Final report - European Commission

wi

The Royal Society for the Protection of Birds

The Lodge, Sandy, Bedfordshire, SG19 2DL, UK

EC contract 070501/2006/451431/MA/B2

Supporting Business for Biodiversity: A biodiversity technical assistance facility

“The Biodiversity Technical Assistance Unit Project”

Final report

August 2nd 2010

EC contract 070501/2006/451431/MA/B2 Supporting Business for Biodiversity: A biodiversity technical assistance facility Final Report (August 2nd 2010)

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Contents

Page

Preface 5

List of abbreviations 6

Lists of tables and figures 8

Executive Summary & thematic high level recommendations to the EC 9

Project Report structure 16

1 Introduction 17

1.1 The context and purpose of the BTAU project 17

1.2 Structure of contracted activities 19

1.3 Financing pro-biodiversity businesses 27

2 Activities implemented and outputs achieved for the project 36

2.1 Overview 36

2.2 Review of progress and achievements for the Bulgarian BTAU 38

2.3 Review of progress and achievements for the Hungarian BTAU 51

2.4 Review of progress and achievements for the Polish BTAU 68

2.5 Review of progress and achievements for Co-ordinating Partner 86

3 Communicating the Biodiversity Technical Assistance Unit Project 106

3.1 Overview 106

3.2 International Project website 106

3.3 Presentation at and participation in international conferences and workshops 107

3.4 Project Workshops 108

3.5 Media articles published and printed materials produced 110

3.6 Conclusions 112


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4 Review of problems encountered during Project implementation 115

4.1 Project design and elaboration of the financial instrument 115

4.2 Project design and engagement with SMEs 117

4.3 EC institutional support and engagement 118

5 Conclusions 119

5.1 Overview 119

5.2 Main conclusions by theme 120

6 Recommendations 126

6.1 Financial instruments for supporting Pro-Biodiversity Businesses 126

6.2 Business advisory & rural engagement instruments 127

6.3 Natura 2000 ‘Business Opportunity Plans’ 127

6.4 Branded certification for supporting Pro-Biodiversity Businesses 128

6.5 Communicating the Pro-Biodiversity Business concept 129

6.6 Future development of the pilot national Biodiversity Technical Assistance Units 130

7. Bibliography 132


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APPENDICES

Page

Appendix 1 Targets, outputs and deliverables for 2009. 134

Appendix 2 Overall Progress against outputs and deliverables for 2009-10. 137

Appendix 3 BTAU Project team and contact information. 153

Appendix 4 Bulgaria: letter from United Bank of Bulgaria confirming their position in

relation to the project and current or future potential for a financial

instrument (in Bulgarian).

154

Appendix 5 Bulgaria: letter from United Bank of Bulgaria confirming their position in

relation to the project and current or future potential for a financial

instrument (English translation) .

155

Appendix 6 Hungary: letter from Savings Cooperative confirming interest in project

and future potential for a financial instrument (in Hungarian).

156

Appendix 7 Hungary: letter from Savings Cooperative confirming interest in project

and future potential for a financial instrument (English translation).

158

Appendix 8 Hungary: letter from Hungarian Enterprise development network

confirming interest in project and in future cooperation (in Hungarian).

160

Appendix 9 Hungary: letter from Hungarian Enterprise development network

confirming interest in project and in future cooperation (in English).

162

Appendix 10 Poland: letter from Ministry of Environment confirming interest in

Project concept, and the future potential for a financial instrument (in

Polish).

164

Appendix 11 Poland: letter from Ministry of Environment confirming interest in

project concept, the future potential for a financial instrument (English

translation).

166

Appendix 12 EBRD: draft terms of reference for market demand study for a pilot

Financing facility in support of companies operating in Natura 2000 sites.

168

Appendix 13 Business plan 2010+ Bulgaria (attached separately). 174

Appendix 14 Business plan 2010+ Hungary (attached separately). 175

Appendix 15 Business plan 2010+ Poland (attached separately). 176

Appendix 16 Research into branded certification with applicability to Europe 177

Appendix 17 EBRD: conclusions and reflections on the future potential of the BTAU

concept.

184

Appendix 18 EIB: conclusions and reflections on the future potential of the BTAU

concept.

186


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Preface

This Final Report is a deliverable of the EC funded project: “Supporting business for biodiversity: a

biodiversity technical assistance facility” (EC contract 070501/2006/451431/MA/B2), also known as

the ‘Biodiversity Technical Assistance Unit Project’. The project began at the beginning of 2007 and ran

until 23rd April 2010. This report summarises the work achieved for the entire project. The BTAU

project sought to identify the structures and procedures that will enable traditional commercial loan

funding to be blended with public subsidies or grants to create or develop profitable micro, small and

medium enterprises that maintain or enhance biodiversity in, or around, Natura 2000 sites across

Europe (or other High Nature Value areas). Biodiversity Technical Assistance Units have been created

in Bulgaria, Hungary and Poland to assist the wider information provision and advisory process that

will lead to the development of ‘Pro-Biodiversity Businesses’ in each of these countries as a template

for other EC member states.

The Royal Society for the Protection of Birds (RSPB) coordinated the project in partnership with the

Bulgarian Society for Protection of Birds (BSPB), Hungarian Ornithological and Nature Conservation

Society (MME), the Polish Society for the Protection of Birds (OTOP) and the European Centre for

Nature Conservation (ECNC). The European Bank for Reconstruction and Development (EBRD) and the

European Investment Bank (EIB), along with the European Commission (EC) advised the project

partners through a formal Steering Committee for the project.

This document has been prepared by the RSPB on behalf of the European Commission and does not

represent the views of the European Commission.

The RSPB accept no responsibility or liability for the consequences of this document being used for any

purpose other than the purposes for which it was commissioned.

Authors

Jack Foxall, Mark Day and Zbig Karpowicz of the RSPB wrote this report in spring/summer 2010, with

significant inputs from Attila Králl, Dénes Nagy and Levente Huszti of MME; Miroslava Dikova of BSPB;

and Zenon Tederko of OTOP. Any questions or comments relating to this Final Report should be

directed to Project Coordinator Jack Foxall, ([email protected]), or Joint Project Managers Mark

Day, ([email protected]) or Zbig Karpowicz ([email protected]) at the RSPB:


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List of abbreviations

AES Agri-Environment Schemes

BBI Business and Biodiversity Initiative of the European Commission

BFF Biodiversity Financing Facility/fund/mechanism

BOS Bank Ochrony Środowiska (Bank for Environmental Protection), Poland

BNAS Business and Nature Advisory Service, Bulgaria

BTAU Biodiversity Technical Assistance Unit

BSPB Bulgarian Society for Protection of Birds

CBD Convention on Biological Diversity

DBU Deutsche Bundesstiftung Umwelt, Germany

DG ENV EC Directorate General Environment

EBRD European Bank for Reconstruction and Development

EC European Commission

ECNC European Centre for Nature Conservation

EEA European Economic Area

EIB European Investment Bank

ENEA European Network of Environmental Authorities

ESUSG European Sustainable Use Specialist Group

EU European Union

FI Financial Instrument

FSC Forest Stewardship Council

GEF Global Environment Facility

HNV High Nature Value

JEREMIE Joint European Resources for Micro to Medium Enterprises

MoEW Ministry of Environment and Water Management, Hungary

MME Hungarian Ornithological and Nature Conservation Society

MSC Marine Stewardship Council

NACE Nomenclature statistique des Activités économiques dans la Communauté Européenne

NDB National Development Bank, Hungary

NFEPWM National Fund for Environmental Protection and Water Management, Poland

NGO Non-Governmental Organisation

NRDP National Rural Development Programme

OTOP Polish Society for Protection of Birds

PBB Pro-Biodiversity Business


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PHARE Poland and Hungary: Assistance for Restructuring their Economies

RA Rainforest Alliance

RDP Rural Development Programme

RSPB Royal Society for the Protection of Birds

SAC Special Area of Conservation (designated under the EC Habitats Directive)

SME Small or Medium sized Enterprise

SPA Special Protection Area (designated under the EC Birds Directive)

SSC Species Survival Commission

ToR Terms of Reference

UBB United Bulgarian Bank

UNEPFI United Nations Environment Programme Finance Initiative

WWF World Wide Fund for Nature


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List of Tables

Table 1: Interpretation of the contract Terms of Reference and focal areas

Table 2: Additional activities implemented beyond the original contract

Table 3: Selected examples of organisations involved in the financing of SMEs (with some or total

focus on biodiversity)

Table 4: Phrasing related to the financial instrument in the overall aims of the project and its

interpretation and assumptions

Table 5: Phrasing related to the financial instrument in the overall outputs of the project and

our interpretation and assumptions

Table 6: Five SMEs selected for potential investment in Hungary

Table 7: The number of SMEs in Poland that fall into sectors that directly or indirectly impact

natural resources.

Table 8: The number and structure of the short-listed Pro-Biodiversity Businesses identified

within the selected lowland grassland areas in Poland.

Table 9: Problems perceived by the Private Sector, the Public Sector and NGOs that create both

constraints and opportunities for developing Pro-Biodiversity Businesses

List of Figures

Figure 1: Diagrammatic representation of an SME financing facility

Figure 2: Map of areas where Natura 2000 sites overlap with the most underdeveloped micro-

regions in Hungary

Figure 3: Map of sites selected for the development of ‘Natura 2000 Maintenance Plans’ in

which private sectors business opportunities are evaluated in Hungary

Figure 4: SMEs in Poland by micro, small and medium category (2005)

Figure 5: PBBs in Poland by micro, small and medium category, (2005)

Figure 6: The percentage of micro, small and medium enterprises in Poland, in 2005

Figure 7: The selected lowland grassland areas in Poland in 2008 with which to narrow down the

SME demand study


SME demand study set against the background of designated Natura 2000 sites.

Figure 9: Integrated regional branded certification network in the Czech Republic (APUS / Czech

Association of Regional Brands 2009)


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Executive Summary and thematic high-level recommendations to the EC

The Biodiversity Technical Assistance Units project funded by DG Environment is an important

milestone in the process to find workable mechanisms to better engage the private sector in the EU

Member States with nature conservation and management, and make their operations compatible

with the needs of biodiversity.

It is now widely acknowledged that nature conservation, in the EU or elsewhere, cannot be delivered

or funded solely by public bodies. It is understood that the private sector activities must form part of

the solution for the existing shortfalls in action and funding, which results in the loss of biodiversity. In

2010, the United Nations International Year of Biodiversity, one factor that has contributed

significantly to the failure to halt the loss of biodiversity in the EU is the inadequate action from, and

engagement with the private sector. Most notably, micro, small and medium-sized enterprises (SMEs),

despite representing over 99% of businesses in the EU, have received by far the least attention in the

‘business & biodiversity’ arena, and arguably no comprehensive mechanisms have to date been

developed to help SMEs address their relationship with, and impact on biodiversity. As a direct

consequence, the micro, small or medium-sized enterprises, many large corporations that they supply,

and broader market mechanisms do not currently consider how SMEs relate to biodiversity in any way.

Therefore, this Project has sought to answer three key questions in relation to SMEs and biodiversity

within the EU, and especially within the Natura 2000 network:

• How important are SMEs within the Natura 2000 network?

• What role do SMEs play, or could they play, in contributing positively to support biodiversity

management within Natura 2000 areas and the wider rural landscapes of the European Union?

• Which existing and new financial and technical instruments could be used or developed to

support and enhance SMEs operating within or around Natura 2000 sites to do so in ways that

are compatible with and beneficial to site management objectives?

