Green finance standards launched to set bar for nature investments

Government-backed nature finance standards have been launched to set the bar for nature investments, clamp down on greenwashing and drive capital into restoring the environment.

The British Standards Institution (BSI) said market participants can immediately start using the Overarching Principles Standard, which aims to build confidence among businesses over the real-world impact of nature investments.

Investors are still largely hesitant to put money into projects that claim to have nature benefits – like planting carbon-absorbing forests or restoring vital habitats to boost biodiversity.

As regulations rapidly evolve, a lack of trust remains over whether such projects benefit nature, as does the risk and fear of corporate greenwashing.

BSI said on Tuesday that the new standard is the first standard for collective nature markets of its kind in the UK, and one of the first in the world.

The organisation said it will help to drive capital into high-quality projects, including restoring wetlands, improving water quality, building flood resilience and creating new habitats.

It comes as part of wider Government efforts to boost economic growth and position the UK as a global leader in green finance.

According to the Green Finance Institute, nature-related risks including water shortages and soil health reduction could lead to a 6% reduction in gross domestic product in the years ahead.

Environment Secretary Steve Reed said: “We need urgent action from across society to address the nature crisis, and businesses have a crucial role to play in that effort.

“By having clear standards, we can strike a blow to greenwashing and give businesses confidence that their investment is truly helping our natural world recover.

“Through the Plan for Change, this Government is working relentlessly to grow the economy and this move gets us one step closer to fulfilling our ambition to make the UK the green finance capital of the world.”

Scott Steedman, director-general of standards at BSI, said: “Today marks a key milestone for the Nature Investment Standards (NIS) Programme with the launch of updated overarching principles ready for adoption across the UK.

“The principles are designed to provide consistency and rigour for high-integrity UK nature markets that trade in real, measurable environmental benefits.

“This supports the goal of increasing investment into nature, helping to create new revenue streams for farmers, land managers and other suppliers of nature-based solutions.”

The Overarching Principles Standard was created following an established BSI market-led process for standards development which included extensive consultation with businesses and land managers.

The organisation is also set to launch a consultation on a first version of a natural carbon standard, as part of a wider framework of standards, which will gather market views for projects selling nature-based carbon credits in UK markets.