A new framework for nature markets – the BSI Principles Standard

The BSI Principles Standard for nature markets report was launched in March – an important document for any landowners involved in, or considering, creating and selling ecosystem services such as biodiversity units or carbon credits.

This standard is the first of its kind published by the BSI in its Nature Investment Standards programme. Using funding from Defra, the BSI is currently developing detailed standards for biodiversity and carbon.

The BSI Principles Standard aims to set high integrity requirements for UK nature markets that will apply to sellers, market intermediaries and buyers to encourage greater confidence in the UK market and avoid problems with greenwashing. This will, in the long run, support greater private investment and funding for nature-based solutions in the UK which is increasingly important given the constraints of government funding for agri-environment schemes.

The standard is a key resource for landowners and managers who are venturing into nature markets of all types (but most likely at the moment for carbon or biodiversity). It provides a clear set of expectations for all parties involved and a really useful glossary – especially for those who are new to nature markets. The glossary includes agreed definitions of a range of terms such as additionality, bundling, credit, environmental output, insetting, investor, nature market and many more.

Developed through the BSI ‘Flex’ process, the standard consults with a wide range of stakeholders to build consensus on the final output. The CLA is part of the BSI Nature Investment Standard Advisory Group and has represented landowners interests as ‘suppliers’ throughout the process and responded to the earlier consultation. The resulting document provides a basis to build understanding that will support constructive discussions between landowners and market intermediaries or buyers.

• Principles for market operation that apply to all participants – sellers, market intermediaries and buyers – covers areas such as transparency and timeliness of sharing key (material) information. This includes: quantification of credits, appropriate governance structures (for example of codes), openness to innovation (for example using new technology for quantification), and recognition of multiple benefits.
• Selling credits covers responsibilities for ensuring high integrity credits, particularly in relation to additionality, quantification, verification and registration. Including: the need to avoid unintended consequences such as leakage or other environmental harm, the need to ensure environmental benefits last for the lifetime of the credit, and proportionate and transparent engagement with the local community where appropriate.
• Purchasing credits covers transparency of ownership of credits on the market registry.
• Registries covers the need to make key information transparent and accessible to all stakeholders (while complying with data protection law) through market registries.
• Trading processes covers how the market should operate around market access, stacking and double counting.

The BSI Principles Standards is relatively a technical document, so perhaps not the easiest of reads, but it does address the key issues of market operation and responsibilities in a consistent way. It includes explanations where necessary and effectively sets some ground rules for sellers, market intermediaries and buyers.

Nature markets could be an important source of funding for landowners and managers in the future, with the government putting a lot of emphasis on private sector funding for the environment as a key goal (particularly given the constrained government finances). There are challenges of course, and like any land use strategy, it is not necessarily right for everyone. However, for those interested in long-term commitments for environmental management of land, it is likely that there will be increasing demand in the future.

The BSI Principles Standard is now available for adoption and is worth using as a basis to assess existing or new agreements, as well as raising any points of difference with advisers, market intermediaries or buyers. These rules exist to help ensure a fair and high integrity market place, so it makes sense to adhere to them.

Landowners, in the main, will be at the supply end of the nature market chain. But, there are many routes to access the market which might be direct or through an intermediary (such as a habitat bank), likely with the help of an adviser, and this will help have common purpose.

The CLA has a number of resources to support members understanding of nature market opportunities and risks. In addition there is a short webinar available to watch here.

If you have any questions or comments please contact susan.twining@cla.org.uk.