Source · Select Committees · Environmental Audit Committee
Recommendation 3
3
Accepted
Government yet to fully integrate natural capital into all policy and financial decisions.
Conclusion
The work done so far in Government to incorporate natural capital approaches into policymaking and the overall evaluation of the economy is welcome: but there is little evidence to how this approach genuinely informs Ministerial and Cabinet decisions on the economy. The Government is yet to demonstrate how it is fully integrating natural capital and natural capital risk into all of its decisions, including financial decisions. We note with concern that the environment and nature are not expressly included in the remits of any of the Mission Boards of the current administration. (Conclusion, Paragraph 35)
Government Response Summary
The government describes existing guidance (Green Book, ENCA, Environmental Principles Policy Guidance) and established processes to assess climate and environmental impacts in fiscal decisions, particularly for Spending Review 2025, as mechanisms for integrating natural capital into policy and financial decision-making.
Government Response
Accepted
HM Government
Accepted
The Enabling a Natural Capital Approach Green Book Supplementary Guidance and the Environmental Principles Policy Guidance aim to upskill policymakers across government, enabling them to take natural capital into account in their broader decision-making. In England, the Environmental Improvement Plan (EIP) annual progress reports and outcome indicator framework provide an assessment of progress on the Government’s environment targets and objectives. An evaluation of the environmental principles policy statement is ongoing. Best practice in the HMT Green Book and Better Regulations Framework highlights that the consideration of environmental impacts should be given equal weighting alongside other social costs and benefits in the appraisal of policy for decision making. This is supported by supplementary guidance: Enabling a Natural Capital Approach (ENCA). In addition, with limited exceptions, ministers must have due regard to the environmental principles policy statement where their polices may have an environment effect (as defined by ENCA screening questions). The principles recognise the limitations of taking decisions based purely upon policy appraisal (which focus on marginal impacts) without considering strategic goals. They work to ensure that policy makers across government recognise the opportunities to support both their own outcome goals and nature outcomes in tandem and at least do not frustrate and hinder government policies which are implemented to directly improve our natural capital assets and reduce the pressures upon them. In England the policies to directly protect and improve our natural capital assets are set out in the EIP, which is currently being revised. In the Interim statement on the EIP rapid review (published in January 2025) we committed to “Highlight how protecting and enhancing our natural capital is not just for its own sake.” The revised EIP will help achieve this. HM Treasury’s Green Book sets out that all policies, programmes and projects must be developed and assessed against how they deliver on the government’s climate and environmental objectives, as well as other policy priorities. Building on the extensive guidance already provided for evaluating and monetising natural capital impacts, the Government has published updated supplementary guidance to the Green Book on Enabling a Natural Capital Approach, including additional guidance on valuing biodiversity. To ensure due consideration is paid to the climate and environmental impacts of fiscal decisions, we have established processes to assess the climate and environmental impacts of fiscal events, with these impacts informing, alongside other policy considerations, decisions made by Ministers at Spending Review 2025. HM Treasury required departments to provide information on the climate and environmental impacts of their spending bids, building on approaches taken in previous spending reviews.