outcome-based payments.

Other suggested approaches, to be adopted by government or other actors, include:

• flexible contracts
• sale of combined co-benefits within NFM projects
• payment structures which link payments to outcomes
• careful consideration of risk sharing
• further integration of ELM schemes (for example, employing floods funding for capital delivery and ELM funding for ongoing management and maintenance of NFM features)
• legislative safeguards for liability
• best practice guidance
• habitat-based credit schemes
• blended finance models

Finally, some responses recommended further research to understand the benefits of restored landscapes that could support an approach where out-of-catchment delivery is allowed but carries a multiplier penalty or disincentive.

Data

Responses suggested that more work is required to implement nationally consistent ways of collecting data and monitoring the effectiveness of NFM investments. Many respondents were expecting these changes as part of the updated assessment and appraisal process for NFM. Respondents recommended that government should

• simplify the assessment process and make it easier to determine the flood-related and wider environmental benefits of a project
• apply adaptive management approaches where monitoring and evaluation systems evolve based on local performance data

Outcome 5: Sustainable land use and food production

Q21. What policies or financial models have been most successful in improving environmental performance and sustainability within the food and drink sector? Please provide evidence.

55 respondents answered this question and highlighted the following themes.

Government regulation and incentive schemes

Responses emphasised that regulation has been an effective tool to improve sustainability in the sector, with many emphasising its value in providing certainty to businesses, raising minimum standards and creating a level playing field. Some said that attaching penalties to harmful actions can prompt the fastest transitions, citing examples such as the plastic bag charge. The role of government in creating positive financial incentives for more sustainable practices was also raised, noting that these can improve resource allocation, shift norms and reduce barriers to participation. One example cited was the Tackling Food Surplus at the Farm Gate scheme which incentivises reduction in food waste.

Agri-environment schemes

Several responses noted that one of the most successful measures in improving environmental performance in agriculture were agri-environment schemes such as ELM schemes. In addition, several noted instances of successful partnerships being established building on public grant schemes, in which farmers have delivered multiple benefits to attract additional sources of finance, for instance integrating sustainable agriculture with NFM. Support for such partnerships was recommended, noting that strong co-ordination enables collective problem solving, supports balanced land-use decisions, and strengthens long-term system resilience.

Specific financial models and blended finance

Responses also cited specific financial models that have been successful in improving environmental performance. Some responses highlighted blended finance schemes including public contributions as particularly effective because they:

• de-risk investment for the private sector and mobilising action
• entail collaborative structures which align incentives and distribute risks
• encourage joint responsibility
• enable action at landscape scale and across value chains
• generate greater demonstrable outcomes in complex economic and environmental systems

Other financial models deemed effective included sustainability-linked loans and finance with long repayment schedules, with responses citing several international examples of funds including in Australia, Brazil and Norway.

Certification schemes

Several responses said that certification schemes and associated labelling reward more environmentally friendly suppliers, by enabling consumers to select products which meet higher environmental standards and also raising awareness – and thus demand – for such products. In addition, they were said to increase market transparency and the credibility of claims by publicly signalling which producers meet higher standards, and to help normalise sustainability as a competitive advantage. Specific schemes which were said to have been effective in improving environmental performance include Organic certification, the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC), while there was some disagreement about Red Tractor, with some responses stating this was not effective enough in improving environmental performance.

Private sector innovation, corporate targets and value chain investment

Some responses gave examples of independent private sector innovation in improving sustainability and said that innovation plays a pivotal role in accelerating a shift to more sustainable practices. Various examples of were given of food and drink companies investing in nature restoration and reducing the environmental impacts of production, while maintaining or improving yields.

Several respondents said that when supermarkets or retailers set corporate targets and accompanying goals within supply chains, this creates incentives for suppliers to adopt sustainable practices. Examples mentioned included companies setting goals to reduce scope 3 emissions, science-based targets and climate related risk.

Examples were also given of companies supporting their suppliers to achieve these targets or goals, through financial incentives to farmers for sustainable practices as well as practical support. Some cases were mentioned in which companies and suppliers work together to create shared approaches, sharing knowledge and providing advice.

