Biodiversity Net Gain can help boost economic resilience – weakening the policy would show a lack of ambition
Government proposals to exempt small sites from Biodiversity Net Gain (BNG) rules signals a disappointing lack of ambition and understanding of how the sectors have already mobilised to support this new market.
Shortly before Christmas, the government published a consultation on a revamped National Planning Policy Framework, setting out proposals aimed at accelerating the delivery of hundreds of thousands of new homes nationwide.
Among the proposals are plans to roll back Biodiversity Net Gain (BNG) commitments to unlock smaller housing sites. But the exemption of small sites (i.e. less than 0.2ha) from BNG obligations signals a disappointing lack of ambition and understanding of how the sectors have already mobilised to apply, satisfy and deliver BNG requirements.
There is strong signalling here suggesting ‘nature is a hindrance and a blocker to development’. Yet scratch the surface, and that is far from the full picture.
BNG has, in my view, been an inspired catalyst for driving the creation of an entirely new market. And in the main, it works. The arrival of BNG for NSIPs (Nationally Significant Infrastructure Projects) from May 2026 is anticipated to drive demand even further.
But there is a higher purpose behind BNG which is often ignored in the desperation to ‘get around the red tape’, which is one of business, societal and economic resilience. Well-developed BNG and nature projects at scale have incredible scope to improve nature resilience, reduce flooding, reduce drought, improve water and air quality, and avoid the associated costs that come with all of these. It can be much more than replacing lost biodiversity and adding 10 per cent.
The planning system has long been a problem and pointing the finger at BNG and nature more widely has much more severe ramifications for the natural capital sector. Whilst the costs around assessing and creating BNG presents costs viability issues in some cases, particularly for small sites, the makeup of these costs often includes set up costs and professional fees, not just the actual costs of onsite delivery or the acquisition of offsite BNG credits.
A better solution would have been a moratorium for small sites to allow the market to evolve and for fractional BNG units to become more cost effective and more widely available. This, combined with a relaxation of the spatial risk multiplier rules for small sites, could have avoided a blanket exemption.
There is no doubt that landowners seeking to deliver smaller scale developments and housebuilders, particularly rural and urban fringe respectively, will be hugely relieved by the change and can likely move forward with one less hurdle to overcome.
But the move has wider ramifications, and has not helped confidence in nature markets. I say this in part from the perspective of a lawyer navigating these markets, advising clients exploring opportunities and structuring those deals. The first question that we ask our clients entering into BNG or any scheme is: what is the demand and who are the buyers?
Business resilience is the real key to nature markets, over and above BNG alone and responsible business agendas. Well advanced businesses of all natures are looking to the future and seeking to understand how nature resilience affects their business and profitability. The World Economic Forum (WEF) estimates that a global transition to a nature-positive economy could generate $10.1tr in annual business value and create 395 million jobs by 2030 through new business models, resource efficiency, and cost reductions.
Instead, with this latest move, the government has signalled that nature and supporting BNG measures are a hindrance.
Take a law firm as an example. Business resilience can mean infrastructure that works, happy, healthy and enthusiastic staff, and a mandate to take carbon footprints and nature impacts seriously. This commitment not only builds in staffing and supply chain resilience, but also helps us to support more natural capital clients and to provide more effective legal structures to schemes, which in turn, make them more economically viable and deliverable.
Even if the Taskforce on Nature-related Financial Disclosures (TNFD) never becomes mandatory, as the wider business community recognises the need for nature resilience, the government’s row back on small sites will only be a minor setback. Those who have invested heavily, financially and practicably, in nature markets are more likely to prosper.
To understand the importance of BNG as a concept, we should look to the interaction between BNG and other streams of project income, such as voluntary markets and landscape recovery projects. The certainty around the demand side of BNG through the planning system is often built into more ambitious projects to justify capital expenditure with guaranteed income from BNG, the wider aim being to generate revenue from the sale of voluntary credits for nature benefits into to the wider business community.
This is what demonstrates the governments wider lack of understanding of the intricacies of markets. Markets will always rely on creative thinking and real business demand from the private sector to keep growing ambitiously. But there is a role for government in stabilising markets and we can only hope that the wider consultation due in spring 2026 will do just that.
To start, policy changes that impact demand are unhelpful and deliver only regulatory anxiety. The consultation should look to introduce demand smoothing measures, without over-interfering. For nature providers, it should also look to enable some demand guarantee to bridge the gap between supply creation and unit purchase. Long term uncertainty around scheme failure and enforcement is an issue that plagues all nature projects and warrants standardisation. The consultation should add clarity around enforcement expectations. The consultation also needs to clarify rules around BNG compatibility with other schemes, particularly given the role of BNG as an anchor project.
All of the improvements that can be delivered around established BNG markets will help to shape the future of wider markets. Better signalling around the true reason behind BNG and the longer-term benefits of it is key to shifting perceptions. This in turn will be key to businesses identifying what nature-based resilience means for them and where taking action will impact profitability.
This article was originally published by BusinessGreen on 9 January 2026.