To answer these questions, between 2006 and 2010 three national Biodiversity Technical Assistance

Units (BTAU) were created and worked in the focal (pilot) countries of Bulgaria, Poland and Hungary,

with support from the Project Coordinators and Project Partner. The overarching objective of all

activities undertaken within the BTAU Project was to identify ways in which to remove barriers and

encourage improvements in the performance of the private sector in rural areas in relation to

biodiversity. In practice, this meant investigating relevant SMEs, finding ways to engage with them,

identifying if their operations could become (or remain) neutral, with no net loss of biodiversity, or

make a positive contribution to biodiversity conservation and therefore become Pro-Biodiversity

Businesses. Finally, the Project examined what incentives should be provided to encourage SMEs to

remain or become compatible with biodiversity in the context of Natura 2000 and the wider rural


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landscape, then worked to establish financial instruments based upon the national circumstances.

Throughout the contract, the Project Team was provided with valuable guidance and support from the

Project Steering Committee, comprised of the EC (DG Environment), the European Bank for

Reconstruction and Development (EBRD), and the European Investment Bank (EIB).

The BTAU Project has identified specific ways to assist SMEs operating within or around Natura 2000

sites to do so in ways that are compatible with Natura 2000 management prescriptions, and therefore

demonstrated how SMEs can contribute to the long-term sustainable and financial management of the

Natura 2000 network through the development of private-public partnerships. This offers the

opportunity for SMEs to contribute directly to the EU meeting its 2020 Biodiversity Target.

To achieve the objective of enabling SME operations to become or remain neutral or have a positive

impact a fully integrated spectrum of financial instruments (comprising grants, debts, equity and

payments) with an accompanying professional technical advisory service (comprising information on

Natura 2000, SME compatibility, business development, branded certification) is proposed.

The recommended blended financial instrument that would form the ‘Biodiversity Financing Facility’

would combine loan capital with incentives for both national intermediary banks and SMEs. These

incentives would create preferential terms to encourage SMEs to take up business development loans

with biodiversity criteria that are extracted from a combination of EU environment indicators and

Natura 2000 management prescriptions. Whilst the concept of a ‘Biodiversity Financing Facility’ is

entirely new, the blended finance model to improve the environmental performance of SMEs is well

established and proven to work effectively in addressing issues including resource reduction and

pollution abatement. Clear demand for a novel ‘Biodiversity Financing Facility’ to provide business

development loans with preferential terms linked to biodiversity performance indicators has been

demonstrated, and the design for an instrument has been developed. Unfortunately, it proved

impossible to make operational a test facility within the contracted period. However, this is now taking

place, albeit after completion of the contract period, with the EBRD funding independently a Market

Demand Study for two Polish Natura 2000 sites and there are ongoing negotiations with the

Government of Poland, a commercial bank, and the national BTAU to create this pilot loan facility with

linked incentives and technical assistance.

Contractually referred to as ‘Biodiversity Technical Assistance Units’ their role within the project was

to research, develop and test all operational aspects of the project in relation to i) rural SMEs and their

associated structures, ii) national governments, including rural development and Natura 2000

management authorities, and iii) financial institutions, including banks, investors and funding

providers. This hybrid ‘bridging’ role was essential to gather disparate information, understand the key

stakeholders’ needs, and then begin to broker new relationships and public-private partnerships

essential if the current situation is to improve significantly.


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The future role of the BTAU has been further defined during the project, and is anticipated to combine

communications and business development services for SMEs with technical support for financial

institutions, grant providers and payment agencies that provide compensatory and incentive

environmental management measures. Consequently, they were recommended to be renamed as

‘Business & Nature Advisory Services’ to more accurately reflect their role as service providers

offering advice to any businesses in relation to biodiversity issues, including those operating within

Natura 2000 sites. The Project found that establishing and building relationships with SMEs required

significant investment of time and expertise, due to the very limited capacity and existing knowledge of

rural SMEs. The BTAUs learned that mobile advisory services would be essential not only to provide

specialist support to the delivery of a ‘Biodiversity Financing Facility’ but equally importantly to assist

rural SMEs to access grants and absorb compensatory and incentive environmental management

payments more effectively, which has been identified as a major problem by the EC across the majority

of financial instruments.

As a conclusion a new technical instrument has been designed and is proposed by the Project Team is

the Natura 2000 ‘Business Opportunity Plan’. Based upon capacity audits of the management

prescriptions, management authority capacity and SME operations, this enabling instrument has been

created to systematically identify the existing or potential compatibility of SMEs with Natura 2000 site

management prescriptions and moreover, SMEs' potential to deliver key management activities

through their business operations. In doing so, it is anticipated that site management will be enhanced,

costs will be reduced, and community socioeconomic benefits will be accrued. By removing uncertainty

in relation to business operations inside Natura 2000, and offering positive private sector opportunities

and beneficial services explicitly linked to designation/existence of a Natura 2000 site, it is expected

that there will be a direct increase in the understanding and acceptance of the Natura 2000 network

within local communities and the wider public.

The potential for these SMEs to remain or become compatible with Natura 2000 site management

prescriptions has also been identified, along with existing and novel technical and financial instruments

required to fully realise this potential. Again, there are strong indications that this is the case across the

Natura 2000 network. Recommendations are provided for the next steps to further develop this

concept and fully capitalise upon its findings and outputs.

All three national Biodiversity Technical Assistance Units remain active after the completion of the

Project, in each case intrinsically linked to the BirdLife International partner. For each BTAU, a Business

Plan has been developed to ensure a range of income streams, from the provisions of a range of

services to the private sector and government. Additionally, a series of national and international

funding opportunities have been identified from bilateral, multilateral and foundation sources that will

enable the BTAUs to provide ongoing support within the business & biodiversity arena, and retain a

particular emphasis on SMEs.


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Summary high-level recommendations for the EC by theme

1. Financial instruments

• For the European Commission to achieve the 2020 biodiversity target adopted by EU Heads of

States in March 20101, one of the critically important measures is to improve the effectiveness of

integrating the EU policy framework in relation to reducing negative and encouraging positive

impacts of SMEs on biodiversity conservation, both in Natura 2000 sites and the wider countryside.

• The EC must ensure that a full spectrum of financial mechanisms are made available, ranging from

improved allocation and absorption of EU funds, and in addition grants, to debt and equity, as well

as environmental payments, and preferential loans with biodiversity conditions, to assist rural

SMEs at different stages of development. This is essential in order to improve fundamentally their

biodiversity performance and in doing so secure the future financing of the Natura 2000 network2.

• New financial instruments to encourage Pro-Biodiversity Businesses in the EU must be designed

using a blended structure that combines a loan, incentives for both national banks and businesses,

and technical assistance to support SMEs and monitor delivery. Their design must build upon

existing financial instruments proven to improve environmental performance of SMEs in fields

including pollution reduction and energy efficiency.

• In the evolution of biodiversity financing, given that the market mechanisms are very immature, it

appears to be too early to create a stand-alone dedicated financial instrument that targets

investments in Pro-Biodiversity Businesses, therefore new financial instruments should be

designed and created as specialised components within the structure of large existing or proposed

national or international financial instruments.

• The explicit function of the EIB to help implement EC policy through strategic investments to

governments, the commercial sector, and public-private partnerships must be utilised if a

Biodiversity Financing Facility is to be designed to operate across the EU27. Logically, EIB in

partnership with national intermediary banks should be perfectly placed to fulfil EU programming

of this strategic financial instrument to encourage pro-biodiversity SME operations through

preferential loans with biodiversity conditions. Based on initial discussions with EIB, in order to

achieve proof of concept before scaling up a Biodiversity Financing Facility, it may be most

effective to develop a pilot Biodiversity Financing Facility as a dedicated and specialised

subcomponent within the existing EIB Interact Climate Change Fund3.

• The expected EC 2011 communication on financing Natura 2000 should incorporate the

recommendations for funding national programming of Natura 2000, and for greater integration of

1 "Halt the loss of biodiversity and ecosystem services in the EU and restore them insofar as feasible, and step up the EU's contribution to averting global biodiversity loss" 2 Financing Natura 2000 – Financing needs and socio-economic benefits resulting from investment in the network. Background Paper for the Conference on ‘Financing Natura 2000’ 15-16 July 2010. DG Environment Contract ENV.B.2/SER/2008/0038 Institute for European Environmental Policy / GHK / Ecologic, Brussels 2010. This forms part of the EC contract ‘Economics and Social Benefits associated with the Natura 2000 network’ currently under completion. 3 http://www.eib.org/about/press/2010/2010-071-european-development-finance-institutions-to-establish-joint-climate-change-fund.htm


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Natura 2000 funding provisions across relevant Directorates General. It should also provide for

professional independent technical advisory services to increase the SME absorption of

environmental payments linked to Natura 2000, and the full testing of targeted SME loans with

biodiversity conditions with ‘Natura 2000 Business Opportunity Plans’ to support their delivery.

2. Advisory & rural engagement instruments

• Any new financial instruments developed to create incentives that improve SME biodiversity

performance should incorporate a ‘Business & Nature Advisory Service’ approach that provides a

professional, independent service to advise and enable SMEs operating in high nature value rural

areas, especially within Natura 2000 sites. This will be essential to supporting access to grants,

compensatory and incentive environmental management payments, as well as business

development loans with biodiversity criteria to become either biodiversity neutral or Pro-

Biodiversity Businesses.

• The ‘Business & Nature Advisory Services’ should be designed to also enable these services to

provide a broad spectrum of advice for SME business development, especially for those businesses

operating within Natura 2000 sites. Development support is envisaged to include concept

development, business planning, negotiating clusters to create cooperative marketing access, and

branded certification for a business or its products.

3. Natura 2000 Business Opportunity Plans

• The EC should seek to fully test the novel ‘Business Opportunity Plans’ instrument conceived by

this Project at a series of selected Natura 2000 sites that are representative of the nine EC

biogeographic regions. The test should develop the process and provide clear recommendations

for the organisational structures, advisory and promotional activities, financial mechanisms

required to develop and deliver Business Opportunity Plans, and should analyse the budgetary and

socioeconomic implications for all major stakeholders.

• The EC should follow the progress of the Hungarian Government’s ongoing initiative to develop

further Natura 2000 maintenance plans as these represent some elements of ‘best practice’

specifically in terms of rural SME engagement during the development of Natura 2000

management prescriptions.

• The EC should seek further incentives or apply pressure to encourage all Member States to

increase the percentage of Natura 2000 sites with management prescriptions from the estimated

20% of the 26,000 sites presently designated.

4. Branded certification

• Branded certification of products and services using certification schemes that apply biodiversity

criteria that make them compatible with Natura 2000 management prescriptions have great


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potential to encourage SMEs operating within and around Natura 2000 sites to positively change

their behaviour, and to enable EC consumers to make ‘nature friendly’ choices.

• At this point, the EC should seek to develop a full ‘Natura 2000’ brand for certified products and

services for application across the EU, on the specific conditions that Natura 2000 management

prescriptions, ‘Business Opportunity Plans’, ‘Business & Nature Advisory Services’ and strong

communications campaigns are all prerequisites for launching this approach. The need for these

prerequisites is due to clear evidence that there is very poor recognition of and limited support

from EC citizens and the private sector for the Natura 2000 concept. A Natura 2000 branded

certification scheme for products and services is strongly preferred and could be applied in all

Member States, but may not be applicable to all sites. The Natura 2000 brand should contribute

significantly to greater recognition of and greater support for Natura 2000 has been achieved

through other means, as well as contributing to both Natura 2000 management and socio-

economic development objectives.

