PwC has walked back a report used to claim the nature repair market could be worth $137bn, accepting it measures “indirect spending towards biodiversity” but the amount spent on “threatened species conservation, with clear outcomes, is likely much less”.
The consultancy firm made that submission to a Senate inquiry examining the Albanese government’s nature repair market bill in response to a critique of the report from the progressive thinktank the Australia Institute.
PwC has also come under fire from the Greens senator Sarah Hanson-Young, who says the firm has questions to answer about whether the report was written to “get their foot in the door to win more work” associated with the market.
The environment minister, Tanya Plibersek, announced the nature repair market in August 2022 and introduced the bill in March. It proposes to create a market to incentivise investment in nature restoration by creating tradable certificates for projects that protect and restore biodiversity.
The Coalition at first agreed in principle, because it replicated a policy of the Morrison government, but withdrew support in June, putting the bill at risk of defeat in the Senate.
In March Plibersek cited the PwC report, titled “A nature-positive Australia” and published in December 2022, which she said had found a biodiversity market that “could unlock $137bn to repair and protect Australia’s environment by 2050”.
The report measured the “direct value [of] financial flows to biodiversity” with estimates of components including: private biodiversity, conservation and natural capital investments ($78bn); forest carbon and biodiversity offsets ($33bn); conservation NGOs and environmental charities ($11bn); government expenditure and subsidies ($8.5bn).
The Australia Institute submitted to the Senate environmental legislation committee that the report was “misleading on a number of fronts and is entirely unrelated to the nature repair market”.
“Critically, the $137bn figure presented in the PwC report seems to be in 2050 dollars,” it said.
“That is, PwC has inflated the figures to what they would be in 2050. It is not an accurate representation of what the financial flows it presents are in 2023 or will be in the near future.”
The Australia Institute also argued that “a significant share” of the financial flows estimated by PwC were “not related to ‘markets’ at all, such as direct government intervention and environmental spending by NGOs and charitable donations”.
“Adjusting the estimates to 2023 dollars lowers the total financial flows to just $70bn, and ‘market-based’ flows down to $18bn,” it concluded.
The Australia Institute also took aim at evidence in Senate estimates on 23 May, in which the environment department deputy secretary, Lyn O’Connell, said it “did not commission or pay for that report”.
“It came out of a conversation I had with a principal at PricewaterhouseCoopers in terms of, ‘here’s something that would be useful for us to know’,” she said.
Hanson-Young told Guardian Australia that “there are questions as to whether this is part of a PwC strategy to get their foot in the door to win more work – it’s a corporate strategy we know has been used elsewhere by PwC”.
A PwC spokesperson said: “PwC regularly authors thought leadership on important topics, and in this case saw an important opportunity to progress a conversation around the role of biodiversity markets and the role for the private sector in funding nature repair.”
In its reply submission, PwC’s acting chief executive, Kristin Stubbins, said its report was “developed in light of government interest in market-based mechanisms, as well as businesses and financial institutions becoming increasingly aware of nature-related risks and opportunities”.
PwC accepted the methodology involved estimating “financial flows from a range of vehicles” and the report “details the limitations” of estimates given the lack of data.
“We also acknowledge in the report that financial flows capture indirect spending towards biodiversity through environmental and conservation initiatives, but the proportion spent on targeted threatened species conservation, with clear outcomes, is likely much less.”
“The report did not attempt to outline the impacts specific to the nature repair market, as it was developed both independently of the Australian government and at a time when the [bill] was yet to be made public.”
Plibersek said: “I’ve been clear that I expect the nature repair market will generate billions of dollars of investment in nature repair to better protect our environment for our kids and grandkids.”
“Any extra investment in nature should be welcomed by people who care about the environment,” she said, citing support for the bill from the World Wildlife Fund, National Farmers’ Federation, Australian Land Conservation Alliance, Landcare and the Northern Land Council.
The bill is opposed by many environment groups due to concerns that the scheme as proposed could be used to offset habitat destruction caused by other developments.
It passed the House of Representatives on Wednesday evening, with Labor and most independent MPs in favour, while the Coalition, Greens and Zoe Daniel opposed it at the second reading stage.
Hanson-Young said: “The last election was about climate action and integrity but the government’s Green Wall Street scheme has neither.
“We need stronger environment laws to protect nature and the climate, not koala credits for greenwashing.”
