A new EU nature credits roadmap is well intentioned, but there are lessons to be learnt from the UK and carbon markets. Christopher Walker reports
This week, the EU announced its nature credits roadmap, aimed at “closing the current ecological investment gap”. It has committed to allocating 10% of its budget to biodiversity by 2026-2027 and to doubling its external biodiversity spending to €7bn. The Roadmap ties in with the EU’s Vision for Agriculture and Food, the Water Resilience Strategy and the European Ocean Pact.
With an estimated €65bn needed annually for biodiversity investment, the European Commission noted that “blending public and private finance will be essential”. President von der Leyen said: “We have to put nature on the balance sheet. That’s exactly what nature credits do. When well designed, they will provide an efficient, market-driven instrument that encourages the private sector to invest and innovate.”
Will they? The Commission issued an open call for feedback by 30 September 2025, and investment managers in the space are already beginning to look at what has already been achieved in the UK. Nature credits are very much a new and evolving area for investors, but since the 2021 Environment Act developers in England have already been required to deliver a 10% biodiversity net gain (BNG).
Last year, Gresham House launched an investment strategy to invest in “habitat banks” created by Environment Bank, a portfolio company within its British Sustainable Infrastructure Fund. Ruth Murray, sustainable investment director at Gresham House, says: “Our view of the EU roadmap is very much guided by our own experience in trying to bring forward a niche proposition in England and the sort of characteristics that we built into that product.”
Fortunately, she believes the Commission has been cognisant of these efforts. “A lot of the characteristics that the EU roadmap is suggesting are exactly what we’ve incorporated – robust monitoring, legal governance, funding security.”
However, she fears that a “crucial element is missing” from the EU roadmap – the demand framework. “All these good intentions are not going to go anywhere unless people are compelled to buy,” she says.
The EU roadmap goes some way to “bringing us towards something more mandatory,” highlighting various bits of legislation such as the TNFD, Murray adds. “[But] it’s very much up to member states to do their own thing. And, until that happens, we don’t have the demand that actually allows either people to pre-fund these projects, or for the corporates – or whoever the potential buyers are – to have certainty in the long-term outcomes being guaranteed to buy them.”
This is a point that Alessia Lenders, head of impact at SLM Partners, agrees with. The UK’s BNG framework “requires all new real estate developers to offset their biodiversity impact either onsite or offsite through credits”, she says. “The framework was built with the ultimate buyer in mind. This buyer was clearly identified at the start of the process.”
By contrast, the Commission seems somewhat vague. Lenders asks: “Will relying on voluntary uptake ever be enough? Based on our experience in the carbon markets, a regulated market with compliance-driven demand works best.”
Lessons from carbon markets?
According to Aadith Moorthy, CEO of Boomitra, an international soil carbon marketplace, there are a myriad of other potential challenges. One of the biggest in his mind “is the disconnect between quality and confidence”. He explains: “There are credible, science-based nature credits available today, but many buyers hesitate because they don’t feel equipped to evaluate which ones meet the bar. That uncertainty slows down the market and affects liquidity.”
Another challenge is the early-stage nature of many certification frameworks. “Unlike carbon markets, where methodologies are more developed, the standards for biodiversity and ecosystem restoration credits are still being defined,” says Moorthy. “This makes it harder for buyers to compare projects or for developers to plan with confidence.”
There is also a growing fear of reputational risk, in his view. “We’ve seen buyers pause or walk away from high-quality projects – not because of the projects themselves, but because they don’t want to be associated with controversy,” he says. “The roadmap lays a strong foundation, but the real work is still ahead. To build confidence and momentum, buyers need clear standards, trusted certification systems and straightforward tools to understand what makes a credit meaningful.”
Nonetheless, a foundation it is. Moorthy, feels the roadmap “lays out an important framework for bringing structure and trust to a new class of biodiversity and ecosystem-focused credits”. Its call for context-specific metrics is “especially important”, because “different ecosystems require different indicators”, he adds. “A croplands project might focus on soil organic carbon, erosion reduction or nutrient retention, while a grasslands project may prioritise vegetation cover, biodiversity or resilience to drought.”
Moorthy also supports the roadmap’s emphasis on governance safeguards. “This is key to maintaining environmental and market integrity and preventing greenwashing,” he says.
The roadmap does represent a marker in the road to better reporting. Lenders welcomes that the “establishment of methodologies for nature credits should help bring more clarity around best-in-class nature impact reporting”.
This has further implications. Murray notes: “Evolving regulations are likely to result in a consensus around methodologies for measurement, as well as around critical market principles, particularly around the fungibility and liquidity of credits. New policy should also drive public sector-delivered market mechanisms, which would serve to stimulate market demand, provide clear demand signals and confidence to private investment, and clarity for project developers on what good looks like. In turn, this would produce clear use cases and incentives for ‘buyers’.”
