The Natural Capital Committee, the government’s independent advisor on natural capital, is warning that the government’s current environmental policies leave “vast holes in environmental protection” and “a gaping hole in legal enforcement.”

The warning comes in the Natural Capital Committee’s (NCC) seventh annual report published yesterday.

The NCC is calling for the government’s 25 Year Environment Plan (25 YEP) to be placed on a meaningful statutory basis and warning that without a credible statutory underpinning, it could end up as “yet another interesting document on the shelf.”

The NCC is also recommending that the new Environment Bill must include a general duty to protect and enhance the natural environment, accompanied by legally binding interim and long term targets for each of the ten 25 YEP goals. Without such a duty, “the Bill is unlikely to achieve significant environmental improvement”, the NCC says.

Long term targets in the four priority areas of air quality, water, biodiversity and resource efficiency and waste reduction on their own are insufficient, according to the Committee. and leave “vast holes in environmental protection, for example in soils.”

In its 2019 annual report the NCC recommended that the following three principles should be at the heart of environmental legislation:

• public money for public goods
• the polluter pays;
• net environmental gain

The new report says:

“It is therefore extremely disappointing that only one of these principles, the polluter pays, has made it into the Environment Bill.”

In the Committee’s view it is also “extremely disappointing” that the current Environment Bill does not address an issue raised in its sixth annual report which said “there is a case to be made for incorporating all aspects of environmental protection at a national level within one body. This would entail substantial changes to the existing bodies.”

Current scope of Office for Environmental Protection leaves “gaping hole in legal enforcement”

The NCC also believes that the current powers within the Bill for the proposed Office for Environmental Protection (OEP) are likely to result in a weaker regime for holding the government and its agencies to account for environmental degradation.

“It is critical that the OEP has the independence, resources and teeth to deliver its role”, the NCC says and the OEP should be accountable to parliament, rather than government.

The report says that the NCC does not consider this to be a “credible position” and that the OEP should be independent from the organisations it is responsible for. Other similar regulatory bodies, such as the Office for National Statistics) or the Audit Commission are accountable to parliament, the report points out.

Commenting on the current scope of the OEP, which covers public bodies only, the NCC says this leaves “a gaping hole in legal enforcement.” The NCC wants to see the OEP’s scope expanded to cover environmental law related to private companies and landowners.

The NCC is also concerned that the OEP will not be able to issue fines in the same way that the European Commission currently can – or require that legislation is revised to meet environmental objectives., commenting:

“Without the ability to carry out these actions it will be difficult to say there is no regression from EU standards.”

“Privately owned natural capital assets are not reflected in market prices”

The report points out that in England and many other countries, the private sector owns and manages the majority of natural assets - for example, over two thirds of land in England is privately owned.

In the Committee’s view, in general, privately owned natural capital assets are not reflected in market prices and, therefore, the private sector has no overt financial incentive to deliver or conserve them.

The NCC is recommending that consideration should be given to requiring the production of Corporate Natural Capital Accounting (CNCA) for public and private organisations and landowners who own, are responsible for or depend on significant amounts of natural capital.

Net zero target should be delivered via joined-up government response to climate change

Commenting on the government’s net zero target, the NCC is recommending that this should be viewed in the broader context of the 25 YEP goals and be delivered through a joined-up government response to climate change.

“The current siloed approach, with several departments and committees involved but with no overall coordination will fail to deliver the intended outcome, and could even contribute to further degradation of the natural environment.” the report says.

In the Committee’s view, based on a partial assessment of available data, no significant progress has been made towards most of the 25 YEP ten goals since 2011, with many areas in decline. A proper assessment of progress is inhibited by the lack of a baseline against which progress can be measured.

“Comprehensive, England-wide environmental census of natural capital assets is urgently needed”

The NCC says a comprehensive, England-wide environmental census of the stock of natural capital assets is urgently needed to establish a baseline against which progress towards the environmental goals articulated in the 25 YEP can be measured. Progress cannot be measured properly until a baseline is established.

The report calls for a wide ranging set of natural capital asset-based metrics to be developed and warns that Defra’s 25 YEP Indicator Framework, as currently designed, does not meet this criteria.

The Committee also wants the government to require businesses to make use of the corporate accounting template that the NCC has developed, including a set of corporate accounting standards as a formal audit requirement.

The NCC is concerned that the plethora of initiatives and different ‘natural capital accounting’ approaches that are currently emerging will lead to greenwashing.

The Committee says the government needs to develop a valuation framework for organisations and landowners to value their natural capital assets in a consistent way. There should be a standardisation of structures and principles to support external reporting, similar to those used in financial accounting.

The report says the latest UK natural capital accounts estimated that in 2016 the partial value of UK natural capital to be around £951 billion. “This is a disappointingly low estimate when compared to the UK housing stock which has been estimated at around £7.3 trillion in 2019,” the report says.

National Infrastructure Commission still regards environment as “constraint to infrastructure”

The National Infrastructure Commission (NIC) comes in for specific criticism from the NCC – the Committee’s Terms of Reference require it to advise the NIC “to ensure that ‘green and blue infrastructure’ is appropriately considered within wider infrastructure discussions.”

Commenting in its sixth annual report, the NCC advised the NIC that the environment in the NIC’s National Infrastructure Assessment (NIA) was considered “largely as a constraint rather than core to the plans, with very limited consideration of the 25YEP goals or ‘green’ and ‘blue’ infrastructure.” The NCC is recommending that the NIC should investigate how ‘green’ and ‘blue’ infrastructure can contribute towards a more resilient ‘grey’ infrastructure.

According to the NCC, the most recent NIC publications still regard the environment as a constraint to infrastructure and “the NIC’s narrow approach omits a number of potentially important natural capital costs and benefits.”

The Committee says the NIC’s recently published resilience study fails to address the importance of natural capital for well-functioning infrastructure and is calling on the NIC to consider natural capital and services it delivers when making recommendations about economic infrastructure.

Policy statements suggested by the NIC, which are to set out a long-term strategic vision for each of the regulated sectors, also need to include the whole of the environment and natural capital - not just climate change, the NCC says.

Click here to download the Natural Capital Committee State of Natural Capital Annual Report 2020