New report identifies opportunities and challenges of using green finance for woodland creation

The report explores real-world examples of land managers’ experiences and perceptions of using green finance – environmentally-targeted sustainable finance – to fund woodland creation in Great Britain.

Woodland creation projects are having to navigate a range of issues when considering, pursuing, and working with green finance. These include:

• Consideration of how green finance fits with and compares to other woodland creation funding sources
• The time, cost, and complexity involved
• Access to knowledge and advice
• Working with funders, collaborators, and communities
• Financial and reputational risk
• The impact on project planning and delivery

Opportunities

The report highlighted several opportunities for using green finance from the perspective of woodland creators. These include:

• Finance opportunities for projects ineligible for government grants or for non-traditional land uses such as rewilding or regenerative farming
• Increasing potential for blended finance approaches which incorporate funding from multiple sources.
• Delivery of community benefits through providing new collaborative opportunities.

Barriers

The report outlined the barriers woodland creators perceive in relation to using green finance. These include:

• The time involved to navigate the funding landscape, and the potential complexities (which may require specialist expertise).
• Difficulties with finding and securing suitable land.
• Difficulties finding investors due to factors including unclear monitoring, perceived risk, and concerns about greenwashing.
• Risks including the long timescales involved and uncertainty around meeting obligations.

The role of government

Experts and case study participants emphasised a need for government to play a role in natural capital market regulation. This included:

• Ensuring the buyers of carbon credits are legitimate.
• Providing sufficient support to local authorities to enable them to enforce obligations relating to biodiversity net gain.
• Enabling and advocating – for example, using government investments such as The National Forest as a broker in developing finance packages that are more appealing to investors.

Looking to the future

The report identifies future areas of research in this area, including:

• Questions about the types of people or organisations using green finance to further woodland creation and how they navigate the risks involved.
• Investigating the perspectives of land managers who have yet to engage with woodland creation.
• Exploring the unintended consequences arising from increased adoption of green finance.
• What is needed to ensure good management of woodlands by land managers using green finance, including consideration of the knowledge and skills land managers may require.

“While green finance presents promising opportunities for woodland creation, realising its full potential will depend on addressing practical challenges, improving support systems, and strengthening the wider policy and regulatory environment,” said Dr Stephen McConnachie, Social Scientist at Forest Research.