Q22. What further measures would be most effective in incentivising the food and drink sector to reduce its impact on nature and increase its investment in nature recovery?

62 respondents answered this question. Many respondents were supportive of further measures to incentivise the food and drink sector to invest in nature and responses discussed the following main themes, building on responses to the previous question.

Fair burden sharing and insetting across the supply chain

Many responses called for fairer burden sharing of nature restoration measures across the food and drink supply chain. Recommendations included due diligence requirements embedded across supply chains, with mandatory measures and clearer obligations on large businesses to source food from nature-positive producers.

Some responses emphasised the importance of supply chain buyers both rewarding farmers for regenerative farming practices, to ensure the transition is economically viable in the long term and at scale, and providing long-term support for them to do so, for example, by funding specific SFI standards such as soil carbon or supporting famers to adopt new technologies or innovative practices.

It was suggested that the Groceries Code Adjudicator might have greater responsibility for enforcement of sustainable practices. Some asked for clearer guidance from government on the financial benefits of investing in nature to help companies build business cases, and some suggested that tax incentives for businesses who invest in nature.

Clear long-term regulation and government policy

Many responses asked for clarity on government’s expectations for investment in nature by the food and drink sector, expressed through clear, consistent and long-term guidance and regulation, with some asking for specific guidance on the business benefits of investing in nature. They said that this would enable businesses to plan ahead, secure returns on investment, minimise risks of greenwashing and scale up to larger nature projects.

Stronger regulation of supply chains to encourage sourcing of food from nature-positive producers, in particular by larger food companies, was recommended to prevent harmful practices and reward farmers for sustainable practices. Specific suggestions included broadening Extended Producer Responsibility schemes to companies causing negative impacts on nature, in line with the ‘polluter pays’ principle. There were also strong calls for a stable, well-communicated alignment of long-term policy and regulation for farmers to give them the confidence to invest in nature, including through:

• ELM schemes
• LNRS
• Land Use Framework
• EIP
• Farming Roadmap
• Food Strategy
• Farming Rules for Water

Co-design with farmers was recommended to ensure that these policies are practical, locally relevant and financially viable.

Reporting and disclosure of nature impacts and sharing of supply chain data

Many responses said that government should strengthen accountability for food and drink businesses and supply chains by mandating disclosure of nature-related risk data. Many suggested making the TNFD mandatory, to enable agri-food businesses to assess and reduce biodiversity impacts alongside their climate impacts. A UK-wide disclosure standard was also proposed. Some responses recommended that sustainability disclosure obligations should be forward-looking, requiring assessment of future risks (such as for deforestation, soil degradation and water pollution) to encourage harm prevention.

There were also many suggestions to improve the efficiency and accuracy of data collection and sharing within supply chains, to stimulate greater investment from business. More robust MRV of data, including through the Food Data Transparency Partnership (FDTP) and standardised farm calculators, was identified as essential to improve accountability and enable impacts to be tracked. There was high demand in responses for long term consistent reporting frameworks, rather than short term or ad hoc reporting.

Market integrity and standards

Many responses called for robust rules, guidance and governance to ensure the integrity of nature markets and provide certainty for businesses to enable investment in nature at scale. Many said that stacking rules should be clearer and some suggested stacking trials to assess the benefits for both food businesses and farmers. Some responses also emphasised the need to support collaboration between farmers and buyers, in particular aiming to establish durable supply chain relationships, and measures to ensure nature markets are accessible for a range of farm sizes.

There was wide support for the BSI Nature Investment Standards which were seen as playing an important role in standardising markets and providing business confidence. But some responses called for stronger validation, verification and measurement to ensure integrity. A national register of accredited nature recovery projects was suggested using verified, long-term nature outcomes data.

A further suggestion was for a general ‘insetting’ standard where existing nature, carbon, biodiversity and nutrients standards are not appropriate, as well as for specific guidance on farm leakage. Some respondents also called for more robust and readily accessible data, to help businesses and farmers monitor environmental impacts, forecast nature outcomes and monitor displacement of food production.

New forms of support for farmers to transition

Some responses suggested that positive environmental outcomes should be achieved through tax relief for capital items which farmers need to support nature recovery and address their climate impacts, and through permitted development rights for farmers installing renewable energy. Concessionary loans and guarantee schemes were also suggested to enable farmers to adopt new practices.

