The role of natural capital in the green economy [revived]

Environmental Audit Committee Open Inquiry
Opened: 13 Nov 2024 Parliament page
The Environmental Audit Committee in the 2024 Parliament has revived the predecessor Committee's inquiry into the current and potential future role of natural capital in the green economy, and the Government’s proposals to increase private investment in measures to support nature recovery. Read the call for evidence for more information … Read more
19 Recommendations
16 Conclusions
1 Report
2 Oral sessions
4 Letters
2 Events
Activity timeline 10 events
16 Oct
2025
Correspondence
4 Sep
2025
Correspondence
4 Sep
2025
Correspondence
22 Jul
2025
Report published
22 Jul
2025
Correspondence
7 May
2025
Report published
18 Dec
2024
Oral evidence
18 Dec
2024
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
4 Dec
2024
Oral evidence
4 Dec
2024
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 2 sessions
18 Dec 2024
View on parliament.uk
Panel 1
Dr Will Lockhart OBE · Department for Environment, Food and Rural Affairs Helen Edmundson · Department for Environment, Food and Rural Affairs Mary Creagh CBE MP · Department for Environment, Food and Rural Affairs
4 Dec 2024
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EAC meeting
Alan Carter · The Land Trust Dr Heather Plumpton · Green Alliance Helen Avery · Green Finance Institute Judicaelle Hammond · Country Land and Business Association Kate McGavin · National Wealth Fund Rt Hon Philip Dunne · Environmental Audit Select Committee
Title HC No. Published Items Response
1st Report – The role of natural capital in the UK's green econo… HC 501 7 May 2025 35 Responded
Recommendations & Conclusions
15 results
Clear
1 Recommendation Accepted
1st Report – The role of natural c…
Undertake impact assessment of Planning and Infrastructure Bill on Nature Restoration Fund and nature markets.
The Government should undertake an impact assessment of the Planning and Infrastructure Bill to assess how the Nature Restoration Fund would interact with and impact upon the operation of Biodiversity net gain and of broader Government initiatives to encourage investment … Read more
Government Response
The government states an impact assessment for the Planning and Infrastructure Bill was published on 6 May 2025 and explains how Biodiversity Net Gain and the Nature Restoration Fund are complementary, and how the Bill supports investment in nature markets. It further commits to considering the NRF's relationship and impact on nature markets through ongoing monitoring and evaluation.
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3 Conclusion Accepted
1st Report – The role of natural c…
Government yet to fully integrate natural capital into all policy and financial decisions.
The work done so far in Government to incorporate natural capital approaches into policymaking and the overall evaluation of the economy is welcome: but there is little evidence to how this approach genuinely informs Ministerial and Cabinet decisions on the … Read more
Government Response
The government describes existing guidance (Green Book, ENCA, Environmental Principles Policy Guidance) and established processes to assess climate and environmental impacts in fiscal decisions, particularly for Spending Review 2025, as mechanisms for integrating natural capital into policy and financial decision-making.
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4 Recommendation Accepted
1st Report – The role of natural c…
Provide assessment of natural capital's incorporation into policy decisions and risk mitigation measures.
We recommend that in its response to this report the Government provide an assessment of the extent to which a natural capital approach is currently incorporated into decisions on policy, how risks to current levels of natural capital are taken … Read more
Government Response
The government provides an assessment by detailing how the natural capital approach is incorporated through the Green Book Supplementary Guidance, Environmental Principles Policy Guidance, and the Environmental Improvement Plan, which includes mechanisms for assessing progress and ensuring environmental considerations in policy decisions. It highlights the ongoing revision of the EIP to further emphasize natural capital protection.
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5 Conclusion Accepted
1st Report – The role of natural c…
Use 2025 Spending Review to set out natural capital approach to spending and growth benefits.
We expect the Government to use the June 2025 Spending Review to set out how it has taken a natural capital approach to the evaluation of spending decisions as well as to set out how the approaches taken will grow … Read more
Government Response
The government confirms it established processes for Spending Review 2025 to assess climate and environmental impacts of fiscal decisions, requiring departments to provide relevant information for spending bids. It further highlights that the Spending Review committed over £2.7 billion annually from 2026–27 to 2028–29 for sustainable farming and nature recovery.
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6 Conclusion Accepted
1st Report – The role of natural c…
Taxpayer purchase of ecosystem services alone is insufficient for required scale of nature recovery.
Taxpayer purchase of ecosystem services alone is no longer a sufficient mechanism to deliver the overall improvement in ecosystem services necessary for the scale of nature recovery required. (Conclusion, Paragraph 49)
Government Response
The government agrees more private investment is needed for nature recovery, outlining a strategy for multifunctional land use and confirming over £2.7 billion in annual investment for farming and nature recovery, with ELMS funding increasing to £2 billion by 2028/29.
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7 Conclusion Accepted
1st Report – The role of natural c…
Ensure policy supports farmers and land managers to deliver ecosystem improvements alongside food production.
The Committee agrees with the Government’s current approach to driving investment into nature recovery through drawing in private finance. Whatever the source of the funds, policy should ensure that farmers and land managers are supported to deliver ecosystem improvements while … Read more
Government Response
The government agrees to support farmers and land managers to deliver ecosystem improvements alongside food production, detailing an investment of over £2.7 billion annually in farming and nature recovery, including significant increases for Environmental Land Management Schemes, to provide income streams for environmental delivery and sustainable food production.
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15 Conclusion Accepted
1st Report – The role of natural c…
Ministers defined ‘protected’ land for 30by30 commitment based on biodiversity protection
Ministers have set out the criteria they plan to use to establish whether land in England is considered to be ‘protected’ for the purposes of the 30by30 commitment. We note that an area is to be considered ‘protected’ if it … Read more
Government Response
The government confirmed its 30by30 vision and criteria, stating it is developing more detailed guidance on interpretation and application, alongside an action plan and assessment/reporting processes, all to be published later in 2025.
