IFB researchers, Prof. Robyn Owen and Dr Amy Burnett, of the Centre for Enterprise, Environment and Development Research and the Middlesex University GreenFin Research Cluster have published their latest report - Early-stage nature positive innovation finance in the UK.
The study uses a longitudinal and predominantly qualitative approach, and the research draws on literature reviews, limited secondary data, interviews with 88 stakeholders between 2022–25, and 10 SME case studies. Findings reveal a nascent, fragmented, and complex green innovation funding market that has yet to fully integrate biodiversity considerations. While top-down drivers such as ESG regulation and institutional investor reporting dominate, bottom-up innovation from SMEs and early-stage impact investors offers promising momentum toward a more nature-positive finance ecosystem.
The report delivers seven key findings and recommendations. The findings were -
- Environmental reporting regulations are the most important driver on UK finance markets,
but they do not directly impact on the early-stage green innovation finance market. - Science-Based Targets are required for nature-positive reporting to operate
effectively within the finance market. - Innovation in nature-tech is ahead of policy, but it requires stable policy and regulation to
assist market adoption with natural biodiversity ecosystem-related impact measures.
Biodiversity Net Gain provides an initial formal approach to create a market mechanism
through nature-positive reporting (through its operation in the planning system), but it is only
a proxy habitat measure for biodiversity (i.e. rather than delivering species performance
measures). It is vital that nature-tech offers practical and accessible measures for SMEs. - The evolving UK green finance escalator (the mechanism to support early-stage companies
to grow and scale) is complex, often fragmented and siloed, particularly around developing
coordinated approaches to nature-positive enterprise. - The linkages between the different stages of the UK publicly-funded green finance escalator
remain complex and disconnected. - Early-stage private environmental impact investment by business angels and seed venture
capital firms2 is currently primarily motivated by the personal values of individual investors
and fund managers. - Intermediary services provide important frameworks for measuring environmental impact
and act as conduits for bringing together public and private finance to green nature-positive
early-stage innovators.
Recommendations are within the report that is available to download.