8.Humanity’s unsustainable use of the earth’s resources is one of the greatest contributors to global biodiversity loss. International and intercontinental trade routes and supply chains allow the demands of consumers to be met with increasing ease, whilst distancing the consumer from the location where resources have been extracted and thus from the environmental consequences of over-consumption.
9.We examined how the UK can reduce the levels of global environmental degradation attributable to the consumption patterns of UK consumers.
10.The United Nations Sustainable Development Goals include a goal on responsible consumption (Goal 2:12: Responsible Consumption and Production). This includes objectives for:
11.The UK Government is responsible for achieving the Sustainable Development Goals domestically and for supporting their attainment internationally. The Government told us that environmental sustainability should be at the very heart of global production and trade. In its 25 Year Environment Plan (25 YEP), issued in January 2018, the Government stated its commitment to leaving a lighter footprint on the global environment by enhancing sustainability and, in particular, by reducing the UK’s impact on the world’s forests. Later in 2018 the Government announced the intention to devise an indicator on the overseas environmental impacts of UK consumption of key commodities as part of the 25 YEP indicator framework. At the time of writing, the indicator remained in development. Ministers believe that the indicator has the potential for use in multi-national environmental agreements, in the targeting of Overseas Development Assistance expenditure and in scenario-based modelling to identify the effectiveness of proposed policy solutions.
12.In our earlier report we stated that consumption of natural resources is one of the biggest drivers of land conversion, biodiversity loss and carbon emissions at a global scale. 50 per cent of food consumed within the UK comes from overseas. The Global Footprint Network has observed that if everyone on Earth lived like the average Briton, resources equivalent to those on three planets would be required to meet humanity’s natural resource demand without destroying nature.
13.A recent study by RSPB and the WWF estimated that for each year from 2016 to 2018 an area equivalent to 88 per cent of the UK’s total land area was required to produce the quantity of seven agricultural and forestry commodities (beef and leather, cocoa, palm oil, pulp and paper, rubber, soy and timber) consumed in the UK. The same study found that more than 40 per cent of the UK’s overseas land footprint was in countries with high or very high risk of deforestation, weak governance arrangements and poor labour standards. Of particular concern was the source of soy consumed in the UK. More than half (56 per cent) of the UK’s soy imports between 2016 and 2018 were in the form of soymeal, a key ingredient of livestock feed. Meeting the UK’s annual demand for soy requires around 1.7 million hectares of land—1 per cent of the global area of soy cultivation. Sustainable certification could ameliorate risks to biodiversity levels, but in 2017 the WWF estimated that only 2 per cent of global soy production was certified.
Figure 1: The UK’s land footprint overseas in hectares (HA) for seven commodities superimposed on the UK map for comparison
14.The diagram in Figure 2, produced by the Secretariat of the Convention on Biological Diversity (CBD), indicates the projected rate of global biodiversity loss and the range of actions required to tackle it. The IPBES, the CBD Secretariat and WWF all advocate a reduction in overall levels of consumption as one component of the transformative change necessary to arrest the trend towards total biodiversity loss. This action was endorsed in many of the submissions we received, from the Joint Nature Conservation Committee (JNCC) to University College London’s Centre for Biodiversity and Environment Research. Professor Andy Purvis, Coordinating Lead Author of the IPBES Global Assessment of Biodiversity and Ecosystem Services, set out why trends in consumption needed to be addressed urgently:
…at the moment one of the huge problems is not population growth; it is consumption growth. Yes, the population has doubled, but each person is consuming more than 50% as much again as they would have done 50 years ago. It is not clear that they are any happier, but we have become kind of addicted to consumption of cheap things, economically—but they cost the earth. I think we need to embed the full costs. If we can better align actors with sustainability it also makes it much easier to have targets without worrying about how to enforce them legally, because enlightened self-interest leads you down a sustainable path.
15.Professor Purvis’s analysis is similar to the IPBES’s global assessment, which highlighted a pressing need to “enable visions of a good quality of life that do not entail ever increasing material consumption.”
16.In our earlier report, we observed that the 25 YEP made reference to “leaving a lighter footprint” on the global environment, but did not identify any action to address the level of the UK’s consumption. The RSPB told us that
Defra carries out estimates of the UK’s GHG consumption footprint (“carbon footprint”), but there is no equivalent to assess the UK’s biodiversity impacts related to consumption.
