Board Meeting Outcomes

The ninth meeting of the Interim Environmental Markets Board (‘Board’) was held on 9th September 2024. Baseline audit of EnTrade The Board considered the results of the baseline audit of EnTrade’s compliance with the Market Rules conducted by Soil Association Certification (‘SA Cert’) as the independent auditor. The Board noted that the audit has not identified any material non-compliance, but there were some deviations from the Market Rules, in particular that EnTrade is yet to submit a Market Operating Procedure to the Board for approval to provide a quality management system for the Markets. The audit also identified some areas where clarification of the Market Rules would be helpful and agreed that these would be considered in the forthcoming review of the Market Rules. Response to the audit. EnTrade advised the Board that it had accepted all the audit findings and agreed with the recommendations including the need to establish a quality management system. EnTrade presented a Market Improvement Plan for actioning the recommendations. The Board determined that EnTrade must complete the key actions arising from the audit prior to the next Market Round. SA Cert were asked to verify when the actions are complete and advise the Board accordingly. The Board also determined that EnTrade should provide a report to the Board on its progress with the delivery of the remainder of the Market Improvement Plan ahead of each Board meeting until all the actions are complete. Scientific Advisory Group The Board discussed the progress in establishing the Nutrient Mitigation Agile Group, including potential members, and the nomination by the Environment Agency of an observer for the Group. Nature Market Dialogue The Board noted the progress of the Dialogue, including the Market Governance workshop held in July and the subsequent survey of governance priorities. Next Meeting The next meeting will be held on 19th November 2024. Jill May, Chair.

The eighth meeting of the Interim Environmental Markets Board (‘Board’) was held on 10th June 2024. Amendments to the Market Rules The Board agreed to a series of amendments to the Market Rules to clarify several matters in relation to the approval of Market Operator Fees and Market Settlement. Market Operator Fees The Board confirmed that a key principle of a high integrity environmental market is that the fees received by a Market Operator should be for services provided and not depend on the price(s) paid by Buyers for Credits or the payment(s) made to Suppliers for the delivery of Nature-based Projects (‘Fee Principle’). The Fee Principle is critical to ensure that that the Market Operator has no financial incentive to benefit from market prices. The Market Rules were also amended to make it clear that the Board is not a price regulator, and that approval of the Market Operator’s fees is on the basis that they comply with the Fee Principle. The fees set by a Market Operator are ultimately a matter for its own commercial judgement. Market Settlement The Board approved amendments to the Market Rules to distinguish more clearly between the process of matching supplier offers and buyer bids and the allocation of the market surplus (‘Matching and Allocation’), from the confirmation by the Market Operator of the successful Supplier Offers and Buyer Bids (‘Market Settlement’). The Board reaffirmed the previous amendments made to the Market Rules made in October 2023, confirming that contracts between the Market Operator and Buyers and Suppliers are formed automatically at Market Settlement. Market Operator Audit The Board was briefed on the appointment of the Soil Association to carry out the audit of the Market Operator’s compliance with the Market Rules. The auditor will join the Board at its September meeting to discuss the outcomes and recommendations from the audit. UK Nature Market Dialogue The Board endorsed the scope of a draft Market Governance Issues and Options Paper being prepared as part of the Nature Markets Dialogue in conjunction with the Broadway Initiative. The Board noted that the paper would be released for consultation in the Autumn. BSI Draft Nature Markets Standard The Board noted the submission that had been made to the development of the BSI Nature Markets Standard. Catchment Market Operation The Board approved the Catchment Opportunities Statement for the third Market Round of the Somerset Catchment Market. Note: The Market Operator discontinued the third Market Round of the Somerset Catchment market after a major buyer advised that its registered bid was materially incorrect. Next Meeting The next meeting will be held on 8th September 2024. Jill May, Chair.

The seventh meeting of the Interim Environmental Markets Board (‘Board’) was held on 15 April 2024. Legal status of the Board The Board agreed to continue to progress its work to establish the Board as an independent legal entity, and that a not-for profit Company Limited by Guarantee was the preferred model, subject to developing a sustainable financial strategy and business plan. UK Nature Market Dialogue The Board discussed the outcomes of the first Roundtable of the Nature Markets Dialogue held in London on 25th March including the rapid development of nature markets both in the UK and internationally and the risks to market integrity in the absence of a coherent regulatory and governance framework. Board noted the establishment of the Steering Group for the Dialogue and discussed the Board’s co-leadership of the market governance workstream, including the preparation of a Market Governance Issues and Options Paper. Nature Market Operators Workshop The Board discussed the outcome of a workshop held on 27th March with several UK nature market operators at which common challenges and issues in developing nature markets in the UK were discussed. The Board agreed to invite the workshop participants to set out their views on the need for independent market assurance, and the potential future role for the Environmental Markets Board. Scientific Advisory Group The Board agreed to establish a Nutrient Mitigation Agile Group to review the Nutrient Reduction Standard and Monitoring Programme for the Somerset Catchment Market. BSI Draft Nature Markets Standard The Board agreed to actively engage in the development of the BSI standard, including making a submission to the consultation. Board roles and responsibilities The Board discussed how it is currently discharging its roles and responsibilities including the balance between its own inquiry and reliance on third-party inputs such as audit reports and advice from regulators. Catchment Market Operation The Board considered several reports from the Catchment Market Operator, including on its financial position. Next Meeting The next meeting will be held on 10th June 2024. Jill May, Chair.

