19th May 2023, by jclough@scottishwildlifetrust.org.uk

A consolidation of key natural capital activities happening globally

Please note, reporting on an initiative is not equivalent to an endorsement by the Scottish Forum on Natural Capital.  If you have an update you would like to share, please get in touch Contact Us – Scottish Forum on Natural Capital

Featured:

Asia: Key insights into blended finance transactions targeting natural capital

Australia:  A new Nature Repair Market

Ecuador: A new blue bond for the Galapagos

EU: Business networks call for robust Nature Restoration Law

Global: Integrating natural capital and biodiversity in the investment process

India: Initiatives for enhanced biodiversity sustainable agriculture

Ireland: Natural Capital Accounting at catchment scale

Scotland: Mobilising private investment in natural capital

UK: A new Nature Markets Framework

Ukraine: Far-reaching reforms for the forestry sector

US: Unlocking hidden investment opportunities in biodiversity

Wales: To follow from Natural Resources Wales

 

Asia: Key insights into blended finance transactions targeting natural capital

Recently published learnings on blended finance for natural capital transactions in Asia reveal a strong appetite for early design-stage grants, with conservation actors leading the effort in designing Natura-based Solutions (NbS) projects, and asset managers still considering investing in natural capital a novel proposition. Indonesia was the most targeted country, with 30% of all proposals exclusively focused on it. Read more: Learnings from the Asia Natural Capital Design Funding Window – Convergence Resources | Convergence

Australia: A New Nature Repair Market

The Department of Climate Change, Energy, the Environment and Water (DCCEEW) of the Australian government are creating a new Nature Repair Market to reward landholders for restoring and protecting nature. The market will also provide options for businesses to invest in nature repair, as part of the Nature Positive Plan.

The planned Environmental Protection and Biodiversity Conservation Act could also drive demand for nature repair projects with legislation for a new National Environmental Standard to ensure offsets are a last resort, will be released for public consultation later in 2023. All landholders, including First Nations people, conservation groups, governments and farmers, can develop projects to improve, restore or protect native habitats and species. A single tradable certificate will be issued for each project, which can be sold to buyers under commercial contracts.

The Nature Repair Market Bill 2023 will establish a transparent framework for biodiversity certificates, to be open for trading in the second half of 2024. This will provide standardised information to enable the market to confidently compare and value projects, tracked via a public register and regulated by the Clean Energy Regulator to help align carbon and biodiversity markets. The Nature Repair Market Committee will review proposed methodologies to ensure compliance with integrity standards.

Ecuador: A new blue bond for the Galapagos

A new “blue bond” will funnel at least $12 million a year into conservation of the Galapagos Islands, giving investors a 5.645% interest rate with risk insurance provided by the U.S. International Development Finance Corp (DFC). The Ecuadorean Foreign Minister commented that “biodiversity is now a valuable currency”, but the key appeal has been the environmental benefits and the hope it will be a catalyst for other highly indebted but nature-rich countries. Read more: Ecuador seals record debt-for-nature swap with Galapagos bond | Reuters

Europe: Business networks call for robust Nature Restoration Law

Business networks writing to the European Parliament in March, advocated for clear policy direction for economic actors in the new Nature Restoration Law, explaining the significant benefits to business, such as increased resilience against extreme weather events, job creation and the creation of new markets.

The European Commission’s proposal for the law, currently in negotiation, aims to enable the achievement of the global target to restore at least 30 percent of degraded ecosystems by 2030 and in all areas in need of improvement by 2050. Requirements include ensuring greater amounts of deadwood available for wildlife species, creating the conditions for common forest birds and reducing areas subject to clear-felling and replanting. Governments will have to provide for more high-diversity landscape features on agricultural land, including managing areas of uncultivated land. MEPs are calling for additional targets on peatland rewetting, restoration of free-flowing rivers, and extending the law to protect endangered marine species on the IUCN Red List.

Global: Integrating natural capital and biodiversity in the investment process

The Chartered Financial Analyst (CFA) Institute is calling on the investment management industry to support education in natural capital issues for investment professionals, to incorporate natural capital in their risk analysis. The institute’s latest report – Integrating Natural Capital and Biodiversity in the Investment Process shares recommendations to bring scientists and experts into the analysis process, and ensure thorough data and scenario analysis and related disclosures to support climate risk analysis.

