Triodos Bank’s Bevis Watts on the future of green finance

28 February 2025

On this month’s Planet Possible podcast, Bevis Watts, UK CEO of Triodos Bank, talks to host Niki Roach about the financing of nature recovery and and how to better connect economy and environments

This month on CIWEM’s Planet Possible podcast, host Niki Roach talks to Bevis Watts, the UK CEO of Triodos Bank, about green finance. On the eve of Watts’ stepping down after 10 years leading the bank, we bring you an edited taster of that conversation, with Niki and Bevis discussing the pioneering role of Triodos in the sustainable finance space, how to scale up the financing of nature recovery, and the need to connect the natural environment to the UK economy.

If you like what you read, you can listen to the conversation in full here or search for Planet Possible in your favourite podcast app or on Spotify. Click ‘follow’ so as not to miss any of our in-depth monthly episodes.

Planet Possible tells the stories of the people paving the way for positive planetary and societal change, so join Niki as she explores what's possible with practitioners and visionaries working on the big issues, from resilience to climate change, to enhancing our natural environment, to improving equality, diversity and inclusion in the environment sector.

You’ll find the Planet Possible MiniPod on the same feed, bringing you a monthly 15-minute burst of topical environmental discussion with some of the leading voices in water and environmental management. February’s MiniPod features Steven Wade of AtkinsRéalis on climate resilience.

Now, over to Niki and Bevis…

Niki Roach: Firstly, how do you define green finance?

Bevis Watts: I prefer the term sustainable finance and define sustainable investing as focusing on the impact you want to have. We talk about trying to promote an inclusive and fair society, and one that lives within planetary boundaries now and for future generations’ benefit. It's really consciously thinking about the environmental, social and cultural benefits. That holistic approach is quite important because nobody's going to care about the environment if they can't house themselves and feed themselves. We need to be much more inclusive in our approach to society and how we take people with us in the transformation we need to undertake.

NR: What's the role of Triodos in that sustainable finance space?

We celebrate our 30th year in the UK this year, and 45 years internationally, and I suppose we have pioneered how you run a bank sustainably. We're completely transparent. We publish every loan and investment that we make. We don't pay performance-related bonuses. We try and promote the highest levels of environmental and social responsibility in everything we do: in how we treat our co-workers, customers and office buildings.

But principally it's how we try and use the money. You could look at all the loans we make and think, ‘well, every bank will consider organic farming and Fairtrade’. That's true, but they didn't in, say, the 1990s, which is what Triodos was doing back then. We use the strap line, “Finance change, change finance” to do those pioneering things and finance transitions, but also then try and be an exemplar and share what we do and encourage others to follow suit.

NR: What does the leading edge of those sustainable investments look like today?

BW: The thing that we've had a particularly sort of high profile for in recent years is financing nature recovery. So nature-based solutions for natural flood management, rewilding projects; really things around ecosystem services and how can you better connect our natural environment to our economy.

We've always lived in this paradigm where our society is measured by how we grow our economy. When I went to business school, you were talking about externalities – things that sit outside of the economic models – and the natural environment was one of them. We need to develop a different way of thinking, and so we've tried to develop and showcase ways of investing in nature that also makes sense commercially.

NR: What’s working and not working currently?

BW: If I look at generic sustainable finance, and particularly sustainable ethical banking, within that, there are a number of smaller players in the UK. Then you've got quite a lot of large banks that will advocate that they are changing – and some are, and there are some really good, well-intentioned efforts, there are lots of good people that work within banking. But the reality is, if you take a macro view globally and include the biggest UK banks, many of them have continued to increase their overall investments in fossil fuels and continue to finance new fossil fuel expansion. And that is just one small example, because they are still financing lots of other things that are not really demonstrating sufficient change aligned with Paris climate goals, or more broadly, the sustainable development goals.

If I talk about nature-based solutions and nature recovery finance specifically, there's a huge amount of work to do there. We [at Triodos] have been pioneering this work since 2017 and a lot of the leading transactions in the UK have been completed by us. But how do we replicate those? How do we grow the supply side? We're talking about very different business models for farmers, landowners, NGOs, different types of transaction.

Biodiversity net gain and carbon credits are all very positive things that are helping us attach value to nature's recovery in its restoration. But we need to establish more of those things, such as recognising peatland carbon codes as a really viable form of carbon credits. We need standards for how you measure the success of all these sorts of things. There's a whole list of things that are around pump priming and scaling what is going to be a really significant new growth area of our economy.

NR: What are some of the enablers that are needed for finance in the nature recovery space?

BW: There are a lot of people now thinking that there's money to be made in nature recovery, that it's a new asset class. When we [at Triodos] focus on projects and partnering organisations, we are really looking to deliver with integrity and value. That's a really important principle. In terms of our role, we've tried to be a bit of an ice breaker, to work with a number of organisations to apply different models that we think could work. This isn't about creating new dedicated funds or new mechanisms. It's about applying existing ones.

We used a charity bond to raise £2 million for Trees for Life, which is a Scottish charity; adapted a sort of social impact bond model to raise money for a natural flood management project in the Wyre catchment; and used commercial loan products to directly finance things that are largely geared around revenue streams from carbon credits, biodiversity net gain and other forms of income that can be derived from ecosystem services.

Over the last few years, we've invested between £40m and £50m in these kind of projects. But Defra (Department for Environment Food and Rural Affairs] estimate that we need to be investing £500m a year of private sector finance by 2027, and by 2030, £1 billion a year into nature recovery projects. I'm not currently aware of anyone that's as active as we are, so the jump we need to make is huge.

NR: What needs to change for that growth to happen?

BW: I've worked in sustainability for 30 years. In 2000 we created the Carbon Trust to promote low carbon technologies and WRAP (the Waste and Resources Action Programme), which I worked for early in my career, to promote the use of recycled materials and resource efficiency and so on. I think we need a similar market intervention as that to really grow the supply side of this sector; that looks at, how do you replicate projects, how do you create model contracts and make those widely available in the market? How do you create the right standards that give market confidence? How do you speed up regulatory approvals for these things to bring speed and efficiency, and again, investor confidence to the market?

There's an opportunity – we are leading as a country in Europe in terms of the number of nature-based solutions projects that have been commercially financed. So I think as Carbon Trust and WRAP have gone on to be globally recognised entities and independent from government, there's a similar opportunity to follow such a path here. That is what’s needed to generate the number of projects, to draw in that scale of investment, and also projects of the scale. We need models that will bring together landowners and operate at a catchment scale and a landscape scale, and what's going to be the governance that sits around that. That's where my head and vision is at on it all.

NR: Are you starting to think about schemes that have multiple benefits or is it more of a siloed approach where it’s a scheme that’s giving us a nature benefit and that’s what we build the investment around?

BW: It's really important with these projects that you don't have a very bunkered view of the value and possible incomes from it. Some will have an element of ecotourism as part of the annual income. Some will have some social prescribing, flood mitigation, carbon sequestration, biodiversity net gain. But that's one of the challenges in this sector – because the land use will be different, and its potential will be different, there is no exact replica. It's very different to, say, financing renewable energy, where you're doing one turbine or three turbines or 20 and there is a degree of replication. It's very different to the complexity of ecosystem services.

There’s much more where that came from, so listen to the full conversation here, including commentary from Ed Dick, the CEO of Great Yellow, a business supporting sellers and buyers of nature improvement projects. Or search for Planet Possible in your favourite podcast app or on Spotify.