Penny leads the Environmental and Natural Capital legal teams at law firm Freeths LLP, where she has built a nationally recognised practice with particular expertise in natural environment and natural capital law.
Over the past few years, Penny together with her colleagues have developed the natural capital practice to be at the leading edge of the emerging natural capital economy. She and the Freeths team have extensive experience in advising on the design and delivery of strategic natural capital schemes and the team offers leading advice particularly on the compliance side of nature markets. Penny is also an active member of the UK Nature Markets Dialogue steering group, helping shape national thinking on environmental and nature market governance and regulation.
Penny was named in the ENDS Report Power List 2023 and is ranked Band 1 for Environment in Chambers UK (2025). In 2022, she was named The Times Lawyer of the Week after successfully leading a technically complex judicial review against the Environment Agency (Harris vs EA), a case which had significant implications for the ongoing relevance of EU law in the UK post Brexit period
As the deadline for responses on the Government’s "Voluntary Carbon and Nature Markets: Raising Integrity" passes (10 July), I am reflecting on what seems to be an important crossroads.
The successful development and effective functioning of nature markets has never been more important. We know that constraints on government funding and existing legal obligations on Ministers and public bodies will never succeed in delivering the levels of nature restoration needed across our country. As an example, the Habitats Directive has been implemented in the UK since 1994 and yet the promised conservation measures to protect and restore key designated sites have not been forthcoming.
We need a radically different approach. We need private investment to flow into nature recovery in recognition of the economic value provided to us all by nature and ecosystem services. This is the only realistic way that we will bring our natural world back into health.
Yet the Government’s policy approach seems to be a shambles. We could not envisage a starker "left hand, right hand" problem across Government.
Before the Labour Government came to power last summer we were seeing positive signs in the emergence of 'compliance' nature markets. As an environmental lawyer, my focus has tended to be on these compliance (rather than voluntary) markets. At that time we were seeing a notable upturn in landowners and intermediary bodies looking to make positive land management changes so as to service the compliance needs of developers. Their focus was delivery of (i) offsite biodiversity units under the Town and Country Planning Act 1990 biodiversity net gain (BNG) legal regime; and / or (ii) nitrate & phosphate or water credits to meet nutrient and water neutrality requirements under the Conservation of Species and Habitats Regulations 2017.
Yet these compliance markets are now having the rug pulled from under their feet in two ways:
1. Part 3 of The Planning and Infrastructure Bill, introduced in March 2025, will (if enacted) have the likely effect of removing incentives for private landowners to create such compliance schemes. Instead developers will be invited simply to pay a levy (tax) to a new Nature Restoration Fund which Natural England will then spend on "conservation measures". Whilst these funds may in due course flow back to some landowners, the returns are very unlikely to be as attractive as where a landowner is in control of the scheme / dealing direct with developers. The environment will also suffer because the Bill significantly relaxes current controls over timing, quality, location and duration of measures to address development impacts.
2. Defra’s May 2025 consultation on BNG suggests that the BNG regime may be removed from small sites which make up 84% of all planning applications. This is despite the fact that the regime has only been a legal requirement for developers of small sites for just over a year and the markets are only just beginning to adjust to it.
These Government initiatives have real implications for investor confidence in nature markets. They will only serve to dampen landowners’ and investors’ enthusiasm and commitment to nature markets, an effect that we at Freeths LLP are already seeing. If even compliance nature markets cannot move forward effectively, where will this leave the voluntary markets which rely on "doing the right thing"? Compliance markets were, after all, offering a template to inform the growth of voluntary markets.
This is not remotely helpful in particular when, at the same time, the Corry Review "Delivering economic growth and nature recovery" (April 2025) has recommended that Defra launches a Nature Markets Accelerator "to bring much needed coherence to nature markets and accelerate investment" in the sector. And the Defra consultation on Voluntary Carbon and Nature Markets (April 2025) explains that "The Government remains committed to the use of market-based measures, domestically and globally, to support our ambitious net zero and environmental targets" and "In this context, the Government is supportive of action to unlock high integrity voluntary carbon and nature markets".
Many of us would have been involved in providing robust responses to the Voluntary Carbon and Nature Markets consultation, pointing out the urgent need for a new legal framework of governance to ensure high integrity markets in both the voluntary and compliance nature markets so as to incentivise investor confidence. The Nature Markets Dialogue, for example, a coalition of experts from the finance, business, farming and environment sectors created to support nature markets development (and for which I am a member of the steering group) published its recommendations on how to build a robust governance framework for UK nature markets and has referred to this in its response to the VCNM consultation. Its proposed ‘Nature Market Governance Scheme’ (contained in Towards a Governance Framework for UK Nature Markets: Key Findings and Proposals) is grounded in legal (statutory) foundation, independent oversight, scientific underpinning and accountability. It offers a model to add much needed legal coherence and oversight to nature markets.
The silos of Government desperately need to come together and continue to engage with stakeholders such as the Nature Markets Dialogue so as to chart one united course to bring about nature recovery.
Penny Simpson
Environmental Lawyer, Freeths LLP
July 2025