Global Forum kicks off new project to mainstream nature in decision-making

Stanford’s University’s Natural Capital Project, the Inter-American Development Bank, and the Asian Development Bank are working with 10 pilot countries (Armenia, Belize, Chile, China, Colombia, Cook Islands, Ecuador, the Philippines, Sri Lanka, and Uruguay) to support them in using natural capital information to design and inform policy and finance decisions. The project partners are also collaborating with the World Bank to share lessons from their Biodiversity, Ecosystems, and Landscape Assessment (BELA) initiative. Read more: Global Forum Kicks Off New Project to Mainstream Nature in Decision-Making | Natural Capital Project (stanford.edu)

India: Initiatives for enhanced biodiversity sustainable agriculture

Initiatives announced in India’s 2023 budget aim to align the country with the UN Global Biodiversity Framework. Schemes to encourage shoreline habitat restoration and the optimal use of wetlands will enhance biodiversity, carbon stock, eco-tourism opportunities and income generation for local communities. Bio-Input Resource Centres will help develop a national-level manufacturing network for alternative fertilisers to promote green agriculture. Read more: View: Budget 2023 ensured India is primed for ‘Green Growth’ – The Economic Times (indiatimes.com)

Ireland: Natural Capital Accounting at catchment Scale and Nature Positive Platform for Business

The INCASE project (Irish Natural Capital Accounting for Sustainable Environments), piloting natural capital accounting (NCA) at catchment scale is now nearing completion. The 5-year project has produced a feasibility study and literature review, and a series of stakeholder engagements and project blogs, and published papers on applying ecosystem accounting to develop a risk register for peatlands and developing peatland ecosystem accounts to guide targets for restoration. The final INCASE report and showcase events are planned for 2023 – stay tuned by signing up to Natural Capital Ireland and INCASE newsletters.

Business for Biodiversity Ireland is a national platform to help Irish businesses on their way to nature positive. BFBI is building a library of online resources and launching a community of practice, with a small multi-sectoral group of businesses to test and feedback on emerging science-based biodiversity tools and methods. The platform is currently inviting businesses to join as members to embark on a roadmap to assess their impacts and dependencies on nature and act for biodiversity.

Scotland: Mobilising private investment in natural capital

A new report from the Scottish Government looks at ways to encourage responsible private investment into peatland restoration, and how to overcome barriers to scaling voluntary carbon markets. The report explores the potential for a Scotland Carbon Fund, a Price Floor Guarantee and the restructuring of Peatland ACTION grants with an ongoing support or “operating” payment alongside reduced capital grants. Other key takeaways detail the benefits of building confidence through good financial governance. Read more: Mobilising private investment in natural capital: report – gov.scot (www.gov.scot)

UK: Nature Markets Framework

The new Green Finance Strategy from the UK Government aims to mobilise private investment to support nature recovery, as part of its drive to net zero by 2050. The Nature Markets Framework outlines ways to raise £1 billion per year by 2030, through policy interventions to grow high integrity voluntary markets, and expediting the development of accreditation through codes and standards.

A new UK-wide nature investment standards framework

The British Standards Institution (BSI), in partnership with Defra and in consultation other interested parties, is developing new, consensus-based, UK-wide nature investment standards framework that sets out clear principles and robust requirements to drive efficiency, greater clarity and rigour in natural capital transactions.

New group to accelerate investment into sustainable agriculture and fisheries

The newly formed, Land, Nature and Adapted Systems (LNAS) Advisory Group will advise Defra on definitions of environmentally sustainable economic activities, developing out the climate adaption elements of the UK Green Taxonomy by considering the role of infrastructure and nature-based solutions. Read more: New group to accelerate investment into sustainable agriculture and fisheries | UK Centre for Ecology & Hydrology (ceh.ac.uk)

Ukraine: Far-reaching reforms for the forestry sector

Recovery efforts to rebuild a green and sustainable Ukraine include aligning the mainly state-owned forestry sector with EU standards, to make it attractive to investors. Although the industry currently has limited digital resources to track the damage created by war, the country’s forestry and wood processing sector has the potential to replace Belarus and Russia as a key supplier of certified wood products to the EU. Read more: Dreaming of a green Ukraine | Preferred by Nature | global

US: Unlocking Hidden Investment Opportunities in Biodiversity

Insights from Goldman Sachs Asset Management suggest business models focused on nature conservation will expand to become attractive to a wider range of investors. Analysts expect rising investor support for three major business models with direct ties to biodiversity protection. These are consulting and remediation, landowners and management and substitution business models that replace extraction with new structures. Asset managers are also encouraging investee companies to disclose more and highlight activities that benefit biodiversity. Read more: Unlocking Hidden Investment Opportunities in Biodiversity (gsam.com)

Wales: To follow from Natural Resources Wales