• Additionally, the EC should also seek ways to encourage Member States to develop regional

branding of certified products and services, from the wider rural landscape that supports

biodiversity, both for its intrinsic nature value, but also due to ‘green infrastructure’ benefits from

improving connectivity between Natura 2000 sites (e.g. Czech Republic Association of Regional

Brands). Such regional branding should only be encouraged if clear biodiversity indicators are

developed and applied to SMEs that receive regional branded certification. Ideally, these

biodiversity indicators for these larger and culturally recognised geographical areas should be

derived from the a combination of Natura 2000 management prescriptions from those sites within

the region and European Environment Agency biodiversity indicators.

• EU Protected Geographic Indication and EU Protected Designation of Origin may also contribute to

this approach, as long as both mechanisms have their biodiversity impacts assessed and revised if

necessary to ensure that one branded certification system already in place does not undermine the

objectives of any other, and to ensure they are in line with the relevant Natura 2000 site

management prescriptions.

• Some internationally recognised branded certification systems for the sustainable production of

commodities and products that incorporate biodiversity criteria (e.g. the Marine Stewardship

Council) are applicable within the EU, and the EC should encourage increased certification by

supporting SMEs operating within Natura 2000 sites and the wider landscape and seascape to

become certified. However, all certification must be verified against Natura 2000 management

prescriptions to ensure full compatibility.

5. Cross-sectoral communication

• To successfully develop and deliver mechanisms for advising and financing SMEs to become Pro-

Biodiversity Businesses at the necessary scale, it will be essential for DG Environment to engage


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across the EC and mainstream the Pro-Biodiversity Businesses concept into other key sectoral

policy areas. In practical terms, if SMEs' biodiversity performance is to improve significantly, DG

Environment must secure a commitment from all relevant DGs to develop an integrated series of

initiatives to contribute to halting biodiversity loss during the financial perspective 2014 - 2020.

• Using accessible language, the EC must actively encourage the Business & Biodiversity Initiative

(B@B) and associated national activities to create opportunities for cross-sectoral communication

across the public sector, private sector and NGOs. This ongoing process will be essential in order to

build greater understanding, and develop more common ground created objectives shared by

these three major stakeholders, specifically in the areas of Natura 2000 sites, as well as in the

wider issue of biodiversity conservation.

• If possible, presentation of the BTAU Project findings, with an emphasis on both the national

context and EU replicability, should form part of the discussion during the 2011 Hungarian and

Polish EU Presidencies to encourage better cross-sectoral cooperation and stronger engagement of

the EU Member States.

• Funding lines that support public private partnerships with strong elements of communications

(e.g. LIFE+) should explicitly focus on encouraging greater involvement and engagement of SMEs

wherever possible.


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Project report structure

This Final Report is a deliverable of the EC funded project: ‘Supporting business for biodiversity: a

biodiversity technical assistance facility’ (EC contract 070501/2006/451431/MA/B2), also known as the

‘Biodiversity Technical Assistance Unit Project’ (BTAU). The project began at the end of 2006 and ran

until 23rd April 2010. The report summarises the work achieved for the entire project.

Section 1 introduces the context and purpose of the project, highlighting the overall aims and expected

outputs, and the detailed structure of contracted activities. Some additional activities were also carried

out beyond the terms of reference and these are highlighted. An overview is also provided on financing

Pro-Biodiversity Businesses (PBBs). This section first clarifies how the Project Team has interpreted the

overall project aims with reference to developing a financial instrument and how we have worked with

the EC and our Project Steering Committee (EC, EBRD & EIB) to build an approach that sought to

achieve these aims. The main approaches, developments and lessons learnt in exploring innovative

financing mechanisms through the project are then summarised.

Section 2 provides a detailed analysis of the activities implemented and the outputs achieved (2007-

2010) is presented. The section first reviews progress for the Bulgarian BTAU, the Hungarian BTAU, and

the Polish BTAU. It continues by then reviewing progress made by the Coordinating Partner, the RSPB.

Section 3 reviews the profile of the project achieved by active communications with key stakeholders.

It first outlines the overall Project website and associated national language mirror sites that were

established to disseminate project information. The project staff’s attendance at international and

national events is then reviewed. This section also summarises the series of national project workshops

that took place, as well as articles published, and publications produced in the three focal countries.

Section 4 reviews the significant barriers and constraints that were encountered during the project

implementation and that adversely affected the Project outcomes.

Section 5 provides the summarised conclusions from across the entire project structured by work area,

and then pilot country.

Section 6 provides the high level structured recommendations for the EC, EBRD and EIB as Steering

Committee members to consider those aspects of this project that deserve further development and

those work areas that are less important to pursue.

Appendices (1 - 18) provide further information relating to some of the tasks carried out during the

project and are valuable sources of background information.


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1. Introduction

1.1 The context and purpose of the BTAU project

During the first decade of the 21st century, there has been a surge of interest by governments, NGOs

and the finance sector to find sustainable solutions to the local, national, regional and global threats

posed by biodiversity loss. In this context, there is a fundamental need to ensure that businesses of all

sizes are more effective in building biodiversity conservation into their operating models. Private sector

activities can make either a positive or negative contribution to biodiversity conservation, or be

neutral, but biodiversity is still largely considered a public good with limited financial value, and few

markets or prices. National and international regulation at various levels plays a large part in trying to

prevent, minimise or compensate for activities that result in the loss of biodiversity because of private

sector activities, but there have been far fewer incentives to encourage businesses to be or become

pro-biodiversity. The challenge is to identify innovative opportunities and incentives that will

encourage and enable private sector ingenuity and energy to develop or refine activities that will either

have no net ecological impact or will actually enhance biodiversity conservation in some specific

measurable ways.

The overall objective of the Biodiversity Technical Assistance Unit (BTAU) Project was to investigate

and test such opportunities and incentives that could specifically secure a greater contribution from

micro, Small and Medium sized Enterprises (SMEs) in developing or maintaining business activities that

were pro-biodiversity. So far, the vast majority of attention has focussed on identifying ways in which

large corporations can avoid, minimise or compensate for their impacts on biodiversity, and in which

ways those corporations can directly contribute to supporting biodiversity conservation4. Whilst large

corporations can undoubtedly make large-scale negative or positive impacts, it is SMEs that make up

the vast proportion of businesses around the world, especially in rural landscapes and protected areas

that are richest in biodiversity. Within the European Union (EU), SMEs represent over 99% of all

businesses, and employ over 75% of people across the EU. In rural areas of the EU, SMEs were

understood to dominate the private sector. In spite of the surge of interest in ‘business & biodiversity’,

in the EU, SMEs had largely been ignored in this work area. The notable exceptions to this are

investigations of the role of SMEs in sustainable supply chains for large corporations with corporate

responsibility reporting, and the opportunities for SMEs to become certified under international

commodity schemes (e.g. Marine Stewardship Council). There was limited reference within the Lisbon

EC High Level Experts Meeting on Business & Biodiversity (2007), and very limited reference to SMEs in

the processes relating to the EU target of halting biodiversity loss by the year 2010. Therefore, there

4 Four significant examples include 1) the publication by Bishop et al (2008). Building Biodiversity Business; European Communities (2008), 2) The Economics of Ecosystems and Biodiversity: interim report http://www.teebweb.org/InformationMaterial/TEEBReports/tabid/1278/ language/en-US/Default.aspx), 3) The Corporate Ecosystem Services review by the World Resources Institute. This provides corporate managers with a proactive approach to making the connection between ecosystem change and their business goals. A structured methodology is provided to help businesses develop strategies for managing risks and opportunities arising from their dependence and impact on ecosystems, (http://www.wri.org/publication/corporate-ecosystem-services-review). Finally, 4) The Natural Value Initiative (http://www.naturalvalueinitiative.org/), is working with the finance sector to develop a toolkit to evaluate the financial risk and opportunity of companies’ dependence and impact on biodiversity and ecosystem services.


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were significant gaps in knowledge and understanding of the relationship between SMEs in the EU and

their knowledge of, attitudes to, and impact on biodiversity. Beyond compensatory and incentive

environmental management payments funded by the EC (e.g. agri-environmental or Natura 200

payments), there was inadequate information on innovative incentives that would effectively engage

the SME sector to become pro-biodiversity businesses and make their much-needed contributions to

halt biodiversity loss.

What was known was that SMEs commonly made frequent complaints about restrictions forced on

business activities in order to protect and manage areas for their biodiversity conservation value.

Conversely, very few SMEs appeared to see biodiversity as an opportunity, or have a clear

understanding of how to identify and develop viable business operations that were either neutral or

pro-biodiversity. Equally, SMEs complained openly about the lack of affordable financial support to

enable them to adapt or refine their operations to invest in biodiversity friendly business practices.

How much SMEs understood about what being ‘biodiversity-friendly’ means appeared was entirely

unclear and highly variable.

Investing in SMEs is very well established professional discipline, and financial instruments with specific

conditions inserted to improve the environmental performance of businesses (e.g. in relation to

pollution emissions, energy use, water use, packaging, waste) are well established. However, from the

investor’s perspective, there appear to be major barriers preventing specific investment in

‘biodiversity-friendly’ SMEs. Not surprisingly, the private sector, including investors, believes (correctly)

that biodiversity is an extremely complex thing, because this is what biodiversity experts have

repeatedly told them. Therefore, investors believe (incorrectly) that this makes understanding whether

a business is negative, neutral or ‘pro-biodiversity’ very complex. Equally, they also believe that

monitoring the performance of a business against biodiversity indicators must also be impossibly

complex and, therefore, prohibitively expensive. Overall, the private sector, including investors and

financial institutions, the public sector, including protected areas managers, and NGOs from across the

spectrum have so far been largely unsuccessful in negotiating innovative public-private partnerships or

approaches to engage effectively and begin solving these specific problems. This is partly due to

seemingly incompatible objectives, but equally due to incompatible processes, limited interactions and

exclusive language.

Recognising these various problem areas, DG Environment initiated a dialogue with business in 2005 in

order to begin identifying how some of these concerns could be integrated into EC policies through an

initiative entitled: ‘Supporting Business for Biodiversity’. The initial aims were to identify opportunities

as well as constraints facing SMEs that operated businesses based upon biodiversity as a key resource,

and to promote discussion of the issues. Emanating from this, DG Environment tendered for the BTAU

Project contract in 2006 to further penetrate the key issues, synthesize current knowledge, engage

SMEs and financial intermediaries in three focal countries, which were chosen to be Bulgaria, Hungary

and Poland. The EC contract required recommendations to be generated on how investors, the wider


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private sector, the public sector and NGOs could engage effectively with the issue of ‘business &

biodiversity’ in a EU SME context. The BTAU Project Steering Committee (comprised of DG

Environment, the EBRD and the EIB) decided to limit the project’s geographical scope further to the

Natura 2000 network but not excluding businesses outside Natura 2000 areas if it was so. This was

based on the clear premise that all Member States are obliged to identify and designate a national

Natura 2000 network of sites under the Birds and the Habitats Directives. Most importantly, it is

promoted that all Natura 2000 sites should have biodiversity management prescriptions to achieve

and/or maintain ‘Favourable Conservation Status’. Therefore, the Steering Committee believed that

pro-biodiversity SME operating conditions might be derived from site-specific management

prescriptions. At present, approximately 26,000 Natura 2000 sites cover an estimated 18% of EU land

area across the 27 EU Member States. Ultimately, the BTAU Project objective was to seek solutions to

enhance the positive contribution of SMEs to biodiversity conservation within the Natura 2000

network, whilst retaining a view to potentially applying the findings in the wider countryside.