WWF, RSPB and Population Matters recommended that the Government set a global environmental footprint target to address this deficiency. We supported this proposal in our earlier report, recommending that the Government should start the process of setting an environmental footprint target by launching a consultation in advance of COP15 on how to model the overseas environmental impact of UK consumption. In response to this recommendation the Government told us they have commissioned the JNCC to develop a global environmental footprint indicator to help build understanding of the UK’s global footprint. The Government did not commit to setting an environmental footprint target in the future, using the indicator to track progress.
Figure 2: Actions to reduce loss and restore biodiversity
Source: Secretariat of the Convention on Biological Diversity, Global Biodiversity Outlook 5 – Summary for Policy Makers, (2020). p 5
17.We were informed of other ways to address unsustainable consumption patterns. Tesco, the UK’s largest retailer, told us that:
The UK’s food strategy cannot be left to the market… The UK produces only half its food; we must ask tough questions about efficient land use. That means eating less meat and dairy, which uses 70% of agricultural land and emits 14.5% of greenhouse gases globally.
Tesco said it could not achieve the required goals alone and concluded that the sector needed incentives for sustainable farming and a strategy to help livestock farmers diversify. Measures to help people adopt more nutritious diets—fruit and vegetable subsidies and a focus on nutrition and diet in education—ought to be introduced. This was supported by University College London’s Centre for Biodiversity and Environment Research (“the UCL Centre”), which recommended that the public should be educated about international sources of food and other everyday products in order to promote responsible consumption. Tesco said that it:
recognise[d] the need to reduce meat and dairy consumption within the UK, and would support action taken by government, in consultation with industry and civil society, to establish clearer consumption targets for meat, dairy and plant-proteins.
18.To address unsustainable consumption, the UCL Centre also recommended focusing on consumer behavioural change by encouraging a shift to environmentally sustainable products and the ethical consumption of services. This behavioural change could be supported by Government investment in, and incentivising of, environmentally friendly production processes, such as subsidies to make ethically generated products cheaper or methods to make green products available to a wider range of people.
19.Tax is an important instrument in the pursuit of environmental goals. Governments can levy taxes on goods or services which harm the environment, thereby incentivising behaviour change. Tax reliefs can also encourage taxpayers to use environmentally friendly products or services. In this way taxes can be used to change unsustainable consumption and production patterns.
20.In April 2021 the Public Accounts Committee reported on environmental tax measures. The Committee concluded that HM Treasury and HM Revenue & Customs (HMRC) had to date taken a very limited view of the potential role of tax in promoting the Government’s environmental policies: neither department could explain clearly to the Committee how the tax system was used to achieve environmental goals. The Committee recommended that at the Chancellor of the Exchequer’s next budget the Treasury should assess the environmental impact of every tax change considered; and publish the expected environmental impact for each tax measure in the budget, including the extent of behavioural change, alongside forecasts for tax receipts. The Government disagreed with the Public Accounts Committee’s recommendations, stating it would not be “practical, cost effective or possible to consider detailed environmental impacts for every tax change”. The Government stated it already considered the environmental implications in relevant measures.
21.Evaluating the environmental impact of spending decisions is another way the Government can mainstream its environmental objectives across policy. In our earlier biodiversity report we recommended that the Government should conduct Net Zero stress tests on the 2021 Budget and all future fiscal events. We also recommended that nature tests should be developed to ensure spending packages align with the Post-2020 Biodiversity Framework. In response to our recommendations the Government said that:
The Green Book already mandates the consideration of climate and environmental impacts in spending…. To ensure spending packages are aligned with government priorities such as Net Zero, HM Treasury is currently reviewing the learning from previous fiscal events to assess how it can better support the government’s environmental objectives. More detail on the government’s approach to embedding net zero in all policy decisions will be set out in the Net Zero Strategy.
The Treasury’s Net Zero Review Final Report will be an analytical report that uses existing data to explore the key issues and trade-offs as the UK decarbonises….[it will] highlight factors to be taken into account in designing policy that will allocate costs over this time horizon. The Net Zero Review will not seek to retrospectively assess or apply new tests to previous government policy as this is beyond the terms of reference for the review.
