Environment Bank Summary

The Environment Bank generates investment in wildlife conservation through biodiversity offsetting. It works with landowners, developers, planning authorities and conservationists to prevent biodiversity and habitat loss and to help development become more environmentally sustainable.

Market Need

Natural ecosystems and biodiversity deliver free goods and services that contribute trillions of dollars of financial value towards the world economy each year. According to a 2012 report by OECD, 40% of global GDP relies on the benefits nature provides. In 2010, the UK Department for the Environment, Food and Rural Affairs (DEFRA) estimated that in the UK alone the environment creates thousands of jobs and generates billions of pounds:

  • English national parks support over 54,000 tourism-related jobs
  • People living within 500 metres of green space were likely to be almost 25% more active at recommended levels. (It has been estimated that the UK public health service could save over £2bn through increased activity in open green spaces)
  • Trees capture carbon and hold soils together, preventing flooding and controlling the climate. In parts of inner London each tree was calculated to be worth up to £78,000 in terms of these benefits.
  • Honeybees and other pollinators contribute up to £440 million to the economy, 13% of the UK's entire income from farming

Climate change, water scarcity, air pollution, biodiversity loss and ecosystem degradation can be looked on as a global failure to adequately price the negative externalities of development across the ages – a major barrier to sustainable growth in all countries.

Biodiversity Offsetting

Biodiversity offsetting is a tool available to developers who have already followed the normal on-site steps to ‘avoid and mitigate’ their environmental impact – offsetting can then be deployed to compensate for any residual loss of wildlife habitat. This residual impact is quantified by The Environment Bank using government metrics and compensated for through investment in biodiversity restoration and long-term management on nearby sites. The overall result will be a gain in the quantity and quality of UK biodiversity.

Professor David Hill, Chair of The Environment Bank

Placing a value on natural habitats and ecosystem services is a way to reflect the environmental cost of land use change – with new trading systems for conservation credits being successfully pioneered in the US and Australia.

In 2011, and with support and co-investment from partners such as the UK Environment Agency and Essex County Council, Shell Foundation formed a partnership with The Environment Bank to pilot the use of ‘conservation credits’ in the UK and test the scaleability of such solutions at an international level.

The UK government has since backed biodiversity offsetting as a useful tool for local planning authorities across England and Wales. Under such schemes, local authorities require companies to offset the environmental impact of proposed land developments so as to ensure no net loss of biodiversity or natural habitats across their region. 

The Environment Bank

The Environment Bank is an independent broker between local authorities, land developers and conservation landowners, providing a range of essential services to make biodiversity offsetting work. These include:

  • assessing the offset requirements of developments, using a government agreed metric standard
  • converting this requirement into an area of habitat creation or restoration
  • sourcing a range of appropriate offset sites from which a final site is chosen
  • creating a trading mechanism to enable developers to purchase multiple credits to meet obligations
  • reporting on delivery and quality of offset sites

The business has developed a broad suite of services and is achieving promising early results as a pioneer of conservation credits within the UK. The Environment Bank’s innovative approach has seen it selected by DEFRA as a key partner on the first ever offsetting schemes in the UK (in Warwickshire, Coventry, Solihull and Essex) with several others agreed.

The team also secured a major partnership with AB Agri (the agricultural division of Associated British Foods) to identify offset receptor sites from among their 30,000 British farmers in 2014.

Back to Incubator

Subscribe to the Shell Foundation newsletter

Subscribe to this report