The UK government’s Autumn Budget came out soon after COP16 on Biodiversity last month. Tom Raven, a Consultant in Eunomia’s Natural Economy team, reflects on whether private finance options can make up for the lack of funding from government and international inaction on financing nature recovery.

How nature fared in the UK Autumn Budget

Defra’s own blog post about the budget is called ‘Maintaining Momentum’, and that nicely captures its business-as-usual spirit.

On the positive side, the budget ringfences £5 billion over two years to help the agricultural sector become more environmentally sustainable. Of this, £3.6 billion will fund Environmental Land Management Schemes (including the Sustainable Farming Incentive, the Country Stewardship Plus Scheme and the Landscape Recovery Scheme) at their highest ever funding level, enabling the sector to contribute to nature recovery.

However, nature doesn’t appear to be getting major funding support. Although Defra’s overall budget is rising in line with previous decisions under the Conservative government, its operational spending is decreasing slightly in favour of larger projects – such as the £58 million for research and innovation into net zero and climate resilience. This could mean smaller budgets for Natural England, the Environment Agency and the Forestry Commission.

Similarly, while the UK Chancellor allocated over £400 million to restore peatlands and plant trees, this is tiny compared to the extra £3.9 billion to fund carbon capture, usage and storage projects and green hydrogen production.

The overall message seems to be that restoring nature is not a high priority funding area. This is a little strange, given that the UK is one of the world’s most nature-depleted countries and that nature plays an important role in mitigating climate change. This UK budget doesn’t go nearly far enough in supporting measures to build back biodiversity and restore ecosystems to health at the scale and speed that the nature crisis demands.

What came out of COP-16

COP 16 in Colombia last month – the 16^th Conference of the Parties to the UN Convention on Biological Diversity – also missed opportunities for meaningful action, despite some significant wins for Indigenous Peoples and the establishment of the global Cali Fund, a profit-sharing mechanism for corporations based on their use of genetic information from nature.

On the whole, COP16 failed to fulfil hopes for concrete decisions on how to put into operation the Global Biodiversity Framework agreed at COP15 two years ago. It was abruptly halted during a 10-hour final plenary session, when many delegates had to leave, and the talks failed to reach a consensus.

COP16 was particularly notable for the unprecedented private sector presence; an estimated 3,000 (13%) of participants represented companies and financial institutions. Much of the discussion focused accordingly on corporate initiatives – from disclosures on nature-related impacts and dependencies to innovative financial solutions such as biodiversity credits – and there are encouraging signs that the private sector is acting ahead of the policymaker curve.

With the right actions, the UK could emerge as a leader in this nature finance arena. Sustainable finance infrastructure is already relatively well-developed here, and we have a world-leading Biodiversity Net Gain policy to ensure development has a positive outcome on nature, which Eunomia is currently evaluating for Natural England.

Private sector finance for nature in the UK

The need for investment is clear and, without further direct funding from UK government or meaningful progress internationally, facilitating the untapped potential of private finance to boost nature recovery will be key, with many businesses increasingly interested in providing financial support at local and regional levels.

Our Natural Economy team is working to design frameworks and policies that help the public and private sectors work together to fund nature improvements that support net zero and environmental sustainability goals while also reducing business risks.

Eunomia recently supported Natural England, National Landscapes and partners to assess the appetite for a large-scale Nature South West partnership to boost the flow of finance into regional nature recovery projects from local businesses, aggregating scale to drive efficiencies and attract larger investors. We are also working with local NGOs like the Shropshire Wildlife Trust to help identify private sector investment and mechanisms to blend private and public sector funding.

Our other work with environmental NGOs has helped attract blended finance for ambitious conservation projects to protect critically endangered species and restore nationally significant habitats. We have also supported local governments, such as Cornwall and South Gloucestershire Councils, to put in place operational mechanisms that encourage private investment.

For now, government support for nature is a complex tapestry of patchwork solutions. It can be difficult to navigate the different routes to funding and understand their benefits and disadvantages. Private finance is an increasingly large part of this tapestry, helping to fill gaps and enable landowners and organisations to solve local problems on the ground.