22.With regards to our recommendation that work should be undertaken by the Bank of England to develop a nature stress test. The Government said that:
The [Bank of England’s] FPC [Financial Policy Committee] will explore the potential relevance of other environmental risks to its primary objective. This work will consider whether environmental risks beyond those related directly to climate change can create financial risks that, left unaddressed, could pose a threat to UK financial stability. It will also take into account evidence from existing literature such as The Dasgupta Review.
23.Consumption patterns in the UK are unsustainable. Addressing these patterns is key to the UK’s contribution to the alleviation of global biodiversity loss. The first step is to recognise the need to reduce the UK’s overall consumption. We welcome that the Government has commissioned the Joint Nature Conservation Committee to develop a global environmental footprint indicator, but we are disappointed that the Government has not then committed to setting a global footprint target using this indicator to track progress in order to reduce the UK’s global environmental footprint.
24.In 2018 the Government announced it would devise an indicator on the overseas environmental impacts of UK consumption of key commodities. It appears that little to no progress has been made in developing this indicator. This is disappointing and shows a lack of prioritisation in addressing one of the biggest drivers of land conversion, biodiversity loss and carbon emissions at a global scale
25.We recommend that the Government urgently prioritise the development of the indicator on overseas environmental impacts of UK consumption of key commodities, since a better understanding of the environmental impacts of imported products is crucial to meeting the Government’s objectives in this regard. The indicator ought to be prepared for release not later than the date of the next Outcome Indicator Framework update. We also recommend that the Government commit to setting an environmental footprint target using this indicator once developed.
26.Ministers should consider how best to encourage behavioural change towards more sustainable and ethical patterns of consumption. Subsidies, environmental tax measures and tax reliefs are some of the financial and fiscal tools available to government. The Public Accounts Committee has criticised the Government’s grasp of the potential for tax measures to bring about environmental change and has recommended that from the next budget, the Treasury should: assess the environmental impact of every tax change considered; and publish the expected environmental impact for each tax measure in the budget, including the extent of behavioural change, alongside forecasts for tax receipts. The Treasury have since rejected these recommendations as impractical and not cost-effective. We consider this to be a short-sighted approach; it will be more costly to the environment and the economy to not consider fully the environmental impacts of policy and tax changes. The approach calls into question the extent to which environment costings are properly considered in developing and setting tax policy.
28.In the Net Zero Strategy, the Government should commit to evaluating all taxation changes against how well they deliver on the Government’s environmental objectives. The Government’s approach to how taxation changes will be developed and assessed to achieve this should also be set out in the Strategy.
29.The Net Zero Strategy should include an explicit commitment to Net Zero stress test all future fiscal events and a commitment to develop a nature stress test to be used for fiscal events. The Net Zero Strategy must be published before the start of COP26.
30.Another key concern raised in the evidence we received was the potential effect on international levels of biodiversity of future trade agreements made by the UK. Tesco, RSPB, WWF, the JNCC and the NFU, among others, called for new trade agreements to incorporate the highest environmental and social standards, thereby accelerating a transition to sustainable supply chains and protecting the sustainable farming sector from the effects of cheap and low-quality food imports.
31.The RSPB and WWF recommended that sustainability impact assessments be conducted for all trade agreements. The JNCC recommended ensuring that all trade deals provided benefits to biodiversity, a position supported by the People and Nature campaign and the Chartered Institute of Ecology and Environmental Management. The Microbiology Society highlighted the integral role that stringent import guidelines would play in limiting the import of invasive species and pathogens, which are key causes of biodiversity loss.
32.In 2018, the former Department for International Development (DfID) and the Foreign Office jointly launched the Wildlife Financial Taskforce. The Taskforce sought to find ways to tackle criminal gangs facilitating international wildlife trade better. Organisations on the Taskforce have committed to not facilitate or tolerate financial flows stemming from the international wildlife trade. The think tank Bright Blue noted that at present the Taskforce consisted only of financial institutions which had volunteered to participate. By contrast, the Modern Slavery Act 2015 established a compulsory statutory duty on organisations with an annual turnover of £36 million or more to prevent slavery in their supply chains. Bright Blue recommended the same approach be adopted for the Wildlife Financial Taskforce, so as to require all large financial organisations to monitor and prevent financial flows related to the illicit international wildlife trade.