1.2 Structure of contracted activities

1.2.1 Overview

The Project was split into two Lots. For Lot 1, the project was required to:

1. Identify the specific market conditions that are intrinsically favourable for pro-biodiversity

business opportunities, and promoting the conclusions to both national and pan-European policy-

making authorities;

2. Develop an information platform, both in terms of content and out-reach capacity (brochures

promoting the pro-biodiversity business concept, best available technology publications / best

practice guidelines, databases, website);

3. Develop material that is adapted for training requirements of business and entrepreneurs of

selected sectors that have a potential to develop pro-biodiversity friendly projects (for example

tourism, farming, food industry, education etc).

Specifically, activities within Lot 1 included:

1. The collation, review and assessment, of existing relevant scientific and policy related information

on development and constraints of pro-biodiversity projects by the private sector. This will

contribute to the preparation of a guidance document for the development of pro-biodiversity

projects by the private sector enterprises and businesses. It is expected that the contractor will

benefit for the execution of this task from the outcomes of the DG Environment contract on

‘Financing Natura 2000 – Financing needs and socioeconomic benefits resulting from investment

in the network’ (ENV.B.2/SER/2008/0038);


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2. Assessment of the existing opportunities for development of pro-biodiversity projects. Market and

business analysis by selected countries and sectors and then extrapolation in EU (and acceding

countries) level and the identification of key gaps in awareness and capacities of business /

enterprises (impeding factors) by country and proposals for remediation. Production of an

information brochure on pro-biodiversity projects for the stakeholders and especially

businessmen and entrepreneurs;

3. The development of a “Handbook for developing and implementing pro-biodiversity projects” by

private enterprises/businesses. The handbook will be based on the work carried out in tasks 1 and

2 and from input from surveys (if chosen). The Commission will ensure the publication of this

handbook;

4. The development of an education tool-kit for business (in particular SMEs) that could be used for

training businessmen and entrepreneurs on developing pro-biodiversity projects;

5. Develop a BTAU toolkit for assessing pro-biodiversity project concepts and ideas for use by the

BTAU.

For Lot 2, the project was required to:

1. Promote and foster partnerships between the conservation and business/enterprises

communities through the organisation of specialised workshops or conferences;

2. To develop a company/enterprises assessment toolkit and identification of opportunities for

developing biodiversity projects with all necessary updates if changes in operational environment

occur;

3. To establish in three Member States or acceding countries (to be chosen with the assistance of the

Screening Committee of the contract composed by Commission officials and possibly EBRD) pilot

Biodiversity Technical Assistance Units (BTAU) which will provide specialised assistance in the

selected countries to enterprises seeking to develop bankable pro-biodiversity projects, in order

to identify a pipe-line of bankable biodiversity-related investment proposals (screening, scoping,

identifying financial needs, selection, specific technical assistance needed that can lead to

investment proposals;

4. To assess and evaluate the country profile with emphasis on pro-biodiversity sectors identification

for all the countries that will host one of the three BTAU;


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5. To evaluate the performance of the BTAU and to identify possible adjustments needed for their

better operation.

Specifically, activities within Lot 2 included:

1. In the context of establishing the Biodiversity Technical Assistance Units (BTAU), the contractor

should:

• Provide detailed assessments using the BTAU toolkit developed, as well as elaboration of

preliminary project ideas in collaboration with stakeholders / proponents;

• Identify companies already working in or suitable for diversification into the biodiversity-

related fields of the potential target areas in the three pilot countries and bringing together of

companies/enterprises and local stakeholders to assist in the final identification of companies

to go forward to project development;

• Provide Technical Assistance to companies/enterprises, that may potentially involve Business

plan development, risk assessment, marketing, financial accounting methods; Cost-benefit

analysis, Supply–chain management linked to biodiversity, specific sector assessments,

biodiversity management, sustainable use;

• Identify the financial needs of enterprises and provide assistance to access the EBRD

Biodiversity Funding Facility or other instruments. Assist with the procedures for SME support

in place (either EBRD’s or assessing funding through local intermediaries like banks and

programmes.

2. Perform an evaluation of the performance and assessment of the implementation procedures of

the 3 pilot Biodiversity Technical Assistance Units;

3. Create a database on pro-biodiversity projects opportunities available in the EU and subsequent

updates of this database, if needed, following changes in the EU and national policies;

4. Organise a minimum of three workshops aiming to address, discuss and test the findings of tasks 1,

2 and 3 of Lot 1 above and their resulting deliverables and to raise awareness at the level of a

Member State or a region;

5. Prepare meeting documents; the elaboration of workshop/conference conclusions and

recommendations during the workshop/conference, and the finalisation of reports from the

workshops;

6. Co-ordinate any ad hoc working groups that may be created and the facilitation of communication,

between them, as well as the development of synthesis documents in a coherent way, as well as


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the management of Internet information for any possible electronic interest groups that the

contractor may wish to form in order to facilitate exchange of information and disseminate results;

7. Organise surveys and management of the collected information, if the contractor proposes to use

surveys for collecting information.

1.2.2 Interpreted aims and expected outcomes

Based upon the contracted objectives, the aims and expected outcomes were interpreted to be:

1 Identify ways to assist SMEs in the EU-27 to contribute to the EU Strategy for Sustainable

Development, in particular the 2010 biodiversity conservation target;

2 Contribute to long-term sustainable management of the Natura 2000 system through the

application of a public-private partnership approach and in the creation of a new investment

market for the banking sector;

3 Create Biodiversity Technical Assistance Units in selected countries to provide technical support

that would enable the delivery of future loan investments for the benefit of biodiversity and

business.

There three key expected outcomes for the Project were interpreted to be:

1 Demonstration of the potential for SMEs that are pro-biodiversity businesses to contribute to the

EU Strategy for Sustainable Development through their commercial activities;

2 Demonstration of the potential role that investment in PBBs could have in contributing to the

sustainable management of the Natura 2000 and the Important Bird Area (IBA) systems in the EU

27 and thereby contributing to halting the loss of biodiversity by 2010;

3 Opening of a new commercial market that would apply to the rural areas of the EU-27 as an

example of a public-private partnership contributing to conservation in the EU.

In order to achieve the above aims and outcomes, The Royal Society for the Protection of Birds (RSPB)

were Project Coordinators, in partnership with three BirdLife International partner organisations from

Bulgaria, Hungary and Poland. The national units provided the project with unique experience in the

management, conservation and monitoring of species, biodiversity and ecosystems. The national units

also offered access to national networks of experts covering both the business, management and

development as well as the banking and financial aspects of the work. The European Centre for Nature

Conservation (ECNC) provided additional specific support to assist delivery of some project objectives.


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1.2.3 Summary of contractor interpretation of the contract terms of reference and key focal areas

The contractor interpreted the terms of reference and provides a summary of progress in this report

against the following major work areas, outlined in Table 1 below.

In 2007, the focus of activities for the project was to establish the pilot BTAUs in Bulgaria, Hungary and

Poland and to carry out rigorous research into the current barriers to Pro-Biodiversity Business

development as well as the market conditions that would be favourable to their development.

Information platforms were set up through electronic and print media to communicate key project

messages and to draw together relevant bodies in the public, SME and financial sectors. A demand

study was initiated to identify all the SMEs operating in each country and to identify which of these

SMEs were or could become Pro-Biodiversity Business in the selected project areas. Outreach to the

SMEs began to assess the demand for an innovative financial instrument for investment in Pro-

Biodiversity Businesses, and the associated advisory support.

In 2008, the focus of activities for the project was to use and apply the knowledge, expertise, tools and

instruments that were developed by the project in 2007. The main aim was to create expanded

portfolios of Pro-Biodiversity Business and to assess the financial and technical needs of selected

enterprises to ascertain the types of investments that could take place as well as the likely funding

needs that were required. The project also began to prepare the design of the financial instruments

that would finance the development of the Pro-Biodiversity Business markets in the pilot focal

countries of Bulgaria, Hungary and Poland. Biodiversity monitoring research was also carried out which

could be applied to any investment or business development proposal to ensure that biodiversity was

maintained or enhanced. Finally, business plans were completed for each BTAU to guide their activity

between 2008 and 2010, and then beyond the end of the project.

In 2009, the focus of activities was naturally again to apply the knowledge, expertise, tools and

instruments that were developed by the project thus far to break down the fundamental barriers to

the development of Pro-Biodiversity Businesses and to identify the significant enabling mechanisms

which could help to catalyse the new market for Pro-Biodiversity Business investments. An important

part of this was to summarise the potential for each of the three national BTAUs to broker a financial

instrument for investment in SMEs and the likely timeframe and possibilities for this to be

implemented. Without doubt, the global financial crisis that began in 2008 severely restricted the

normal access to financial institutions for the National and Coordinating Partners and therefore caused

very significant constraints and delays to the development of a new financial instrument in all three

countries. The paralysis in the financial markets effectively froze the SME lending market in 2008-09.

Linked to the global financial turmoil, and the EC’s delay in initiating the Business & Biodiversity

Initiative tender DG Environment granted a four-month project extension in the autumn of 2009 to

extend the project until 23rd April 2010. The extension’s main aim was to ensure that each national

partner could continue exploring opportunities to find solutions and build recommendations for future

investment opportunities for SME financial and technical assistance in Pro-Biodiversity Businesses.


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Table 1: Contractor’s interpretation of the contract terms of reference and key focal areas

Work area and brief description of activities

undertaken

2007 2008 2009 2010

Q1/2 Q3/4 Q1/2 Q3/4 Q1/2 Q3/4 Q1

Identifying the barriers to the development of Pro-

Biodiversity Businesses: The private, public and third (NGO) sectors were engaged to fully understand the perceived and actual barriers to development of Pro-Biodiversity Businesses. Specifically a national banking sector study was commissioned in each case to determine the financial environment in each country, and how this related to all SMEs. (Lot 1)

X

Identifying the market conditions that are

favourable for the development of Pro-Biodiversity

Businesses consultation with selected SMEs and financial institutions was combined with literature review to enable the Project to begin understanding what was required to create the new market-based instrument. (Lot 1)

X

Developing an information platform to disseminate

Project findings: The Project Team designed and created an English language project website (www.smeforbiodiversity.eu) that was accompanied by parallel web pages in the focal country languages. A Project brochure was also designed and produced for SMEs and local and regional public sector bodies, to promote the Project concept of encouraging Pro-Biodiversity Businesses through technical and financial support packages. (Lot 1)

X

Establishing pilot Biodiversity Technical Assistance

Units to provide specialised assistance to

enterprises seeking to become or remain Pro-

Biodiversity Businesses: Biodiversity Technical Assistance Units were formed in Bulgaria, Hungary and Poland as operational teams within or adjunct teams affiliated to the BirdLife International Partner. The BTAUs were staffed by experts in biodiversity, banking and SME business development. Each national team was designed to fully investigate how to develop the SME Business & Biodiversity sector by identifying the shared objectives of business owners, investors, bankers, key elements of the public sector and NGOs. (Lot 2)

X


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Work area & brief description of activities 2007 2008 2009 2010

Q1/2 Q3/4 Q1/2 Q3/4 Q1/2 Q3/4 Q1

Developing an Enterprise Assessment Toolkit:

Based on self-assessment questionnaires and semi-structured interviews a toolkit was devised and tested by the Project Team that would assess any business to determine if it was both commercially viable and had a business development plan that would enable it to qualify as (or remain as) a Pro-Biodiversity Business; (Lot 1 & Lot 2)

X

Assessing the financial needs of specific

enterprises:

Within a series of prioritised sites, a selection of enterprises were assessed in each focal country to ascertain the specific types and scale of technical and financial investments that each would require, as well as their anticipated funding needs; (Lot 2)

X X X X

Designing an innovative SME financial instrument:

Based on the findings from SMEs, government and the financial services sector, the Project Team undertook a full research study of investment opportunities. This was carried out in each focal country as well as at a European level to identify institutions and financial mechanisms that related to improving the social and/or environmental performance of SMEs. This knowledge was used to guide the design of an innovative SME financial instrument for encouraging pro-biodiversity business development in an EU context. (Lot 1)

X X X X X X X

Devising a BTAU Business Plan to encourage

sustainability beyond the project: The RSPB performed an evaluation of the performance and assessment of implementation procedures of the 3 pilot Biodiversity Technical Assistance Units and then helped each BTAU to develop its individual Business Plan to guide their activity between 2008 and 2010, and then beyond the end of the project. (Lot 2)

X X X X


undertaken

2007 2008 2009 2010

Q1/2 Q3/4 Q1/2 Q3/4 Q1/2 Q3/4 Q1

Disseminate information: Information was disseminated to investors and banks, SMEs and their trade associations, key elements of the public sector, and NGOs to raise interest and awareness. Of particular significance, a handbook was drafted in 2008 on ’Developing and implementing pro-biodiversity business projects’. This was updated in 2009 and then fundamentally redeveloped in 2010

X X X X X X X


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to summarise and promote the key lessons learnt from the project to priority stakeholders. (Lot 1 and 2).