Nature-positive food labelling

Several responses called for more rigorous food labelling standards across the supply chain, noting that these should focus on restoring nature in addition to carbon, with some saying that existing farm gate standards such as Red Tractor and Linking Environment and Farming (LEAF) should be strengthened and that locally-produced food and drink should have more of a focus.

As well as enabling consumer choice of nature-positive brands, this was seen an opportunity to increase public awareness of where their food comes from and its environmental impacts. Positive case studies, such as existing partnerships with food and drinks companies, could showcase best practice and incentivise the spread of sustainable practice.

It was also suggested that government should pilot a government-backed label on food and drink products. Finally, it was noted that the data on land use involved in labelling could also be used to improve verification of sustainable food production and processing.

Q23. How can measures best be designed to ensure fair distribution of costs and accountability across the food and drink supply chain, and to avoid putting domestic farmers at a disadvantage?

48 respondents addressed this question, making the following main recommendations.

Support for farmers

Many responses cited the need to help farms of all sizes, including upland farmers, who are transitioning to nature-positive farming alongside food production. Suggestions included:

• payments for technical advice
• support for data collection
• innovation support and measures to facilitate access to markets
• expanding ELM schemes and payments for outcomes such as soil health

Several respondents said there was a need to support farmer co-operatives, to help farmers negotiate the demand market and facilitate investment for local businesses. Loans and tax benefits were also suggested to help farmers build secure routes to market for nature-friendly food.

Food and drink company investment in nature recovery measures

Many responses suggested that food and drink companies should bear greater responsibility and accountability for impacts on nature in their supply chains, and ought to share the costs of more sustainable food production by investing in nature recovery, including at farm level. There were strong calls for large food companies – both retailers and processors – to do more to recognise and financially reward to farmers adopting nature-positive and low-carbon practices.

Procurement contracts offering price premiums were recommended, as well as direct help for farms with infrastructure costs and ensuring contracts do not produce negative impacts on biodiversity or soil degradation.

It was also noted that this would ensure that value is retained in communities while empowering farmers to farm sustainably. Some suggested a tiered system requiring larger food businesses to take proportionally more responsibility for environmental performance.

Some responses also saw wider benefits for the environment of investment being driven by food companies rather than only by individual farms – their investment can enable projects to be combined at scale, reducing risk and bringing businesses closer to their supply chains with shared objectives, such as using SFI measures relevant to the food companies’ supply base.

Several responses however noted that there are currently insufficient incentives for the food sector to transition to nature-positive practices at scale, with co-ordinated action needed across the supply chain including farmers, retailers, processors, insurance providers, financial institutions and government, to provide investment confidence.

Trade agreements and rules

Many responses recommended stronger and more consistent environmental and animal welfare standards for food imports which have negative impacts on biodiversity or carbon, as well as fertilisers, pesticides and animal feed. Many suggested that trade agreements should include enforceable measures holding production to equivalent standards as in the UK, to avoid UK farmers being disadvantaged by cheap imports produced to lower standards.

Stronger regulation, border adjustment mechanisms or levies were suggested as measures. Aligning domestic and international regulations, to avoid duplicative or conflicting requirements and the displacement of UK domestic food production, was also suggested.

Other specific actions suggested including establishing a government task force or consultation to design production standards for all food sold in the UK, and improvements in food product labelling to reward more sustainable international producers.

Effective design of market rules for insetting

Many respondents suggested that market rules within the supply chain should support proportionate demands on farm businesses, for example enabling stacking with SFI to achieve effective nature outcomes. Buyers of credits should also pay a fair price that reflects farmer return on investment for nature recovery measures and food commodities they produce.

Many respondents wanted assessment methodologies for nature and carbon nature markets better aligned for insetting, alongside consistent regulation and robust governance, so that measurable outcomes for nature and investment at scale can be delivered. For example, verified nature recovery projects could be purchased by supply chain sectors to meet disclosure requirements and enhance brand credibility whilst ensuring long-term supply. Some respondents were keen for standardised environmental data and use of digital technology to improve insetting practices.