33.Asked whether the Government would support an environmental net gain condition on all trade deals, Lord Goldsmith, Minister for Pacific and the Environment, replied that:
it is the position of Government that trade is not just about the exchange of objects for immediate economic gain. We recognise that the process of negotiating free trade agreements offers all kinds of opportunities to project values, to move the market in particular directions. We want to create, and it is an express aim, a stronger market signal through our free trade agreements for sustainably produced commodities…We have put the environment as one of our top three priority areas as a new member of the World Trade Organisation.
34.When asked whether the Government would support conducting sustainability impact assessments on all trade deals, he said:
I cannot unilaterally make commitments on behalf of Government, but certainly an understanding of how any free trade agreement will impact on the environment is essential, whether or not that is through the mechanism you have described. The process, I agree with you, absolutely must happen.
He cautioned that this would be “uncharted territory”, stating he was not aware of free trade agreements having been designed in the past where the environment has been an express priority.
35.For the Government to make good on its support for environmental sustainability to be at the heart of global production and trade, it needs to mainstream biodiversity considerations more consistently into its trade agreements and operations. Leaving the European Union has provided an opportunity to promote the highest environmental and social standards in trade. We welcome Ministers’ willingness to use future trade agreements as market signals for sustainably produced commodities and their support for considering the environmental impacts of agreements. We also welcome the Government’s leadership in establishing the Wildlife Financial Taskforce.
36.We recommend that sustainability impact assessments be conducted for all future trade agreements and that as part of the Government’s Nature Strategy the Government consider how to monitor and deliver environmental net gain in trade deals. In response to this report the Government should set out how it intends to widen participation in the Wildlife Financial Taskforce, whether through proposing a statutory obligation on businesses of a certain size, or through other means.
37.The World Economic Forum’s Nature Risk Rising report has found that all businesses depend on nature either directly or through their supply chains, and that around $44 trillion of economic value generation (half of global GDP) is dependent on nature. Ecosystem loss brings “operational risks; supply chain continuity, predictability and resilience risks; liability risks; and regulatory, reputational, market and financial risks.” The move of many environmentally damaging production processes from the UK to other countries, including lower income countries, can mask the full impact of the UK’s national consumption. In addition, the UK depends on imports from abroad for many essential goods and services, including food, so loss of biodiversity abroad, and the benefits to agriculture it provides (for example, pest control and pollination) inevitably affects UK food security. It is therefore essential that the UK monitors the impact of its supply chains on biodiversity abroad and takes steps to reduce the negative consequences of the UK’s consumption patterns. This section explores how the UK can promote sustainability in supply chains.
38.The importance of increasing the sustainability of UK supply chains was summarised by the Secretary of State for Environment, Food and Rural Affairs, Rt Hon George Eustice MP:
[Concerning international biodiversity] the impact of British industry and British companies on overseas biodiversity, the sustainability of some of those forest risk products and making sure that there is some due diligence in the supply chain is probably the most powerful thing that we would be able to do.
39.Monitoring the impact of UK activities abroad presents a challenge: datasets on biodiversity are much scarcer for some regions, particularly in the tropics where many raw materials ultimately consumed in the UK are sourced and where biodiversity levels are high but vulnerable to degradation.
40.Credible sustainability certification is a key way to reduce the risk that an imported item has been associated with deforestation, poor social practices or illegality. The WWF and RSPB found that there was limited data available on the proportion of the UK’s imports that were certified. The exceptions were for palm oil and timber, largely as a result of the UK’s commitments to report on certified palm oil imports and to tackle illegal logging. In October 2012 Ministers committed to work towards achieving 100% certified sustainable palm oil in imports by 2015: although the UK has only ever achieved 77% to date, the target has spurred positive action from companies. The WWF recommended that the Government initiate similar time-bound targets and reporting commitments on other commodities, particularly soy, cocoa, timber, and pulp and paper. They also recommend that the Government convene roundtables for high risk commodities such as cocoa, timber, and beef and leather, as they have done with palm oil and soya.