1.2.4 Additional activities implemented beyond the original contract

In cooperation with the Project Coordinators, specific individual work objectives were set annually by

the Project Steering Committee (EC / EBRD / EIB). These objectives enabled implementation of the

activities outlined above. A limited number of additional objectives were added which were beyond

the scope of the original project document, but which added direct value and strength to the overall

achievements of the project. These are shown in Table 2 below.

Table 2: Additional activities implemented beyond the original contract


undertaken

2007 2008 2009 2010

Q1/2 Q3/4 Q1/2 Q3/4 Q1/2 Q3/4 Q1

Assessing Protected Area Management Plans to

identify business opportunities: The Project Team gathered evidence that the majority of SMEs have an extremely limited understanding of the implications of Protected Area Management plans on their operations. Large numbers of Natura 2000 management plans have been / are being developed across Europe and many cover private property on which business operations are carried out, but there has been an inadequate communication of the implications of Natura 2000 designation. As a result, very few have guidelines have been developed on how businesses can contribute to the goals of each plan. Many small businesses are suspicious and view Protected Areas as an obstacle to profitable enterprises. This does not always have to be the case. Natura 2000 Management plans were assessed to highlight how SMEs could remain or become Pro-Biodiversity Businesses and how they could play a fundamental role in the future management of Protected Areas.

X X X

Devising a cost-effective biodiversity monitoring

system:

Business investments that require the monitoring of a measurable change in methodology and/or performance by the beneficiary to qualify for preferential conditions are commonplace. Environmental indicators to monitor the reduction in pollution, energy, water or packaging are well established and must be simple, easily understood by loan recipients and banking staff, and low-cost to implement. A simple, clear and inexpensive monitoring system that will enable the biodiversity performance of their businesses was devised using

X X X X


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EU level indicators that could theoretically be applied to any investment in any SME across Europe to ensure that biodiversity was maintained or enhanced;

Contributing and sharing knowledge with the EC

Business and Biodiversity Platform (BBI) project:

The EC Business and Biodiversity Initiative contract has as its objective to research and promote biodiversity best practice amongst key European business sectors (e.g. agriculture and tourism) that have a particularly close relationship with the use of natural resources within the EU. Due to tendering procedures, this project was late to start, and it finally began in late 2009. The Project Coordinators have actively engaged with IUCN Europe as the lead contractors for the BBI project since being notified.

X

1.2.5 Prolongation of the BTAU Project contract

In August 2009, the RSPB asked the EC for a four-month extension to be granted to the Project. The

request was agreed by the EC at the beginning of October 2009. The reason for this extension request

was to allow for more time to engage with IUCN as the BBI project lead contractors, taken that there

had been some delay in awarding the contract, and moreover to gain extra time to negotiate the

creation of the innovative financial instruments in each of the partner countries, taken that the

unforeseen financial crisis negatively impacted the market. The aim was to maximise the use of time to

assess whether the current national political and financial structures in Bulgaria, Hungary and Poland

respectively were conducive to creating a financial instrument, and if not, to ascertain what future

steps are required to remove remaining barriers and address this issue. Section 1.3 (below) provides

more contextual background on the financing of pro-biodiversity businesses.

1.3 Financing pro-biodiversity businesses

1.3.1 Overview

A core component of the BTAU project is the design and establishment of a financial instrument to

support the growth and creation of Pro-Biodiversity Businesses5. Using financial incentives to improve

the environmental performance of the private sector – from micro-enterprises, SMEs to the largest

multinational companies is a well-established approach that is often used in parallel with the

enforcement of a regulatory framework6. Selected examples of this approach are shown in Table 3

below. Financial incentives as grants or payments, or as loans with preferential conditions can

compensate for losses or enable compliance have been developed linked to a series of EC Directives.

These include permissible levels for the release of pollutants into the environment, for efficiency in the

use of energy, water and other natural resources, and most recently this approach is being applied to

5 See Frentz, J-M. (2006) Scoping study to assist in the structuring of a Biodiversity Financing Technical Assistance Facility, European Bank for Reconstruction and Development 6 This idea goes back to the CBD CoP of 2006 where Decision VIII/17 called for increased engagement of and with the private sector in all aspects of biodiversity conservation.


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companies reducing their greenhouse gas emissions. All these examples could be argued as pro-

environment and therefore pro-biodiversity. While there is some weight in this argument, the Project’s

concern was relating to specific financial instruments that would be directly linked to enabling the

growth and/or creation of SMEs that were Pro-Biodiversity Businesses in the EU Member States.

Table 3: Selected examples of organisations involved in the financing of SMEs (with some or total

focus on biodiversity)

Finance sector: Organisations that finance and underpin economic activity and growth, such as banks, asset

managers, insurance companies and business services

European Bank for

Reconstruction and

Development (EBRD)

www.ebrd.com

EBRD has shown an interest to establish new financial instruments called Biodiversity

Financing Facilities (BFFs) in its countries of operation, where demand studies have

shown such a facility would be justified, and a pipeline of bankable PBB projects can be

created. EBRD were involved in a “banking, business and biodiversity” taskforce in

Europe and published a scoping study to assist the structuring of a biodiversity

financing technical assistance facility for SMEs in 2006. EBRD operated a small business

development scoping study in the Eurasian steppes with RSPB between 2008 and 2009.

EBRD were a member of the Steering Committee for the BTAU project.

European Investment

Bank (EIB)

www.eib.org

EIB has prioritised SMEs in its lending activity, and the institution is developing and

expanding this area of its work through a range of activities including technical

assistance, credit arrangements with local financial institutions and SME portfolio

guarantees. EIB continuously adapts its activity to developments in EU policies and is

exploring biodiversity funding. EIB were a member of the Steering Committee for the

BTAU project.

International Finance

Corporation (IFC)

www.ifc.org

The IFC have funded a small number of loans (five) totalling US$2.9 million for pro-

biodiversity businesses in five countries around the world, one of which was Poland.

The program selects institutions to act as intermediaries, providing them with

US$500,000 to US$1 million loans at long term, low interest rates. In Poland, the

recipients included CARESBAC-Polska S.A (a small commercial financial company

providing debt and equity to small business enterprises for biodiversity conservation in

the field of sustainable land use and organic farming) and Symbio Impax Polska

(distributes organic products from small, independent traditional Polish family farms

dedicated to conserving biodiversity in important buffer zones). The IFC have also

produced a guide designed to help companies operating in emerging markets better

understand their relationship to biodiversity issues and how they can effectively

manage those issues to improve business performance and benefit from biodiversity

(http://www.ifc.org/BiodiversityGuide).

Rabobank

www.rabobank.com

Rabobank has been involved in a banking, business and biodiversity taskforce in Europe

and has worked with European biodiversity NGOs such as IUCN, WWF and ECNC.

Rabobank are directly investing in biodiversity-related projects, particularly in the

sustainable agriculture sector, and have a large SME investment programme although

this is mainly for environmental issues in the broadest sense.

Triodos Bank

www.triodos.com

Triodos Bank only lends money only to organizations and businesses with social and

environmental objectives. It provides loans and equity investments to promote

sustainable development, which includes investments towards biodiversity businesses.

The Triodos EIS Green fund invests in a portfolio of high growth potential sustainable


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UK companies in the field of sustainable living, waste recycling and reduction (See

‘Triodos Foundation’ below).

Cooperative Bank

www.co-operative.coop

The Co-operative Bank’s Ethical Policy states that it won’t invest in businesses whose

core activity contributes to the unsustainable harvest of natural resources, including

timber and fish. The bank also funds individual pro-biodiversity businesses on a case-

by-case basis. For example, it agreed funding for four UK fisheries to progress MSC

certification.

Foundations: a nonprofit organization that donates funds either directly or through other organisations in support

of pro-biodiversity businesses.

The Doen Foundation

www.doen.nl

The Doen Foundation provides subsidies, loans and equity investments to promote

sustainable development, which includes investments towards biodiversity businesses.

Doen funded the research completed by Fauna & Flora International (see below) during

2004 and 2005 on pro-biodiversity SMEs in Hungary and Poland.

Triodos Foundation

www.triodosfoundation.

nl

The bank lends to biodiversity SMEs (predominantly biodiversity “projects”, mainly in

the field of organic farming (www.triodosfoundation.nl). Also see “Triodos Bank”,

above.

1.3.2 Clarification on terminology and phrases used in developing a financial instrument

The overall aims within the Project contract describes a “public-private partnership approach” and the

“creation of a new investment market for the banking sector” as well as creating national BTAUs to

“enable the delivery of future loan investments for the benefit of biodiversity and business”. The

overall outcomes make reference to, “the potential for SMEs….to contribute to the EU Strategy for

Sustainable Development through their commercial activities” and “opening a new commercial market

in the rural areas of the EU 27 as an example of a public private partnership”7. The BTAU project has

interpreted these phrases in Tables 4 and 5 as follows:

Table 4: Phrasing related to the financial instrument in the overall aims of the project and our


Overall aims

Phrase relating to financial instrument Interpretation

Public-private partnership approach.

This assumes that governments, SMEs and investors will all interact and play a part in creating a new market for pro-biodiversity business products and services. The Project was tasked to identify the barriers facing each actor that currently prevent them from playing their role in such an approach, and in developing solutions and recommendations to remove these barriers and create action. The success of the approach cannot be solely controlled by the Project but will lie partly in each actor taking responsibility to overcome obstacles themselves,

7 Pioneering work on clarifying the overall pro-biodiversity approach for SMEs was done in 2007. (Dickson, B., Watkins, D. & Foxall, J. (2007) The Working Partnership: SMEs and Biodiversity. Fauna & Flora International, Cambridge, UK).


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and partly for each actor to understand the needs and messages conveyed by the partners and act accordingly. Traditionally, a Public-Private Partnership (PPP) describes a government service or private business venture that is funded and operated through a partnership of government and one or more private sector companies. However, in this case the ‘public’ component is the co-financing for Pro-Biodiversity Businesses that comes from some kind of ‘grant’ element. Such funding could come from the public, but equally could be from the third (NGO sector) or philanthropic foundations.