Specific standards were proposed by some respondents, including for soil health to ensure a joined-up approach to soil management across the supply chain, and for high-emission agricultural products such as beef and lamb. There was some support for a green finance regulator to enable approved natural capital and carbon accounting frameworks. Some respondents said that market fragmentation and exemptions currently undermine demand for nature markets.

Reporting and disclosure of nature impacts data in the supply chain

Many respondents said that reporting of nature impacts and due diligence across the supply chain should be mandatory for large food and drink businesses, in order to:

• ensure transparency and traceability of nature impacts
• foster competition on sustainability
• ensure a fair distribution of costs and accountability

Some recommended mandatory TNFD reporting. Several responses also focused on MRV, suggesting that clearer and standardised methodologies are needed, for example by aligning with TNFD, to provide clarity on what constitutes a contribution to high-integrity nature recovery and ensure environmental claims are transparent. Regulatory certainty around data and consistent standards were said to be essential to prevent market distortion.

Q24. How can measures recognise and mitigate the impacts of the wider bioeconomy on land (for example, the use of natural fibres, timber, paper and pulp)? Which sectors are most important?

30 respondents answered this question. They identified the following measures as most important.

Certification schemes

The single measure most often cited by respondents was the use of sustainability certification schemes for sourcing in sectors such as timber, paper, fibres and (less commonly) agriculture. Specific suggestions were that government purchasing and procurement should take account of these standards, that guidance should be provided for important sectors on responsible sourcing, and that claims about sustainability should only be permitted when independently verified by a robust third-party scheme. Views differed as to which schemes offered the best measure of sustainability and whether they need to be further strengthened to have a greater emphasis on long term nature recovery.

Land use planning

Many respondents also emphasised the importance of strategic national land use planning to ensure the impacts of the bioeconomy on land are effectively managed and – where necessary – mitigated. Respondents suggested that the Land Use Framework take into account likely future demand for resources, explore where these are likely to be in conflict with nature and climate targets and address these trade-offs. Some also called for a zoning approach to simplify planning and investment decisions, designating some land for priority purposes while also setting out where and how multifunctional land use should be developed (such as regenerative agriculture or high biodiversity productive forestry) and proposing how best to deploy marginal land. This would support the achievement of a range of objectives and enable the bioeconomy to scale in places and ways which are sustainable and can contribute to environmental and economic goals.

Circular economy

Several respondents also recommended that government promote and incentivise circular economy approaches including use of lifecycle assessments of carbon and environmental impacts in important sectors, as well as reuse and recycling of products such as wood, paper and wool, and felt that with this approach it is possible to improve – and evidence – sustainability. Timber substitution in construction was cited as an example where lifecycle assessments show a positive contribution to environmental goals.

Sectors

Many respondents pointed to particular sectors which need to be considered. Several respondents emphasised the opportunity to expand sustainable domestic forestry and woodland creation to deliver multiple benefits, including:

• reduced reliance on timber imports (which may come from places with high deforestation risk)
• improved traceability
• contribution to domestic targets for nature and net zero
• rural job creation

Other commonly cited sectors were:

• construction and housebuilding
• textiles and fashion
• packaging
• timber
• biomass energy

Many responses observed that while a shift to bio-based materials such as timber, natural fibres and paper could reduce reliance on fossil fuels and help tackle plastic pollution, they also carry environmental risks. It was suggested that stronger regulation is therefore needed to prevent negative impacts on water, soil, carbon storage and biodiversity. 

Several responses discussed concerns and risks associated with biomass production, especially the use of large areas of land to grow maize for energy. They emphasised that poorly regulated biomass expansion has been shown to be environmentally harmful, and recommended that policy must take account of the full range of environmental impacts.

Q25. What measures could be used to increase investment in sustainable timber production and processing, and timber reuse and recycling?

