What does the EU Nature Restoration Law mean?

On 27th February 2024, the European Parliament approved the Nature Restoration Law, marking a significant step towards the restoration of Europe's ecosystems.The law passed through a final parliament vote with 329 votes in favour, 275 against and 24 abstentions. EU member states will have to adopt, through an open, transparent and inclusive process, national restoration plans detailing how they intend to achieve these targets. The Parliament’s lead negotiator on the proposal, César Luena, said the EU can now “move from protecting and conserving nature to restoring it”.

What is the EU nature restoration law?

The EU nature restoration law was first proposed in June 2022 with the aim of fulfilling the EU’s climate and biodiversity goals. In simple terms the law mandates restoration of at least 20% of the EU’s land and sea areas by 2030. EU member states will need to restore 30% of habitats covered under the law by 2030, to include forested areas, rivers and wetlands. There will then be a further percentage increase of restoration mandated, with restoration of 60% of land and sea areas by 2040 and at least 90% of areas by 2050. 

The law is intended to work alongside other environmental policies on a range of issues, including birds, habitats, water and invasive alien species. Its goals also align with the new EU 2030 forest strategy which intends to protect and restore forests across the bloc.

What is the science behind the nature restoration law?

The scientific rationale for the EU’s nature restoration law is laid out in the European Commission’s impact assessment study , which considers ecosystem restoration needs in tandem with the financing needed to implement such large wide scale targets throughout the EU. The impact assessment study together with the EU’s most recent “State of Nature” report identified the following :

• 80% of habitats in the EU have “bad” or “poor” conservation status, and only 15% are in “good” condition.
• More than half of EU peatlands – including bogs, mires and fens – and half of EU dune habitats are in bad condition.
• One in three bee and butterfly species are in decline, with €5 billion of the EU’s annual agricultural output “directly attributed” to these species.

In early 2021, the EU opened a public consultation based on this research. More than 110,000 people and organisations responded, showing an “overwhelming support” for legally binding nature targets. 97% of respondents stated they were in favour of general EU restoration targets across all ecosystems.

How will member states comply with the restoration law?

The law states that EU countries should, “as appropriate”, prioritise areas of nature that are “not in good condition” and also located in Natura 2000 sites - an EU network of protected areas containing at-risk species and ecosystems which have been deemed areas essential to nature conservation. Member states themselves can choose where they will restore, what they will restore and how they will restore, with the only requirement being a submission of national restoration plans to the European Commission to show how they plan to deliver on the key targets set out within the law. The European Environment Agency will also draw up regular technical reports on progress towards the targets. The Commission, in turn, will report to the European Parliament and to the Council on the implementation of the Nature Restoration Law.

What will the Nature Restoration Law mean for corporations?

To highlight the critical role of business in nature restoration the Institute for European Environmental Policy has produced a briefing together with the Corporate Leaders Group of companies (CLG) and the University of Cambridge Institute for Sustainability Leadership titled ‘From Risk to Resilience: The Business Imperative of Nature Restoration’.

As shown by the case studies from the members of the CLG, many businesses were already engaged in restoring agricultural land, rivers, forests, and other ecosystems prior to the passing of the Nature Restoration Law, due to an increased recognition of the effects of nature degradation on supply chains, corporate operation and public image. The CLG further noted that 60% of companies listed on the Euronext stock exchange have a “high or moderate” dependency on nature, which places €3.26 trillion of market value at risk if nature restoration is not championed at a policy level. Amongst the most well known corporations to publicly support the EU restoration law during the consultation phase were Unilever, Danone and Ikea.

The new law now passed will codify corporate action on nature and will also create further opportunities for businesses to engage in public-private partnerships and mobilise more funding and investment in blended finance models that leverage private financing with public funds. 

What will the Nature Restoration Law mean for the financial sector?

According to the Impact Assessment Report nature restoration efforts yield a high return on investment, ranging from €8 to €38 for every euro spent, depending on the ecosystem type. The benefits of restoring various ecosystems, such as peatlands, marshlands, forests, heathland, scrub, grasslands, rivers, lakes, and coastal wetlands, are estimated to exceed €1,800 billion, with restoration costs around €150 billion. This showcases the immense potential of investing in nature restoration across various sectors.

Investing in nature is being increasingly recognised as an opportunity, and the Impact Assessment Report considers private financing options as a key way by which restoration costs will supplement the public funding that will go into nature restoration efforts. Private investment options are likely to feature in the implemented law and, as referenced in the impact assessment report, these options are likely to include green equity, debt, and bonds.

The EU nature restoration law is the first of its kind globally and is the EU's key contribution to the Convention on Biological Diversity which was adopted at COP15 in Montréal. It also contributes to achieving the EU's climate mitigation and climate adaptation objectives cost-effectively and to meeting EU international commitments.