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RIAA congratulates the Australian Government on the passing of environmental law reforms in late 2025. These reforms are a significant positive step forward and should lead to positive outcomes for businesses, investors, the environment and Australia’s economy, provided implementation achieves the objective of halting and reversing nature loss.

Crucial to the reformed laws achieving their intended purpose will be getting the associated regulations and standards right. These standards must be science-based, measurable, enforceable and aligned with planetary boundaries. The Responsible Investment Association Australasia (RIAA) welcomes this opportunity to provide feedback on National Environmental Standards for Matters of National Environmental Significance (MNES) and Environmental Offsets.

The MNES and Environmental Offsets standards will have a significant impact on investments that interface directly with Australia’s natural environment.

RIAA thanks those RIAA members, in particular members of RIAA’s Nature Working Group and External Reference Group, who contributed to the development of this submission.

General comments

Investors are increasingly understanding the significance, urgency and materiality of nature risk to their portfolio companies. RIAA’s 2023 Australian Responsible Investment Benchmark Report found that natural capital is emerging as an increasingly popular positive screening theme for Australian investors, with46% of survey respondents screening for biodiversity preservation and conservation, while climate change-related issues continue to be a priority. Investors are increasingly engaging with investee companies on nature-related issues, with 54% of investors engaging with companies on biodiversity/nature conservation and 38% on natural capital issues. This indicates that investors would welcome a regulatory environment that better protects companies and the economy against nature risk.

As nature conservation gains prominence among commercial stakeholders, it will simultaneously present both risks and opportunities for investors. Given the significant dependence that companies, industries and economies have on the services nature provides, the degradation of nature will prompt structural shifts in economies, compelling governments to heighten measures for managing increasingly scarce resources. These developments will have ripple effects across investment portfolios, influencing access to resources and associated costs, that can ultimately impact economic development. There is a growing trend towards nature-friendly business models among both corporate and retail consumers, a trend likely to intensify in the face of climate change, given the importance of healthy and thriving ecosystems to mitigating climate change. It creates an opportunity for investments in restoration, conservation, and sustainable solutions to enhance natural areas and increase biodiversity.

The strain facing Australia’s environment, with pressure from climate change, habitat loss, invasive species and extractive industries require strong laws and associated standards.

RIAA agrees the standards should support overall Environmental law reform in delivering:

1. Stronger environmental protection and restoration
2. More efficient and robust project assessments
3. Greater accountability and transparency in environmental decision making.

The Standards outline a number of positive improvements to existing legal frameworks, regulations, standards, guidance and practices, and offers the following comment:

• RIAA agrees that project proponents must act in accordance with a mitigation hierarchy to avoid, mitigate, repair and compensate for nature loss. RIAA welcomes the inclusion in the MNES Standard of the requirement for proponents to consider the mitigation hierarchy to limit, as far as possible, adverse impacts on protected matters; and to ensure decision-makers can objectively assess an activity’s negative impact.
• RIAA supports the inclusion of compensation as a very last resort - compensation not be able to be used to make an unacceptable negative impact acceptable – that is, where an unacceptable negative impact is determined, it should not be approved, irrespective of compensation.
• RIAA further agrees that decision-makers should only consider offsets where residual significant impact on a protected matter are not unacceptable. All residual significant impacts should be fully compensated through the use of offsets, and a net gain must be achieved.
• RIAA supports the strengthening of existing provisions and agrees that offsets must deliver benefits to affected protected matter by directly contribute to its overall conservation outcome, and deliver benefits that would not have occurred without the offset

The Standards relating to the MNES and Offsets will help to provide clearer rules and more transparent decision-making for businesses, and will support greater environmental protection; however, the standards could be improved to provide better certainty to investors and protection for the environment, and to ensure private sector operators have a positive, rather than negative, impact on the environment.

Summary of recommendations

RIAA recommends the following:

• include science-aligned, outcomes-based rules in the standards that ensures projects halt nature decline and contribute to net improvement of biodiversity and nature outcomes in the design and delivery of projects;
• develop additional science-based guidance relating to the circumstances in which activities must be avoided, as well as what sufficient mitigation looks like;
• include in the Environmental Offsets standard a requirement that offsets result in a net gain for the impacted area and/or species, and that the outcome should be quantifiable (not just direct and tangible);
• tighten language contained in the standards to ensure clarity for entities, proponents, decision-makers and civil society;
• provide additional clarity around how and to which decisions the MNES standard applies;
• carefully consider lessons learned from previous and existing offsets regimes in designing the Environmental Offsets standard and any associated guidance;
• include further detail within the MNES and Environmental Offsets standards, rather than relying on guidance;
• include in offsets agreements enforceable and monitored legal requirements to deliver outcomes in perpetuity, with associated requirements in the Environmental Offsets standard itself, including provisions for ongoing monitoring and evaluation of the effectiveness of offsets;
• prohibit the use of offsets where a project or activity may negatively impact species that are already considered critically endangered;
• include in restoration contributions requirements transparent, measurable, high-quality and science-based outcomes for nature (ie. science-based ‘like for like’);
• develop National Environment Standards for First Nations engagement and participation in decision-making, aligning with the principles as outlined in UN Declaration of the Rights of Indigenous Peoples, particularly reflecting a national definition of ‘Free Prior and Informed Consent’ (FPIC);
• codify the Dhawura Ngilan Business and Investor guides into codes, practices and regulations; reference engagement and participation from First Nations peoples in all stages of MNES and Environmental Offsets standards development and implementation; and
• consider the scope of the MNES framework and the recognition of relevant domains that have a substantial impact on Nationally Threatened Species and Ecological Communities, such as high biodiversity value, native forests, and, in certain instances, old-growth forests.

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