35 respondents address this question, recommending the following areas of action

Promotion of sustainable timber practices

Responses recommended that governments take steps to promote the use, recovery and reuse of timber, to drive demand. Specific recommendations included:

• designing forestry and timber use schemes to incentivise high-integrity actions, for example, native, large-scale, maintained woodlands
• providing certifications for timber producers and products that meet sustainability standards
• sending clear and consistent policy signals to provide long-term certainty and promote confidence in project and wider investors

Incorporation of sustainable timber use into regulation

Some responses called for greater consideration of sustainable timber use in regulatory and decision-making frameworks. Recommendations included:

• establishing green public procurement standards to give preference to construction using sustainable timber – including sustainable timber practices in carbon accounting frameworks
• embedding productive forestry in land use decision-making tools and frameworks, reviewing land use and planning regulations to reduce friction and to ‘unlock’ land access
• promoting alignment of processes and regulation across devolved nations and the EU

Targeted public investment

Targeted public investment was recommended, to:

• support research and development and innovation, for example, in reuse technologies and efficiency
• support essential infrastructure and capacity, for example, for harvesting, manufacturing and waste collection
• deliver public-private partnerships with funding that de-risks investment
• support workforce and skills pipelines across the supply chain
• provide funding streams for woodland creation and management, for example, through grants or subsidies
• create a financial incentive for sustainable timber, for example, through tax relief or penalties

Outcome 6: International nature finance and access and benefit sharing

Q26. Are you aware of your international nature-related risks, dependencies and impacts, for example, through using frameworks such as the TNFD? If so, how do you manage and address them?

35 respondents answered this question. 20 indicated they were aware of their nature-related risks, dependencies and impacts, one said they were not, and 13 were partially aware. Those who answered yes explained how they manage and address their risks, dependencies and impacts, and made a variety of recommendations to help overcome challenges they face.

Respondent approaches

Many respondents said that they are developing their own climate-nature strategies, using a variety of approaches to report and manage the impacts of nature-related risks. Some reported using scalable digital tools or analysis frameworks to support sustainable procurement, nature-positive land use and business planning. Some emphasised their use of targeted fieldwork to validate data, engage local communities, understand sourcing locations and establish cooperative agreements. 

However, several responses said that few companies are taking the next step and developing company-wide nature strategies, looking not only at how they can mitigate negative impacts on nature but also how investments can generate nature-positive outcomes. Many said that data limitations are a huge challenge, meaning companies may rely on sectoral averages. International partnerships were mentioned which are piloting a natural capital accounting system to support participants with TNFD-aligned reporting frameworks and metrics, including evaluating data readiness and usefulness for decision-making.

Reporting standards and metrics

Many responses agreed that coherent standards and metrics will help UK companies prioritise and make informed decisions about how and where to intervene to reduce negative impacts on the environment. There were also calls for government to explore and clarify how nature reporting will be incorporated into UK SRS and any future reporting obligations, and for coherence across reporting frameworks, noting that clear reporting requirements create a level playing field.

Appropriate regulation

Some organisations are anticipating that TNFD disclosures will become mandatory in the future, and noted that the process of mapping dependencies is complex, costly and may require a mandate to incentivise wider supply chain engagement. However some respondents recommended that before regulatory levers are introduced, common barriers faced by smaller firms and private investors should be addressed.

Responses also highlighted that regulation should be proportionate, so that small companies can assess their nature-related risks and opportunities without undue regulatory complexity and the need to rely on costly external expertise. Some suggested that regulators should also assess if steps should be taken to enhance transparency around the largest financial sector exposures of banks.

Guidance and support

There is growing demand for practical tools and investment pathways that help companies identify, mitigate, and disclose nature-related risks in line with emerging standards. Several responses said that government should support the introduction of simplified TNFD guidance and the creation of practical tools (such as prescriptive templates) to assist businesses, particularly SMEs, in navigating nature-related risks and opportunities.

Some responses said that guidance to illustrate the business case and added value of capturing nature-related risks — and the broader reporting process— would be highly beneficial and could help catalyse businesses’ own investment in enhancing their resilience against identified nature-related risks and dependencies.

Encouragement and support from government for companies (including SMEs) to upskill with respect to nature dependencies, impacts, risks and opportunities, was also recommended to help drive demand for nature investment.

Q27. What role is global nature playing in your investment strategy? For example, are you exploring investing in international ecosystem services, including biodiversity credit markets, or avoiding certain types of investments due to their impacts on nature? What would help you better integrate nature into investment decisions?

