The UK government is sponsoring a British Standards Institution (BSI) Nature Investment Standards Programme, a new programme to develop a suite of high-integrity nature investment standards.  BSI is consulting until 7 June 2024 on its first standard: the Overarching Principles Standard (“OPS”), titled “BSI Flex 701 v1.0 Nature Markets – Overarching principles and framework – Specification”.

Nature markets are mechanisms that allow for the trade of the products of ecosystem services, such as carbon offsets or biodiversity units, in order to incentivise private investment in nature recovery and sustainable land management practices. They are gaining traction as a way of plugging the funding gap for UK nature recovery in order to meet environmental targets while providing additional income streams for farmers and landowners. However, concerns persist around the underlying integrity and governance of these markets, particularly in relation to the trade and sale of carbon units or credits.  These concerns are a barrier to investment and engagement in nature markets.

The Nature Markets Framework published last year contains the government’s vision for scaling up private investment into nature recovery and sustainable farming, including setting a goal to grow annual private flows to nature to at least £500 million every year by 2027 in England, rising to more than £1 billion by 2030.  Enabling high-integrity nature markets and guarding against greenwashing is crucial to the realisation of this ambition. 

The OPS aims to set out core principles to guide high-integrity nature markets. It’s important to note that the OPS is not itself government policy.  Instead, it serves as a starting point for further refinement and iteration in alignment with emerging policies and industry developments.

Nevertheless, this consultation provides an important opportunity for a range of stakeholders, including policymakers, industry experts, and environmental advocates, to engage with the future direction of these markets. The government plans to work closely with BSI to provide practical guidance on adopting and implementing these standards, ensuring clarity, consistency, and minimal administrative burden for market participants.  Meanwhile, in tandem with the OPS consultation, the government is set to launch a broader consultation on voluntary carbon and nature markets. 

Looking ahead, the adoption and implementation of nature investment standards – and wider policy and regulation from government – will be crucial for realising the vision of high-integrity nature markets.  The launch of the OPS consultation marks an important step towards this. We will be keeping a keen eye on how BSI responds to consultees’ views on the topic. 

Burges Salmon is very active in nature markets and has advised scheme bodies, project developers, landowners, credit buyers and other investors on the legal arrangements for a range of innovative nature-based solutions.  We see this move from government and BSI as significant progress in enabling high integrity markets which, if followed through, is likely to lead to an increase in market confidence.  

If you would like to discuss any issues relating to the consultation or nature markets further, please get in touch with Sarah Sackville Hamilton or another member of the Environment Team.