Natural Capital is now at the forefront of the decision-making process for a wide range of businesses. Driven by the twin global crises of anthropogenic (human-caused) climate change and biodiversity loss, natural capital is a useful way to help us understand our impact on the planet. Furthermore, it provides a toolkit for addressing two of the most damaging environmental effects of human activity – greenhouse gas emissions and species decline.
In the UK at present, natural capital is commonly associated with carbon sequestration and emissions reduction, principally achieved through woodland creation and peatland restoration projects. The majority of these projects are registered for carbon credits through the Woodland Carbon Code and Peatland Code, which allow projects to obtain private finance, and investors to report offsets against their own emissions.
This puts farmers, land managers and other custodians of the landscape in the vanguard in of our changing approach to the environment.
These codes have been highly successful to date in helping many schemes become a reality. Furthermore, the rigorous audit process ensures that they meet strict ‘additionality’ criteria (so all sequestration is in addition to what would have happened anyway), and emissions reporting is evidence-based. All of this has ensured that ESG (environmental, social and governance) reporting and the offset claims attributed to these projects are credible and taken seriously. The direction of travel is positive – in 2022 the independent Climate Change Committee (CCC) estimates that UK emissions are now almost half (47%) their 1990 levels.
However, it is important to consider the vast scale of the challenges we are facing at present and how much progress is still required. According to research conducted by the Natural History Museum, the UK is placed at the bottom of the G7 league table for biodiversity intactness and is within the lowest 12% of countries globally. Furthermore, in a 600-page assessment of the UK Government’s Net Zero Strategy, CCC argued that credible government plans existed for only a third of the UK’s required emissions reductions to meet their carbon budget by the mid-2030s.
In order to meet the UK’s Net Zero commitments by 2050, offsetting alone will not achieve the necessary emission reduction. Whilst it will play a vital role in meeting these targets, it is critically important that we do not lose sight of the wide array of sectors where change needs to be effectively implemented – renewable energy, transport, energy efficiency in buildings, and agricultural practices to name but a few.
It is therefore crucial to remember that woodland creation and peatland restoration are only two parts of the solution, and consider natural capital from a much wider viewpoint. By doing so, we will be able to use the concept to its full potential.
Natural Capital: The expert advisers at Galbraith provide guidance in realising value in all land uses – by assessing and measuring natural assets, furthering opportunities in biodiversity net gain, and ensuring stakeholders are rewarded fully for their investment in and contribution to delivering ecosystem services and net-zero outcomes.