29 respondents answered this question. Stakeholders reported prioritising high-quality nature-based outcomes which extend beyond carbon through UK and international markets, and noted a range of opportunities and risks of engaging in international markets. In terms of what would help them better integrate nature into investment decisions, respondents called for greater clarity and standardisation of policy and markets, standardising markets and the development of centralised infrastructure to support investment decisions, as well as recommending the provision of blended finance.

High-integrity nature outcomes

Respondents highlighted the benefits of investing in markets which produce nature-based outcomes with co-benefits for the environment and local communities beyond carbon. These were said to offer benefits in branding and customer engagement, as well as the potential for a range of marketable outcomes. The role of nature-risk screening and nature-negative exclusions in investment portfolios was emphasised. Some also said that they were reviewing their land or investment portfolio for opportunities to enter nature markets via insetting. Overall, responses described prioritising transparent, traceable and verifiable investments to ensure high integrity outcomes for nature.

International markets: risks and opportunities

Responses noted that domestic markets offer security via high-integrity credits in the form of the Woodland Carbon Code and Peatland Code, which are widely recognised and verified and align with UK standards. They also attached importance to the visible local or regional benefits delivered through domestic markets. However, responses said that both corporate buyers and wider investors are starting to explore emerging global nature markets that align with UK frameworks, as these present a comparatively cost-effective opportunity

Calls for policy clarity

Responses called for more policy clarity on a variety of fronts:

• international standardisation of credit frameworks and metrics
• greater UK and international policy clarity and demand signals
• backing from government or NGOs for credible schemes

Infrastructure to support investment decisions

Responses said that the development of supporting infrastructure could support market engagement by reducing administrative burdens and complexity. Suggestions included robust monitoring systems and data platforms, and the development of outcome-based, replicable project models.

Q28. How can the UK help ensure that biodiversity co-benefits are integrated into international carbon markets, and vice-versa? How has your experience with carbon markets influenced your approach to nature markets?

41 respondents answered this question. Responses to the first part of this question centred on the need to de-risk and incentivise engagement, and to drive progress by acting as a ‘first mover’. Responses to the second part of the question highlighted the importance of clear standards and co-benefits beyond carbon.

De-risk market engagement

Responses recommended a range of steps to de-risk market engagement. Some recommended aligning and integrating standards for carbon so that they wrap up biodiversity benefits alongside carbon to drive investment decisions. Some also emphasised the need for measurement standards for quantifying and verifying biodiversity outcomes, clear baseline data to support measurement of ‘net positive’ outcomes, robust reporting criteria and independent verification of outcomes. There were also calls to resolve uncertainties around the issues of additionality, stacking and permanence.

Finally some recommended developing a wider range of carbon codes which incorporate biodiversity outcomes, and creating incentives for engagement in nature markets via policy endorsement.

Act as a ‘first mover’ in academia, national and international markets and global forums

The second main theme was that government should lead the way by investing in (or enabling ) research or exemplar projects which demonstrate best practice, advocate for the role of nature-based markets in meeting global nature and climate goals in international forums, and act as a ‘first mover’ in the market - engaging with schemes that generate high-integrity co-benefits alongside carbon.

Importance of clear standards with co-benefits beyond carbon

Responses expressed a preference for clear standards with robust measurement frameworks that align with international, science-based standards, and noted that there was hesitancy to make investments due to uncertainty around inconsistent and frequently-changing standards and targets. Responses showed a preference for engaging in markets with the potential for wider ecosystem outcomes and co-benefits, alongside carbon, and expressed wariness around engaging with carbon markets which have neglected biodiversity and other ESG goals.

Q29. Does the concept of access and benefit sharing apply to your organisation or sector? If so, how do you incorporate benefit-sharing into your business model?

20 respondents addressed this question, of which 11 answered yes to the question. Others gave more general comments.

Partnerships

Most of those who answered yes agreed that a structured, long-term approach to partnerships is important to ensure that benefit-sharing is meaningful, equitable and aligned with sustainability and impact objectives. Some of the current benefit-sharing actions include sharing guidance and best practice, co-investment in sustainable land use and structured stakeholder engagement. Blended finance models, using for example a combination of public grants, philanthropic funds, private investment, sovereign bonds and debt-for-nature swaps, are also used to help de-risk investments and attract more private capital projects.