Creation of a new investment market for the banking sector.

The Project will identify financial institutions that would be willing to partner with others to create preferential investments in Pro-Biodiversity Businesses. The ’banking‘ sector is interpreted as any national or international financial institution or investment body that would provide financing to Pro-Biodiversity Businesses, given the right circumstances.

Enable the delivery of future loan investments for the benefit of biodiversity and business.

The key word here is “enable”. BTAUs bring together the relevant actors and carry out targeted research for the ultimate benefit of SMEs that with technical advice, grant funding and/or credit can either maintain or enhance biodiversity across the EU. This process has a series of steps and the delivery of future loan investments depends on a number of factors, most notably: 1) Sufficient quantified demand from SMEs 2) Adequate enabling mechanisms to encourage market development initially (e.g. preferential terms, realistic eligibility, technical assistance and effective promotion) and 3) the willingness of financial institutions to invest in ways that meet SMEs needs over the longer term.

Table 5: Phrasing related to the financial instrument in the overall outputs of the project and our


Overall outputs

Phrase relating to Financial instrument Interpretation

The potential for SMEs….to contribute to the EU Strategy for Sustainable Development through their commercial activities.

This refers to a number of exploratory activities that each BTAU performed. Significant areas of research include: 1) the national SME databases constructed that reveal geographic location in relation to areas of high nature value; 2) Location of existing (or potential) business activities that are compatible with maintaining or enhancing biodiversity; 3) National interpretations of the EU Strategy for Sustainable Development that influence business activities differently in different countries 4) the potential for SMEs to contribute to the delivery of protected area site management plans by carrying out targeted activities for the benefit of biodiversity; 5) Promotion of best practice through the dissemination of case studies and knowledge gathered by the Project

Opening a new commercial market in the rural areas of the EU 27 as an example of a public private partnership

This Project is a pilot and thus will test how, when and where a new commercial market could be created and triggered initially. The same interpretation applies to public-private-partnership as defined above.


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1.3.3 Main approaches to exploring innovative financing mechanisms by year

The following methodologies were applied across the BTAU project in relation to assessing institutions

and testing innovative financing approaches that could be created specifically to enable specific

investments in Pro-Biodiversity Businesses:

2007: A full national ’banking‘ study was commissioned to investigate the national political, economic

and financial environment in which SMEs operate in each pilot country. In each case it was

performed by finance and banking experts. The opportunities and constraints facing SMEs and

the potential to develop a financing instrument for SMEs were assessed. This included a review

of potential partner financial institutions; an analysis of existing credit facilities available to

SMEs (and their conditions); an analysis of investment opportunities from within nationally

available EU funding lines (e.g. Structural Funds, Rural Development Funds, Life+

Environment); a ‘demand study’ outlining the likely credit requirements of SMEs, and the

numbers and types of SMEs in operation. A series of SME studies in selected areas were used

to extrapolate the likely aggregate loan demand.

2008: The information collated in 2007 was refined in 2008 in order to identify the most appropriate

financial instrument that could be applied in each pilot country and the set of circumstances

that would need to be in place to enable the financial instrument to be effective. The global

financial crisis resulted in a paralysis of the investment credit in the three focal countries,

meant that all banks approached by the Project Team found it impossible to engage with the

Project. In the case of the national intermediary banks, this was because they had suspended

loan facilities until their exposure to toxic assets became clearer. Conversely, in the case of

International Financial Institutions (notably EIB and EBRD) they put on hold any new credit line

developments in order to focus shoring-up existing credit lines through national partner banks.

Consequently, this period saw an effective cessation of all constructive dialogue with the

national and international banks.

2009: As the year ended, the comparative impact of the credit crunch and banking crisis on the pilot

countries began to emerge. In Poland, the low level of international debt meant that it was the

only EU Member State to have actually stayed in economic growth and thus was the most

likely to take-up dialogue with the Project. This turned out to be true with significant progress

being made towards the design and establishment of a viable financial instrument. The banking

crisis in Bulgaria effectively froze all operations, and banks and institutions worked hard to

strengthen their core positions, with new investment markets being abandoned. Hungary was

one of the most severely affected (due to the large sections of their domestic mortgage

markets being based on foreign currency loans), and ended with IMF intervention and no

opportunities for the creation of new financial instruments.


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In line with the new banking reality that emerged from the crisis, further information on the

financial arena was gathered. It was agreed with the EC that the key aim for 2009 would be to

strategically do everything possible to salvage the financial instrument approach as identified

in 2008 and focus on the pilot country where the greatest progress could be made. If

successful, the aim continued to be the provision of a credit disbursement of at least the 10

first loans at the national level. Greatest confidence remained with the elaboration of the

potential investment of EBRD with national partner banks in Poland, alongside grant co-

financing from the Polish National Fund for Environmental Protection. Simultaneously, the

Project Coordinators continued to explore opportunities with financial institutions at the

European level (especially EIB and EBRD) to promote the idea of a European-wide financing

instrument that could be part of the EC policy towards ‘green investment’. All options for the

establishment and operation of the new SME financing facility were highlighted, and

recommendations have been made as to the opportunities and constraints to creating the key

components of a blended financial instrument and launching a new market after the Project.

2010: An assessment of the situation by each pilot country demonstrated that the external factors in

the banking world were simply beyond the control of the Project Team and have considerably

hampering the possibility of meeting the original objectives set in this work area. As a result,

the EC responded positively to a request made by the Project Coordinators for a four month

extension to be granted to ensure that each pilot country and national partner could come to

meaningful conclusions as to what could, and what could not, be expected for this work area.

The realistic outcomes expected would be one of the following: that a financial instrument was

possible; or that the political and economic situation at the national level was not conducive to

setting up a financial instrument at this time.

A full summary of the outputs of these investigations and approaches is outlined in sections 2.2 - 2.5.

1.3.4 Summary of the developments and lessons learnt in creating innovative financing

mechanisms for Pro-Biodiversity Businesses.

The financial instrument referred to in this project is a new investment mechanism that is specifically

designed to enable investments to be directed to existing or potential pro-biodiversity businesses.

Commercial banks do offer credit products for SMEs, including farmers and other rural entrepreneurs

in the pilot countries, the terms and conditions of these loans often strongly discourage Pro-

Biodiversity Businesses PBBs from even applying for loans under such conditions. Standard loans are

focused on short-term, high interest loans, such as for seeds, fertilisers and processing machinery. In

particular, the loan terms lack a sufficient (if any) grace period for start up and working capital

requirements. Critically, the collateral requirements demanded by the banks (which usually form a

major part of the applicant’s eligibility assessment) in most cases are based on property. However,

even if the business is prepared to risk their property, if the property is in a village rather than a town

then the bank may often refuse to accept it, or in the best case will accord it a very low value that


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covers only a small percentage of the required collateral. Additionally, banks appear to assess a

property within a protected area as a higher risk factor due to the perception that it has been devalued

due to development restrictions that result from designation. Each of these conditions represents

major disincentives that factor against the development of existing or new Pro-Biodiversity Businesses.

A general conclusion from the three focal EC Member States is that rural lending by commercial banks

is a badly neglected sector that is marginalised within national banking systems. SMEs generally, and

particularly micro-enterprises, are considered to be a high-risk market segment with low liquidity and

collateral (especially in the new EU Member States). Consequently, in many cases the reality for many

SMEs is that they have effectively no access to finance, irrespective of whether they are Pro-

Biodiversity Businesses. On the commercial side, banks are consistently setting loan conditions that do

not take account of the long-term nature of Pro-Biodiversity Business development. Therefore,

medium to large unsecured loans over longer periods are simply unavailable to the majority of SMEs

operating within or around Natura 2000 sites, especially those that wish to become Pro-Biodiversity

Businesses. Where there are opportunities, the prohibitive costs, time required and complexity of loan

negotiations impose significant barriers on the majority of SMEs.

The following lessons have been learnt regarding attempts to secure bank financing for Pro-

Biodiversity Businesses. Research from earlier projects in the business and biodiversity field such as

those funded by the DOEN Foundation in Hungary and Poland (2004), and the Probioprise Project8 of

DG Research, as well as work carried out by the European Centre for Nature Conservation (ECNC)9,

complement and back these lessons from this BTAU Project:

• Political commitment: from respective National Governments can significantly assist or

hamper the development of pro-biodiversity Projects;

• Openness and flexibility between financial and biodiversity conservation sectors are crucial

to achieving any result: these sectors are very different in approaches, negotiation manners, as

well as use and interpretation of terms;

• Change takes time, therefore Projects aimed at developing biodiversity financing should

incorporate this time factor when forward planning;

• Technical assistance is required directly by potential Pro-Biodiversity Businesses, to

understand and obtain information that is demanded by lending banks. This means after loan

products are developed, there will still be a need for technical advisors that assist SMEs in any

loan application procedure;

8 www.efmd.org/biodiversity

9 ECNC (2002-2007) European Biodiversity Resource Initiative and European Task Force on Banking, Business and Biodiversity; ECNC (2007)

Establishing Pro-Biodiversity Business Opportunities in Bulgaria and Croatia; ECNC (2007) Biodiversity Finance Clearing House Mechanism, and ECNC (2007) Regional Biodiversity Financing Initiative (Developing bank products for SMEs for biodiversity conservation in Hungary), Summary Report.


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Money

Advice

• Biodiversity loans require preferential banking conditions in order to be able to compete with

other available potential borrowers (e.g. low interest rate, risk guarantees, flexibility in own

capital, flexible collateral, variable investment types, company types and grant incentives);

• Market analysis and demand studies must be completed before banks can be expected to

show any commercial interest in the development of new loan products;

• Market analysis and demand studies must be based on quality data (often only available from

the BTAUs) but must also be given a seal of approval from a reputable consultancy that is

trusted by the banking world;

• Use local partner banks to facilitate the process. If a loan product is developed by a major

European finance institution, it is crucial to have a local partner bank in the country with

extensive local and regional representation and capacity to help facilitate the process;

• Public incentives are required. Banks are interested to develop new products, but expect

incentives (e.g. tax breaks, subsidised interest rates), in order to create commercially attractive

products for Pro-Biodiversity Businesses.

The BTAU Project has concluded that the financial instrument has to be implemented through some

form of Public-Private Partnership (PPP), operated at the national level. Figure 1 illustrates how such

an SME financing instrument within Europe could be created, and demonstrates the links between

funders, recipients of funds, and a BTAU.

Figure 1: Diagrammatic representation of an SME financing facility

National

Government /

Foundations

International

Financial

Institutions

Donor Government/

Financial institutions

Grant funding

(~10%)

Loan Capital

(~80%)

Technical

Assistance funding

(~10%)

National Partner Bank (with rural network) Business and

nature advisory

service (BTAU)

SME SME SME SME SME


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Figure 1 shows that the bulk of funds should come from private capital (generally a loan10 rather than

equity11) provided by the commercial banking sector. However, public capital in the form of grants,

subsidies, or guarantees12 is also still required, as commercial lenders and investors will often be

disinclined to provide grant funding. This can be provided by for example, European Union resources,

nationally derived funds and/or philanthropic foundations and then delivered via the national or

regional governments within EU Member States.

10 Short-term and long-term loans are self explanatory, but can be structured in various ways. Generally, long-term loans imply greater risk and thus require higher interest rates. Loan financing (compared to equity) may be more appropriate for small-scale enterprises

11 Equity investments are, by definition, more long term and risky than loans, (with risk being proportional to the loan financing) but may be suitable for medium to large-scale companies that seek to generate biodiversity benefits. 12

Loan guarantees and other innovative financing structures can help attract borrowers in such cases. Capital is a particular constraint for many small companies, which cannot easily access conventional finance (as they cannot offer sufficient guarantees and / or because their financial needs often fall under the minimum lending threshold of most banks).