41.The Government can create market incentives for businesses to manage their supply chains sustainably by adopting sustainable public procurement policies across these high-risk commodities. Yet the performance of Government departments against existing sustainable procurement commitments has been limited. According to the Government Buying Standards (GBS), the procurement of sustainable palm oil has been mandatory since 2015. However, little information on the uptake of this policy by government departments is available. WWF and RSPB have alleged that this is due to a downturn in transparency commitments: for example, mandatory reporting on Greening Government Commitments ceased in 2016. They recommended the GBS should require all acquired forest-risk commodities (in addition to palm oil and paper) to be certified as sustainably produced. They also recommended that the standards should be mandatory across all public bodies—for example in schools, the NHS and prisons—and that annual reporting on compliance against public procurement policies should be mandatory for such public bodies. They further proposed that reporting and monitoring frameworks for assessing compliance against public procurement policies should be strengthened: for example, annual public reporting on progress ought to be mandatory for all government departments and wider public bodies.
42.The National Audit Office (NAO) has repeatedly raised concerns over the lack of data and monitoring on compliance with the Government Buying Standards. In 2012, Defra reported that it was difficult to assess the extent to which departments purchased products meeting Government Buying Standards, as not all departments collected the necessary information. In 2013, the NAO found that monitoring of the extent to which departments’ procurement had met Government Buying Standards had been limited. In subsequent reports the NAO found that both the Department for Transport and the Ministry of Defence had stopped collecting data to monitor their compliance with Government Buying Standards, since monitoring was no longer mandatory, making it impossible to know whether departments had improved their sustainable procurement performance. Defra have stated that it is discussing with the Cabinet Office the need for a coordinated review of government buying standards, including alignment with net zero. Defra is also considering restarting compliance reporting, and now recognises its utility in detailing the extent of sustainable public procurement across government.
43.Another approach to encouraging sustainability in supply chains is through the implementation of a natural capital approach to the pricing of products. This would involve measuring the impact products have on natural capital and embedding payments for credible ecosystem services into the cost of these products. The integration of a form of natural capital approach into private sector operations was supported by Tesco, Associated British Foods, JNCC, Professor Partha Dasgupta and Professor David Hill of the Environment Bank. Primark, now a brand owned by Associated British Foods, is a member of the Cambridge Natural Capital Impact Group. The group have developed a metric to measure biodiversity impacts in global supply chains. With this metric, the group believes businesses can determine where their operations pose the greatest risks to nature, thereby informing corporate response strategies.
44.The NFU expressed reservations over a natural capital approach to pricing agricultural products. They stated that:
within agri-food supply chains, farmers and growers for the most part are price takers due to their limited market power within high consolidated supply chains.
The NFU observed that the agricultural sector was highly fragmented, with tens of thousands of farmers supplying agricultural commodities to a handful of processors, manufacturers, and retailers. This provided limited scope for farmers to pass on production costs further down the supply chain. In the context of farming to higher environmental standards, the NFU considered that farmers would be required to absorb the costs associated with safeguarding biodiversity. Since British farmers competed on a global scale with diverging production standards, the NFU argued that the cost inflation associated with agricultural production to higher environmental standards would significantly undermine the competitiveness of British agriculture if imports were not held to a similar standard. The NFU recommended that the Government should require imports to observe domestic production standards so as to promote fairness in the supply chain.
45.The new Environmental Land Management Schemes (ELMS) introduced through the Agriculture Act 2020 will support farmers by providing public money for public goods—such as helping wildlife, planting woods to capture carbon and improving the soil. When we asked David Webster, Director of Sustainability and External Affairs at Associated British Foods UK Grocery, whether he was concerned that costs would shift to farmers or consumers whilst transitioning to the ELMS system, he said:
The honest answer is I do not entirely know at this stage. It depends what is within the detail of the final implementation requirements. In theory, if we get this right and we can improve soil quality and integrate some of the management elements, it should work to the benefit of British agriculture… it is the right direction for us to be heading. It sets a very positive precedent for moving forwards.