Inclusion, fairness and transparency

Some businesses said that their experience confirmed that change that is fair, inclusive and has gone through effective consultation and engagement leads to more successful projects and ensured benefits are shared transparently and equitably. For example, benefit sharing was said to have been more successful where farmers retain ownership of their data and receive direct returns from carbon sales and practices that benefit the environment.

Whole value chain approaches

Responses noted that some early incorporation of access and benefit sharing is driven by regulatory compliance, for example, water regulations and sustainable finance disclosure regulations. To scale international investment and take a holistic approach, it was recommended that the focus should be whole supply and value chains rather than individual projects.

Respondents gave examples of how they are applying landscape-scale supply or value chain approaches to strategically align actions, for example through co-ownership models, close community collaboration and local employment, robust biodiversity monitoring, and assessment frameworks. They noted that these practices align with the principles of Free, Prior and Informed Consent (FPIC) and other international biodiversity frameworks.

Governance

Some respondents discussed their approaches to governance, placing local communities and supply chains at the centre of delivery. Governance frameworks were also said to enable knowledge sharing of best practices and agreement on standards for measurement and evaluation. It was noted that strong governance frameworks are critical to how benefit sharing is implemented locally and to ensuring alignment to wider nature-related commitments.

Q30. What are the key challenges to investing in nature-based opportunities in biodiversity-rich countries? What can policy makers and market enablers do to help scale international nature investment and better connect supply with demand?

29 respondents answered this question. Responses were broadly aligned on the main barriers:

• weak governance
• data gaps
• unclear land rights
• limited local capacity

Recurring concerns included the risk of greenwashing, community harm, and reinforcing existing inequalities in biodiversity-rich countries. There was strong agreement on the solutions, for example, the need for robust standards, long-term regulatory clarity, and transparent monitoring to build trust. Some argued that UK businesses should prioritise domestic nature recovery before expanding international investment, but that there was also a need to increase awareness of the impacts of UK business on ecosystems abroad.

Governance

Weak or inconsistent regulatory frameworks were seen as the most significant barrier to investment in biodiversity-rich countries. Several responses stressed the need for stronger regulatory demand signals. The lack of harmonised standards, definitions, and global measurement frameworks was said to undermine comparability and investor confidence. Effective governance was considered essential for credible markets and long‑term investment stability.

Integrity

Integrity concerns centred on transparency, measurement, and proving genuine ecological outcomes. Respondents noted that demonstrating additionality, especially for avoided deforestation, is difficult without robust baselines and credible counterfactuals. Limited data quality and inconsistent biodiversity metrics were said to create fragmentation and raise reputational risks. Many emphasised the need for shared standards, open-access monitoring systems, and high‑integrity assurance frameworks (linking with the governance theme above). Strengthening integrity was seen as critical for unlocking demand and avoiding accusations of greenwashing.

Finance

High transaction costs, long return horizons, and perceived political and operational risks deter private investment. Respondents stressed that project pipelines in biodiversity-rich countries are often immature and are not investment ready. Access to blended finance and financial mechanisms such as guarantees, first-loss capital, and concessional funding, were widely views as essential but said to be currently limited. Some also highlighted the need for investment readiness funding. Overall, de-risking tools and consistent demand signals were said to be required to scale international nature finance.

Capability

Limited local technical, institutional, and monitoring capacity was seen as a major barrier to credible nature investment. Respondents emphasised the need for skilled local intermediaries able to manage long-term ecological projects. Building capacity in project design, MRV, and financial management was seen as critical. Some suggested the UK could contribute by exporting expertise in nature markets and innovation.

Local impacts

Addressing local impacts particularly for indigenous peoples and local communities were seen as fundamental to market legitimacy. Respondents highlighted risks relating to unclear land rights, inadequate benefit sharing, and potential community displacement. Concerns about green colonialism and inequitable distribution of benefits were recurrent. Many called for mandatory safeguards and community involvement in project design.