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2. Activities implemented and outputs achieved for the project

2.1 Overview

This section provides a full review of the progress of each national partner in the BTAU project against

all project activities for the entire duration of the project. A BTAU can be defined as a unit staffed by

experts in nature conservation, business development and investment with the aim of facilitating the

construction and adaptation of SMEs to acquire investment to carry out profitable nature-friendly

activities. A BTAU needs to be created and operated through with three to five years of grant funding.

Once loans are successfully released to SMEs, a BTAU will eventually become self-sustaining, by being

paid to provide advice and guidance to SMEs and investors. The key objectives of a BTAU are to:

• Facilitate partnerships between investors, SMEs and government to enhance the role of SMEs

in biodiversity maintenance and enhancement

• Identify financial instruments for investment into SMEs

• Identify SMEs suitable for investment

• Work with the public sector to ensure SMEs play a role in protected area management

planning and delivery

• Seek out opportunities to enhance the market for Pro-Biodiversity Business development

• Provide advice and guidance to SMEs on opportunities for Pro-Biodiversity Business investment

• Promote the idea and the concept through written and electronic media and through outreach

programmes, workshops and other events

• Establish the structures and procedures to enable the effective monitoring and ongoing

development of PBBs, prior to and during loan disbursement

• Ultimately become a self-sustaining unit, by generating a surplus for the further and continued

development of PBBs.

During the EC funded BTAU project each national BTAU has followed the same Terms of Reference and

the same basic approach. However, it is particularly illuminating that the results of each BTAU shows

both similarities (in terms of the demand from SMEs, the opportunities and the constraints) and

differences (in terms of the political and economic climate, specific financing mechanisms and the ease

of developing the sector).

This section then reviews the progress of the Coordinating partner for the same duration. Finally, it

provides a list of project written outputs. A list of targets, outputs and deliverables for 2009 can be

viewed in Appendix 1. A review of progress against the 2009-10 targets can be viewed in Appendix 2.


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2.2 Review of progress and achievements for the Bulgarian BTAU

2.2.1 Overview of the Bulgarian BTAU

The Bulgarian BTAU was set up within the structures of the Bulgarian Society for Protection of Birds

(BSPB), in Sofia at the beginning of 2007 and is locally named as the Business and Nature Advisory

Service (BNAS). The BNAS consists of a coordinator and a socio-economist, with short-term support

from economics, public relations and biodiversity consultants used as required.

2.2.2 Progress in relation to identifying the barriers to PBB development

We engaged public and private sectors to fully understand the barriers to development and the

perceived problems that currently exist. It was clear that SMEs were not treated differently depending

on the sector they belong to; the only targeted credit line is the one developed by the Swiss

Development Cooperation Program for farmers and SMEs from the Central Balkan Region linked to

organic farming.

The main barriers in Bulgaria to developing the sector were seen to be related to the difficult financial

and political national circumstances and the absence of market opportunities. On the financial side,

banks increased their aversion to risk, which was expressed both in higher interest rates (the average

was 15% and rates ranged from 10% to 22%), and in elevated credibility criteria placed on its

customers, such as good credit history, business history, turnover and long term delivery contracts.

SMEs also faced shrinking markets both for exports and locally, and their survival strategy was to shrink

production levels, rather than opting for a loan. In addition, the majority of Bulgarian banks do not

have Corporate Social Responsibility Programs or at least such programs are not marketed well.

On the political side, these processes have been accompanied by national elections and a complete

change in the management of the country, exposure of corruption with EU funds, general

dissatisfaction with the management of EU agricultural subsidies, especially for SME animal farms, and

an overall pessimistic attitude towards any kind of programs, funds or other targeted activities.

Finally, although SMEs have become a target group for Bulgarian banks, as a result of increased

competition and stable growth, one of the significant issues faced by PBBs in Bulgaria was a lack of

identity and recognition that their goods and services provided extra benefits to the society and thus a

higher level of satisfaction to their customers. It was recognized that some kind of trademark or

certification system was required to successfully promote PBB activities.

2.2.3 Progress in identifying the market conditions that are favourable to PBB development

The BTAU in Bulgaria carried out significant research into the opportunities for branded certification

for Pro-Biodiversity Businesses that could enhance market development. A two day workshop was held


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on 15th-16th September 2008 devoted to branding and certification, aiming to summarize the

international experience available so far.

Participants shared experiences on certification schemes across Europe including attendees from the

Forest Stewardship Council13 (FSC) on forest products and organic farming certification, to Fair Trade,

Slow Food, and some national schemes for branding traditional regional products. These brands had

different levels of complexity and criteria, but they all promoted wise use of natural resources and

protection of the environment. Workshop participants unanimously agreed that the system of regional

brands implemented in the Czech Republic was the most relevant certification scheme, which provided

a reasonable level of administration and recognition.

In 2009, the BTAU in Bulgaria focused on adjusting the Czech Republic approach in order to focus on

PBBs for potential implementation in Bulgaria. Activities included:

• Presentation of the certification idea to stakeholders in four Natura 2000 sites, where the

project has been active;

• Studied in detail the Czech experience;

• Organized a field trip to the Czech Republic for representatives from three of the above regions

to get first hand impression of how the certification system is run, what are the direct benefits

to SMEs and for regional development;

• Held initial consultation with DBU (a major German foundation) for the possibility to fund a

regional branding and certification project in Bulgaria. The project application is under

preparation;

• Three regions have expressed interest to participate as pilot sites in the certification process.

Initial workshops were organized there, to select the name and logo of the brand.

2.2.4 Progress in developing an information platform to disseminate findings

The Bulgarian BTAU contributed towards the production of the project brochure (which provided

concise guidance on how to develop pro-biodiversity businesses in (or adjacent to) Natura 2000 sites)

in 2007 and wrote a dedicated webpage on the project website (www.smeforbiodiversity.eu) in English

and Bulgarian. The main topics covered included an overview of the national financial framework, a

description of the number and types of SMEs in the country, and an overview of Natura 2000 sites

across the country.

2.2.5 Progress in establishing a pilot Biodiversity Technical Assistance Units to provide specialised

assistance to enterprises seeking to develop Pro-Biodiversity Businesses

13 www.fsc.org


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The BTAU has grown into a successful unit in Bulgaria that will continue its functions beyond the end of

the current project. The BTAU team is the core part of BSPB’s Business and Nature Advisory Service.

The main goal of the BTAU is to assist SMEs, including farmers in Natura 2000 sites to enable them to

understand the implications of operating profitable businesses in these areas and on how to benefit

from the conservation status of their land, without harming it. The BTAU has established mobile

advisory teams, which cover certain areas and establish direct contacts with economic actors in that

area. Their functions are not limited to advisory services, but they also monitor biodiversity and the

threats to it in their region.

2.2.6 Progress in performing a demand study of SMEs to identify all SMEs working in the sector

and those that could be transformed

In 2007, the BTAU in Bulgaria constructed a long list of all SMEs operating in natural resource sectors

across the country. A short-list of actual businesses by sector was carried out indicating a strong

potential ‘pipeline’ of potential businesses that could be invested in. A database was formed to collate

the material.

SMEs in the Bulgarian economy have an important and increasing role. In 2004, there were more than

221,000 SMEs. The national economy is largely dominated by micro enterprises that operate in all

economic sectors. They form 89.6% of total private enterprises surveyed. 15,000 SMEs were selected

from Forestry, Agriculture, Fisheries, Tourism, pharmaceutical (medicinal plants) and hunting sectors.

This was further narrowed down to 500 SMEs from 10 municipalities, broken down by these sectors.

Random sampling procedures were then applied to narrow SMEs down to 30 companies. Interviews

were carried out on the 30 companies and a file of interviews constructed.

In 2008, upon EBRD’s recommendation, a demand study was formally prepared which aimed to

demonstrate that sufficient demand for targeted pro-biodiversity financing for SMEs existed. The study

revealed that a quarter of SMEs selected and interviewed during the pilot project phase showed clear

interest in a preferential loan, the size of which in on average, €25,000 (although this ranged from

€5,000 to €1million). The potential size of the demand market was identified as above €2,000,000 per

annum, based on an initial pipeline of about 80 SMEs (6-7 new client SMEs per month).

During 2009, the BTAU selected five SMEs that qualified as PBBs and who were looking for credit to

enable growth and development. These SMEs operate within two main ecosystems within Natura 2000

sites – grasslands and forests. They included:

• Three milk processing facilities, using extensive grazing;

• One dairy farmer who is diversifying to also include rural tourism practices;

• A sustainable forest management company.


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Forty additional SMEs were added to the Bulgarian database. The existing database provides

information on the SME such as location, main activities, assets, customers, production process and

future investment needs. An effort is made to link the future development goals of the SME with

biodiversity benefits. Nevertheless, this direct connection is not always straightforward and therefore a

broader, sustainable development context has been applied.

The BTAU is continuously expanding its database of SMEs who are, or have the potential to become

PBBs. Further expansion of the SME database has been achieved mostly through collaboration with

other projects within BSPB and other nature protection organizations, such as The World Wildlife Fund

for Nature (WWF Danube-Carpathian Programme) or the Global Environment Facility (GEF) funded

Rhodope project. This has enabled the project to add enterprises from other Natura 2000 sites, which

were not initially included in the territorial scope of the BTAU, but which have a record of

accomplishment in pro-biodiversity activities.

The approach described above allowed the BTAU team to build its credibility among rural SMEs as a

competent partner and provider of technical assistance related to sustainable business development.

Currently, the BTAU has a short list of about 50 businesses, which can be described as Pro-Biodiversity

Businesses or have the potential and intention to become pro-biodiversity, assuming that a financial

instrument of some kind is put in place.

2.2.7 Progress in developing an enterprise assessment toolkit

The BTAU in Bulgaria worked with the two other BTAUs (Hungary and Poland) during 2007 to

formulate a toolkit to assess any business to see if it was a) commercially viable and b) had an

investment plan that would enable it to qualify as a PBB. This was used to filter a final list of five SMEs

that could be offered investment, outlined in section 2.2.8.

2.2.8 Progress in assessing financial needs of enterprises

See section 2.2.6

2.2.9 Progress in developing a biodiversity monitoring system

The BTAU in Bulgaria worked with the two other BTAUs during 2008 and 2009 to devise a draft list of

criteria that could be applied to any investment to ensure that biodiversity was maintained or

enhanced. The conclusions in developing a biodiversity monitoring system are summarised in section

2.5.10.

2.2.10 Progress in building capacity to SMEs

One major conclusion in this area of the project is that work with SMEs requires a great deal of time to

build trust. The three-year period of project operation (combined with the project extension) has

allowed the BTAU in Bulgaria to build excellent working relationships with those SMEs who have a

genuine interest in sustainable business activities. SMEs were engaged throughout the project to

enable them to identify opportunities to become a Pro-Biodiversity Business. Their managers (owners)


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have been involved in project activities, such as information workshops, field visits, and media events.

This has increased their understanding of the Pro-Biodiversity Business concept and assured them that

in the medium to long-term this approach will be beneficial to them. Such engagement has also helped

to address, discuss and test the findings of the project.

Maintaining interest within SMEs operating in Natura 2000 sites has been achieved through various

approaches. These include the regional branding workshops and field visits, training in how to diversify

business activities in a sustainable way, preparation of business plans for Rural Development

Programme (RDP) Axis 3 measures, training on agri-tourism and alternative forms of recreation, and

the participation in several fairs and markets for traditional products.

