On July 17th, the European Council formally adopted the first-of-its-kind regulation on nature restoration. The law aims to restore degraded ecosystems across the European Union, addressing the urgent need for biodiversity recovery and climate resilience. Its ambitious targets include the restoration of at least 20% of EU land and sea areas by 2030, and of all ecosystems in need of restoration by 2050, with even higher targets set for ecosystems currently in “poor condition”. Member states must now develop and implement detailed national restoration plans to reach these targets. While the law only directly imposes obligations on member states, businesses will be affected indirectly by the measures these states implement in response.

THIS ARTICLE IS WRITTEN BY LEENE TIMMERMANN ([email protected]) AND SEFA GEÇIKLI ([email protected]). LEENE AND SEFA ARE BOTH PART OF RSM NETHERLANDS BUSINESS CONSULTING SERVICES WITH A FOCUS ON SUSTAINABILITY AND STRATEGY CONSULTING.

Understanding the EU Nature Restoration Law

The EU Nature Restoration Law was first introduced in June 2022 as part of the EU Biodiversity Strategy for 2030. It aims to increase biodiversity and enable climate change mitigation and adaptation by setting clear targets for member states to achieve. To facilitate action where it is most needed, the focus lies on those ecosystems with the most potential to capture and store carbon as well as prevent and reduce the impact of natural disasters. In addition to the overall restoration targets, the law, therefore, includes more specific requirements. A non-exhaustive list includes:

  • Regarding agricultural ecosystems, EU countries must achieve a positive trend in two of the following three indicators by the end of 2030:
    - the grassland butterfly index;
    - the share of agricultural land with high-diversity landscape features; and
    - the stock of organic carbon in cropland mineral soil.
  • Due to their cost-efficiency in reducing agricultural emissions, EU countries must restore at least 30% of drained peatlands by 2030, 40% by 2040 and 50% by 2050. Rewetting peatlands will, however, remain voluntary for farmers and private landowners.
  • EU countries must reverse the decline of pollinator populations by 2030 at the latest and achieve an increasing trend from then onwards.
  • Several indicators in which EU countries must achieve a positive trend are introduced to restore forest ecosystems.

As the law will now be included in the EU’s Official Journal and enter into force at national levels immediately, member states must start creating national action plans to achieve these targets. Each Member State shall submit a draft of the national restoration plan on the first day of the month following 24 months from the date of entry into force of this law. An emergency brake is available to suspend targets for agricultural ecosystems in exceptional circumstances if they severely reduce the land needed for sufficient food production for EU consumption.

However, to facilitate a successful implementation and protect the interests of the many affected stakeholders, Member States are encouraged to follow a fair and cross-society approach in developing their national plans. In all phases of the preparation, review and implementation, states should, therefore, engage a wide range of stakeholders, including local and regional authorities, landowners and land users and their associations, civil society organisations, business communities, research and education communities, investors and the public.

Economic Implications

The legislative process towards this final approval was marked by extensive deliberations and discussions. Particularly economic consequences, both from a national and an individual business perspective, were a central issue. While land restoration, especially of this scale, can be a very expensive journey, the European Commission expects an economic return of 8 to 38 euros for every euro spent. While the obligation to achieve the targets set by the Commission falls on the member states, the measures they must take to comply are expected to have far-reaching effects for businesses, both negative and positive.

Businesses in agriculture and fisheries will likely feel the effects the most as their value creation highly depends on ecosystem services. Particularly, farmers have raised significant concerns about the effect on their business in the face of the contradicting legislative calls to reduce land-use and increase food production. Companies near affected areas, such as coastal regions, forests, and riverbanks, may also face changes, including new land-use policies, conservation efforts, and restoration projects. 

On the other hand, the new law is expected to mobilise significant funding and investment in nature and biodiversity both from the public and private sector. The European Commission intends to identify various sustainable financing measures, such as the InvestEU Programme, to support implementation, presenting a significant opportunity to leverage public funds to attract large-scale private-sector investments. Funding of nature restoration measures on the ground, including result-based support and innovative schemes such as carbon farming or green and blue infrastructure projects, could be further promoted. The law's potential to generate hundreds of millions of Euros in private financing could have transformative effects on global environmental efforts. 

Forward-thinking: Adaptation Strategies

To take advantage of the opportunities this law presents and avoid much of its costs, it is key for businesses to plan ahead. As national action plans are developed, staying informed about new national regulations and regional initiatives enables proper preparation. Particularly, businesses in those sectors most affected by the legislation, like agriculture and fishery, can benefit from working with authorities to protect their interests and considering their adaptation strategies ahead of time. Significant advantages can come from leveraging the anticipated incentives and financing opportunities. 

Adapting business practices while there is still time to spare is likely to unlock even more benefits. The law's focus on biodiversity will likely lead to the growth of new markets for ecosystem services, such as carbon sequestration, water purification, and pollination. Delaying such considerations until they become necessary to comply with national legislation will prevent valuable preparation time and may necessitate hasty and costly last-minute actions. By anticipating this trend, businesses can take the time to prepare and implement a strategy which positions them to enjoy the full economic benefits of the EU Nature Restoration Law.

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