The sixth meeting of the Interim Environmental Markets Board (‘Board’) was held on 22 January 2024. Board Membership Jill May commenced in the role as Chair. Professor Steve Ormerod has agreed to become the Chair of the Board’s Scientific Advisory Group. Further details about Jill May and Professor Ormerod are available on the Board Website . Legal status of the Board The Board agreed that it would be best to establish the Board as an independent legal entity. The Board will obtain legal advice on potential legal forms with a view to discussing the likely preferred form at the April meeting. Review of Market Rules The Board will participate in the Bristol Avon Catchment Market Conference on 26th March with attendance by Jill May and Gary Mantle. The intention will be to obtain feedback from farmers and landowners, regulators, and housing developers on how the market is working, and an early assessment as to the effectiveness of the Market Rules. UK Nature Market Dialogue The Board agreed to co-lead the Governance workstream of the UK Nature Market Dialogue being facilitated by the Broadway Initiative. Jill May will co-chair a Market Governance Roundtable on 25th March hosted by Frontier Economics. Bristol Avon Catchment Market The Board approved the Market Opportunities Statement for the second Market Round of the Bristol Avon Catchment Market, which was amended following the withdrawal of three Registered Projects due to the identification of a potential additionality issue. The Board will consider the outcome of the review of Project additionality at its April meeting. Next Meeting The next meeting will be held on 15th April 2024. and will focus on the legal status of the Board, its responsibilities and the ways it receives assurance on these, and the membership of the Scientific Advisory Group. It will also discuss learnings from the UK Nature Market Dialogue and Bristol Avon Catchment Market conference. Jill May, Chair.

The fifth meeting of the Interim Environmental Markets Board (‘Board’) was held on 7 December 2023. Board Chair Jill May has been confirmed as the Chair of the Board and will commence her role in January. Further details about Jill are available on the Board Website . Review of Market Rules The Board discussed the scope of the terms of reference for a review of the current Market Rules. The current Market Rules began their development three years ago, and although the markets are still nascent the Board considers that a review is timely, to ensure the Rules are fit for future market development. The Board agreed that: the primary purpose of the Review would be to assess the operation of the Rules in practice, and identify changes necessary to support thriving, efficient and high integrity markets that are capable of being scaled up to make a significant contribution to nature’s recovery. the secondary purpose of the Review would be to contribute the lessons learnt to wider thinking on nature market governance, both in the UK and internationally. The Review will be conducted over the course of 2024 and involve consultation with Market Participants and wider stakeholders, with the Terms of Reference to be made public in the New Year. Engagement on Nature Market Governance The Board discussed a proposal to help lead a Dialogue on UK Nature Market Governance to input into policy development on the future governance of voluntary carbon and nature markets in the UK. The dialogue would run during 2024 and would enable the Board to share its experience and work with like-minded organisations to build a consensus about the actions Government needs to take to secure the integrity of UK nature markets. Somerset Catchment Market The Board considered a report from the Market Operator on an administrative error that arose in the Settlement of the second Market Round of the Somerset Catchment Market and how that error was resolved. The error resulted in a shortfall of Phosphorus Credits needed to meet Buyer Requirements. The shortfall was met from unallocated credits from the first Market Round. The Board welcomed the Market Operator’s timely reporting of the issue and its resolution. The Board was satisfied that there was no detriment to Market Participants. The Board agreed to amend the scope of the Baseline Audit of the Market Operator to review the issue and make recommendations on any further improvements to prevent recurrence. Next Meeting The next meeting will be held on 22 January 2024 and will focus on the workplan for 2024, including the establishment of the Technical Advisory Group. Andy Pymer, Acting Chair.

The fourth meeting of the Interim Environmental Markets Board (‘Board’) was held on 23rd October 2023.

The third meeting of the Interim Environmental Markets Board was held on 12th September 2023.

A Special Meeting of the Interim Environmental Markets Board (‘Board’) was held on 28th June 2023.