Nature Finance UK – Investing in a greener future
The Nature Finance UK Conference 2024, sponsored by Knight Frank, offered encouragement to landowners looking to generate future environmental income streams
3 minutes to read
I know some farmers and estate owners are understandably frustrated with the speed at which private nature finance markets are developing in the UK. However, as a keen observer, I can see that considerable progress has been made over recent years.
The seventh Nature Finance UK Conference, held in London at the Institution of Engineering and Technology on 5th November, was a good example of this.
Organised by the Ecosystems Knowledge Network, an independent knowledge-sharing organisation committed to advancing the stewardship of land, water and nature, the conference attracted a mix of over 350 environmental and financial professionals and private and institutional landowners.
The energy in the room was palpable as delegates heard from both sides of the nature finance market: those creating and selling nature-based solutions and those buying and investing in them.
As my colleague James Farrell, the Head of our Rural Consultancy team, points out, such events were previously noteworthy for their lack of landowners and farmers who are at the coalface of nature restoration. Thankfully, that is no longer the case, which is why we were delighted to be the conference’s lead sponsor for the second year running.
All the sessions held throughout the day were fascinating, but a few stood out for me because they really highlighted the progress that is being made in developing a viable private nature finance market in the UK.
James Farrell, Head of Rural Consultancy at Knight Frank, speaking at Nature Finance UK
Nature fund
One of the barriers to attracting investment into the UK’s nature markets has been a lack of suitable products for fund managers to invest in. Typically, they want to own the assets in their funds to take advantage of any increase in capital value.
But, given the UK’s relatively thin land market and a general antipathy from rural communities towards large-scale corporate land acquisition, this has not been possible in all but a few cases.
That’s why I was excited to hear about a new collaboration between fund manager abrdn, nature-based solutions provider Palladium, NatureScot and the UK Infrastructure Bank, now known as the National Wealth Fund.
Under a joint-venture arrangement, clusters of Scottish landowners will receive an annual management fee for allowing the creation of carbon and biodiversity credits that will deliver acceptable returns for abrdn’s investors, even without the ownership of the underlying land. As a bonus, if future nature-based opportunities arise, the landowners will still be able to take advantage of them.
What really stood out for me though was the conference’s carefully scripted closing speech delivered by Mary Creagh, Sir Keir Starmer’s Minister for Nature.
Mary Creagh, Minister for Nature, speaking at Nature Finance UK
Buried within the usual politically ambitious statements were some suggestions of real substance. Her speech seemed to suggest the government is prepared to provide the regulations and standards that will help unlock the vast sums of money institutional investors say they want to invest in nature-based carbon projects.
She also alluded to potential engagement with the Treasury to incentivise private-sector participation in nature’s restoration, which was a pleasant surprise and, dare I hope, code for possible tax relief?
I look forward to next year’s conference, to find out how much more progress has been made. For the sake of the countryside, the government needs to deliver sooner rather than later.
James Shepherd is a partner in Knight Frank’s Rural Consultancy team and the department’s Natural Capital lead. Please get in touch to find out how he can help your business.