Driving sustainable nature investment with robust standards
As the world grapples with the urgent need to address climate change and biodiversity loss, investors are increasingly turning their attention to nature-based solutions.
A recent report by Pollination, a global climate change investment and advisory firm, reveals that more than two-thirds of investors worldwide plan to increase their investments in nature-related ventures, with 75% believing that such investments will eventually evolve into a distinct asset class.
This growing interest in nature markets is driven by a combination of factors, including the potential for financial returns, the desire to make a positive environmental impact and the increasing pressure on businesses to address their carbon footprint and contribute to net-zero targets.
However, as nature markets continue to grow, so too do concerns about greenwashing and the lack of standardization in the sector. Greenwashing, the practice of making misleading or unsubstantiated claims about the environmental benefits of a product or service, poses a significant risk to the integrity and credibility of nature markets.
Without clear standards and guidelines, investors may struggle to distinguish between genuine nature-based solutions and those that are merely paying lip service to sustainability.
The crucial role of standards in building trust and confidence
This is where the development of robust standards and frameworks becomes crucial. By establishing clear criteria for what constitutes a high-quality nature investment, standards can help to build trust and confidence in the market, attracting more investors and driving sustainable growth.
One such standard is BSI Flex 701, the first in a suite of nature investment standards developed by the British Standards Institution (BSI) in collaboration with the UK Government, devolved administrations and a wide range of stakeholders. BSI Flex 701 provides a common framework and principles for the design and operation of high-integrity nature schemes, outlining clear requirements for generating, trading and storing nature units.
The standard is intended for use by all nature market participants and will serve as a foundational element in BSI's Nature Investment Standards Programme. As a BSI Flex, the standard is designed to evolve alongside emerging government policies and market developments, with ongoing review, discussion and improvement.
While BSI Flex 701 is a UK-specific standard, its principles and framework have the potential to be applied more broadly across the Commonwealth. The Commonwealth Standards Network will be exploring how this standard can be adapted and implemented in other member countries.
The introduction of BSI Flex 701 marks a significant step forward for the UK's nature markets, providing a robust framework that can help to combat greenwashing, build investor confidence, and drive sustainable investment.