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17 Recommendation Accepted
1st Report – The role of natural c…
Successful nature markets require balance between scale, local accountability, and BNG benefits
For successful nature markets to be delivered there needs to be an effective balance between efficiencies of scale and local accountability which brings about local buy-in and transparency, ensuring that offsets are being delivered to a high standard. A method … Read more
Government Response
The government outlined ongoing BNG consultations, including efforts to simplify the small sites metric and increase access to the off-site market for SME developers, aiming to make BNG delivery easier and ensure local biodiversity benefits.
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18 Recommendation Accepted
1st Report – The role of natural c…
Evaluate BNG policy effectiveness, review investment estimates, and publish annual updates
The Government should continue to demonstrate leadership on natural capital markets by evaluating and reviewing the BNG policy and whether its design, metrics, and implementation remain effective in increasing investment into natural capital projects and delivering measurable improvements in nature … Read more
Government Response
The government confirms it continues to monitor BNG, has launched consultations to improve its operation, and will keep monitoring and evaluation requirements under regular review, publishing reports periodically.
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30 Recommendation Accepted
1st Report – The role of natural c…
Set out unequivocal support for BNG policy, driving it through Nationally Significant Infrastructure Projects.
The Government must set out unequivocally its support for BNG policy and ensure that it continues to deliver genuine habitat net gains and supports a thriving market in natural capital credits. The Government should make use of Nationally Significant Infrastructure … Read more
Government Response
The government unequivocally states its continued support for BNG policy. They confirm that BNG will be introduced for Nationally Significant Infrastructure Projects (NSIPs) from May 2026 and that a consultation is underway to determine its application, directly addressing the recommendation to use NSIPs to drive BNG support. They also highlight consultations to improve BNG for minor and brownfield developments.
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31 Conclusion Accepted
1st Report – The role of natural c…
Nature markets face inherent complexities in trading non-fungible, location-specific natural capital assets.
Our inquiry has found many financial mechanisms that can be employed to fund nature recovery: nature markets are one piece of the puzzle. Natural capital assets cannot be directly traded with the same ease as carbon dioxide allowances or carbon … Read more
Government Response
The government agrees that biodiversity is location-specific and that markets must reflect this, highlighting the BNG scheme, development of domestic standards, rejection of international biodiversity offsetting, and exploring regulatory oversight through the VCNM consultation.
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32 Recommendation Accepted
1st Report – The role of natural c…
Define government expectations and set measurable targets for nature recovery through nature markets.
The Government should clearly define its expectation for the level of nature recovery in England which is likely to be achieved through the operation of nature markets, and should set out the criteria against which progress will be evaluated. In … Read more
Government Response
The government highlights existing initiatives and market growth, stating that Environment Act Targets are already set to improve natural capital and interim targets are in the Environmental Improvement Plan, implying these address the committee's call for targets and criteria.
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33 Conclusion Accepted
1st Report – The role of natural c…
Ensure robust regulation and integrity for UK nature markets, preventing offshoring degradation and financial risks.
Nature and biodiversity are highly location specific and a market which trades in biodiversity credits must account for this. The UK Government should ensure that the UK market has integrity and strong regulation that minimises the risk of the UK … Read more
Government Response
The government agrees on the need for market integrity and outlines existing actions like BNG metrics and BSI Nature Investment Standards. It also commits to exploring options to strengthen regulatory oversight, market rules, assurance frameworks, and financial resilience through the VCNM consultation.
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34 Recommendation Accepted
1st Report – The role of natural c…
Publish all outstanding nature market documents, provide timelines, and align policies with international standards.
To achieve success in nature markets, the Government must produce the full suite of documents that will be fundamental to its success, including the Land Use Framework, the Government responses to the consultations on a UK Green Taxonomy and on … Read more
Government Response
The government commits to publishing the Land Use Framework and its response to the VCNM consultation later this year, and a decision on the UK Green Taxonomy soon. It notes existing guidance and ongoing consultation for stacking and bundling rules, and supports aligning with international standards like ISSB.
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35 Recommendation Accepted
1st Report – The role of natural c…
Maintain steadfast commitment to implementing biodiversity net gain policy to avoid market uncertainty.
At such an early stage it is difficult to assess the full impacts of the biodiversity net gain policy. The Government should remain steadfast in its commitment to implementation of this policy: any indication that it could be rolled back … Read more
Government Response
The government states its continued support for the BNG policy, demonstrating this commitment by outlining two recently launched consultations on applying BNG to NSIPs (due May 2026) and improving BNG for minor and brownfield developments.
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Government Response AI assessment · 35 of 19 classified
Accepted 15
Accepted in Part 2
Acknowledged 11
Deferred 5
Rejected 2
Total 19 recs + 16 conclusions
Correspondence 4 letters
16 Oct 2025 To committee Letter from the Chief Secretary to the Treasury relating to the environmental impacts of the Spending Review, dated 3 October 2025
Parliament page
4 Sep 2025 From committee Letter to the Secretary of State for Environment, Food and Rural Affairs relating to The Role of Natural Capital in The Green Economy: Government response, 22 July 2025
Parliament page
4 Sep 2025 To committee Letter from the Under Secretary of State for Nature relating to the Role of Natural Capital in the Green Economy: Government Response, dated 27 August 2025
Parliament page
22 Jul 2025 To committee Letter from the Chair to the Secretary of State for Environment, Food and Rural Affairs, regarding the Government's response to the Committee's report on the role of natural capital in the green economy, dated 22 July 2025
Parliament page