46.In 2019, the Government set up the Global Resource Initiative (GRI) Taskforce to investigate how the UK could address commodity-driven deforestation and land conversion. In 2020 the GRI set out its final recommendations, including the introduction of a mandatory due diligence obligation on businesses that place commodities and derived products that contribute to deforestation on the UK market. The Government responded to this by proposing amendments to the current Environment Bill to require greater levels of due diligence from businesses and to make it illegal for UK businesses to use key commodities if they have not been produced in line with local laws protecting forests and other natural ecosystems.
47.90 per cent of respondents to the Government’s consultation on the new Environment Bill measures believed that the proposals should be extended. Several businesses, trade associations and conservation organisations have urged the Government to go further and take measures aimed at halting all forms of deforestation. Unilever, Nestle, Mondelez and all of the UK’s ‘big seven’ supermarkets wrote to the Secretary of State stating:
Restricting action to illegal deforestation would not achieve halting the loss of natural ecosystems, especially when governments have discretion to decide what is legal.
They advocate measures prohibiting the use by any UK business of produce from any deforested land.
48.The Government proposals do not extend to the finance sector, despite a GRI recommendation to this effect. Financial flows from or via the UK which fund deforestation activities are therefore likely to continue unchecked.
49.Asked why the Government had not extended the due diligence obligation to cover all forms of deforestation, Lord Goldsmith said:
If we were to get to grips with illegal deforestation, that would be taking an unprecedented gigantic bite out of one of the world’s greatest problems. Almost 90% of deforestation in Brazil, for example, is illegal. Globally it is around 50%.... the purpose of what we are doing here is not just to begin to get our own house in order; it is about creating a global coalition….If we want China on board, which imports around 65% of all the world’s commodities and therefore is a major part of the problem at the moment, and if we want them to become part of the solution, we have to peg our standards to legality.
50.Organisations are already going beyond the Government’s proposed legislation to establish deforestation free supply chains. ABF Agriculture has committed to eliminate deforestation from all its palm and soya supply chains by 2025. The WWF and RSPB reported an increase in the number of commitments from the private sector to be deforestation free, and in action towards further transparency and sustainability in supply chains. However, they noted that substantial risks remain embedded in the UK’s supply chain and a large ‘implementation gap’ remains between pledges on deforestation and conversion-free supply chains and tangible progress on the ground.
51.We welcome and agree with the Secretary of State’s analysis that addressing the sustainability of the UK’s global supply chains will be one of the most powerful ways in which the UK can reduce its adverse impact on levels of international biodiversity. The degradation of ecosystems brings supply chain, market and financial risks. Monitoring the impact of UK activities abroad presents obvious challenges: nevertheless, efforts must be stepped up to make overseas biodiversity monitoring a reality.
52.Sustainable government procurement presents a pathway to increasing the sustainability of supply chains. Yet Government performance against existing sustainable procurement policies has been unimpressive. The removal of the mandatory reporting obligation by Government departments against the Greening Government Commitments has led to a dearth of data and has hampered the monitoring of compliance with the Government Buying Standards, to the extent that it appears at present impossible to know whether departments have improved their sustainable procurement performance. In the run up to COP15 and COP26, and at a time when the Government should be showing leadership on sustainability issues, its departments appear instead to be moving backwards. This increased opacity over departmental sustainability practices is unacceptable.
53.We welcome the news that the Department for Environment, Food and Rural Affairs is considering restarting the routine reporting of levels of compliance with Government buying standards. We also note with approval the effect that Government commitments on the importation of sustainable palm oil has had on the supply chains of companies importing palm oil to the UK.
d)the Government Buying Standards should be mandatory for all large public bodies, like the NHS and prisons. Annual reporting on compliance against public procurement policies should be mandatory for these large public bodies.
57.90% of respondents to the Government’s consultation on new laws for forest-risk commodities believed proposals should be extended so that it is illegal for UK businesses to use any key commodities related to deforestation in their supply chains. We agree with stakeholders that global deforestation and the UK’s contribution to it cannot be tackled without bold and ambitious action. This should include moving to deforestation-free supply chains. The finance sector should be included in due diligence obligations if the UK is to avoid funding deforestation through lending and investments.
58.To increase the sustainable use of forest-risk commodities we recommend that the Government make it illegal for UK businesses and the finance sector to use commodities linked to deforestation and, at the very least, include the finance sector within the scope of the provisions on forest-risk commodities in the Environment Bill.
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