The most significant capacity building activities included:

1. Direct sales – lobbying, working group, publications

The adoption of a national decree on direct sales will provide High Nature Value (HNV) farmers

with the opportunity to add value to their products and secure income, which will allow them to

develop in a sustainable manner and to continue to maintain semi-natural pastures in Bulgaria.

The project supported a press conference on the issue of direct sales in February 2009 and co-

funded a visit to Italy in May 2009 for a group of farmers and journalists. The material was

broadcasted on national television in four consecutive episodes and made a large impact on policy

makers, farmers and BTAU stakeholders. The film material was also used to produce a 10 minute

film on agri-tourism, which was used as an educational tool by the project staff during workshops

and trainings. There were at least 50 publications in national newspapers and magazines devoted

to the regulation of direct sales, where project staff has been quoted or interviewed.

2. Providing venues for the promotion of pro-biodiversity businesses, such as markets and fairs;

(Sofia, Kurtovo Konare, Svoge, Bra)

The BTAU project co-organized a tasting of HNV farm products in Sofia (25 April 2009) with very

wide media coverage; one producers’ market of HNV and traditional products in the town of Svoge

(14 November, 2009, Ponor SPA), where the initiative was picked up and replicated by the

municipality. BTAU project staff provided support to the fair of traditional tomatoes and peppers in

the village of Kurtovo Konara (3 October, 2009, Bessaparski hills SPA), and provided one visit for

five farmers to the fair of traditional cheese products in Bra, Italy in September 2009.

3. Business development tools for local products

The BTAU worked with the local tourist association in Madjarovo to develop a food menu based

on local products and specialties as a business development tool, which is also good for nature

conservation (low carbon impact, conservation of native breeds and species);

4. Rural tourism training to SMEs


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The BTAU organized three training workshops in three Natura 2000 sites (West Balkan, Ponor, and

Bessaparski hills) on agri-tourism, alternative recreation and funding sources;

5. Work with farmers on organic farming

The BTAU provided consultation to farmers to assist them with the transition to organic farming;

The BTAU in Bulgaria has achieved a great deal in terms of staff development and reputation, and

credibility among local communities. BSPB has created ‘Mobile Advisory Teams’ to help build capacity

of SMEs. These teams are a significant factor now in three project sites and the demand for their

services is growing continuously. Training has been provided within BSPB to maximise the effectiveness

of these mobile teams. For example, training was provided on how to communicate the PBB idea to

Bulgarian corporate business and how to include nature friendly business activities in their CSR

strategy – to all BSPB staff involved in the BTAUs activities. Two more mobile teams are in the process

of formation – one in North East Bulgaria, covering the region of Shabla, where work with farmers is

essential for the preservation of nesting and foraging sites for red breasted geese, and in North Central

Bulgaria, along the Danube.

2.2.11 Progress in constructing a financing instrument

In the first year of the project (2007), a banking sector study was carried out to provide insights into

the types of credits that have been successful with SMEs. The interviews revealed the issues and

problems that SMEs have encountered when trying to obtain credit from commercial banks in Bulgaria.

As a result, the features of the desirable credit emerged to be:

• Longer repayment period;

• Relatively low interest rate (5-8%);

• Support element (at least technical assistance);

• Grant element;

• More flexible collateral requirements;

• Simple accessible documentation.

The BTAU introduced the project to all major commercial banks in Bulgaria through a banking sector

expert and a project workshop. One bank, the United Bulgarian Bank (UBB), expressed its interest and

support to the project and in 2008 and provisionally agreed to finance the credit component from its

own capital. Prior to the global credit crisis, UBB were interested in a full loan facility worth €10m -

€15m. In 2009, UBB reconfirmed their interest but not surprisingly revised their commitment to invest

in a pilot financial instrument. They have not yet specified how much this would represent, however

from the National Unit’s perspective, ideally 50 - 100 typical business loans would need to be released

across 2 – 3 Natura 2000 sites. This would create a sample size sufficiently large for analysis to provide


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initial conclusions in terms of best practice to be identified. Collateral was seen as one of the primary

obstacles to the absorption of all loans by SMEs, even under financially preferential terms.

Two further banks (Piraeus Bank and Union Bank of Bulgaria) also expressed an interest in the project

and its long-term aims, highlighting that they would potentially be interested in investing in such a

concept but that the financial environment in Bulgaria was currently not conducive to developing the

idea any further.

It became clear that technical assistance alone would not be sufficient to promote pro-biodiversity

investments. Additional benefits were required, such as a credit guarantee fund or a grant scheme co-

funding. Further assessment of the situation led the BTAU team in Bulgaria to make a case to the

European Bank for Reconstruction and Development (EBRD)14 to provide essential technical assistance

regarding the detailed design of the financial instrument, as well as in identifying grant co-financing.

Based on the interviews with SMEs and the overall assessment of the banking sector and the demand

for targeted preferential loans, the Bulgarian BTAU has concluded the following.

The financial instrument for Bulgaria should aim to include the following components:

1. A credit guarantee scheme to eliminate the need for collateral and to make it possible for

commercial banks to offer attractive conditions. The BTAU focussed on the development of

appropriate Pro-Biodiversity Business evaluation standards, as well as product diversification

and market placement Technical Assistance strategies.

2. A grant component (up to 20% of the investment), to be given to successful SMEs at the end of

the loan for delivering public good benefits (such as habitat management or restoration, or

sustainable resource use);

3. Loan capital at a reasonable interest rate (7-8%) on the loan component, due to the reduced

risk of the investment thanks to the guarantee scheme and the pre-selection mechanism;

4. A sufficient maturity period that depends on the amount of the credit and the return schedule

of the investment.

It is important to note that any Pro-Biodiversity Business investment will be evaluated on two criteria –

economic and biodiversity sustainability. The BTAU should be in charge of the second criteria, and will

have follow up responsibilities relating to the SMEs fulfilling their biodiversity obligations. The release

of the grant component will depend on biodiversity outcomes.

14 www.ebrd.com


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Unfortunately, project implementation coincided with the worldwide financial crisis, which in Bulgaria

led to an economic crisis in 2009, thus significantly hampering the progress that could be made in

Bulgaria under this project target. During 2008 and 2009, the global financial crisis in Bulgaria forced

national banks to revise their policies and become more cautious especially when extending credits.

Bulgarian banks increased the interest rate on credits generally by some 20 to 30% and increased all

the requirements towards their potential credit clients, companies and individuals. Following the

global developments, Bulgarian banks changed the main field of competition between themselves

from the extension of credits to the attraction of deposits. The interest rate on deposits was also

increased by some 20%. Thus, the financial environment became much more hostile to all companies

relying on credits, especially for investment purposes.

In the first half of 2009 real GDP in Bulgaria dropped by 4.2 per cent on an annual basis, value added

falling by 2.3 per cent in real terms. The negative trends in the economic activity in Bulgaria reflected

sharp declines in external and domestic demand, weaker foreign investment inflows, and tighter bank

lending than in the previous year. Bulgarian goods exports dropped by € 2.3 billion (30.2 per cent) on

the corresponding period of the previous year due to decreasing external demand. Domestic demand

(mainly for durables, investment goods in particular) eroded rapidly, contributing to a € 4.2 billion

(34.9%) fall in imported goods. The negative trade balance and the current account deficit started to

decline. During 2009, the GDP dropped by some 5%, individual consumption dropped by 6.2%, and

households’ consumption dropped by 6.4% as compared to the 2008 figures.

Although the macro-economic parameters of the Bulgarian economy remained favourable and the

banking sector did not suffer from a large shortage of financial resources, the supply and demand of

credits declined significantly in 2009.

On the supply side, banks increased their aversion to risk, which was expressed both in higher interest

rates (the average was 15% and rates ranged from 10% to 22%), and in elevated credibility criteria

placed on its customers, such as good credit history, business history, turnover and long term delivery

contracts. On the demand side, SMEs faced shrinking markets, and they opted to reduce production,

rather than seeking credit to bridge the downturn.

These processes have been accompanied by national elections and a complete change in the

management of the country, exposure of corruption with EU funds, general dissatisfaction with the

management of EU agricultural subsidies, especially for SME animal farms, and an overall pessimistic

attitude towards any kind of programs, funds or other targeted activities. In addition to the factors

described above, no external funding for a grant scheme or credit guarantee fund have been secured,

despite the genuine effort by EBRD to provide some options for external funding.

All of the above reasons have made it impossible and imprudent to pursue further the establishment of

a financial instrument in Bulgaria at this stage. It was deemed that such an instrument has the

potential to impact the economic choices and behaviour of SMEs in rural areas, especially those


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operating within Natura 2000 sites, but it will be best placed during the period of economic recovery,

when more and more SMEs will be looking for credit to jump start their businesses.

A targeted credit line has the potential to provide one aspect of funding needed for the restoration and

maintenance of habitats. In addition, a considerable amount of work needs to be carried out in the

area of promotion and marketing of pro-biodiversity goods and services, consumer education and

influencing the attitude of the public. The main features of the financial instrument identified in 2008

remain the same, but the timing for implementation at the national level should be once the above

negative factors have been overcome

Latest figures for the beginning of 2010 send some encouraging signals for certain increases of exports

related to the economic recovery in Europe but it is difficult to predict that this will be a sustainable

process in the short and medium term as far as Bulgaria is concerned. Another positive sign is the

latest slight decline of interest rates on mortgage loans.

Saying this it becomes obvious that in such circumstances of gradual loss of markets, the main

challenge in front of the vast majority of the SMEs is not to further increase their production by

accumulating new debts but to survive and preserve the market positions they already have. This is

exactly the case with the target group of companies the BTAU project works with. That is why we

confirm our understanding that unfortunately the BTAU project coincided with the global and national

financial and economic crises which did not allow us to suggest the introduction of any kind of financial

instrument.

2.2.12 Progress in disseminating information

The Bulgarian BTAU disseminated a wide array of information for investors, the public sector, NGOs,

and SMEs (as well as their trade associations) to raise interest and awareness. The BTAU has promoted

the project to key stakeholders on an ongoing basis.

On the investment side, information was disseminated to national banks to seek interest in the project

and with EBRD and EIB through the Steering Committee. Inputs were also made to EBRD’s strategic

environmental review of wind power development in Bulgaria.

A great deal of dissemination and capacity building was provided at the policy level. This included:

• Inputs to updating RDP measures related to Natura 2000 and nature protection (Axis 2)

lobbying for the adoption of decree on direct sales and participation in the working group, set

up by Ministry of Agriculture and Food (MAF) for its preparation, mainstreaming pro-

biodiversity business approach into municipal development plans, local development

strategies and other policy documents at regional and local level, presentation of the PBB

concept at workshops and high level meetings devoted to the funding aspects of biodiversity


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conservation, habitat restoration and preservation of ecosystem services. The project is

contributing to the development of Local Development Strategies for four regions, to be

funded from axis 4 of the RDP (LEADER+ approach). The project team further promoted the

PBB concept and to incorporate it into these strategies and thus secure funding for PBB

investments at regional level;

• As agreed with the EC, the Bulgarian BTAU coordinator represented the project at the business

and biodiversity section of the Conference of Parties for the Convention on Biological Diversity

in Bonn in May 2009;

• The project organized training workshops for stakeholders interested in preparing projects

(with BTAU assistance) to apply for funding from measure 312 of the Rural Development

Programme (RDP), through the RDP - Axis 3 trainings;

• Technical Assistance was offered to the Shabla municipality to streamline the municipal

development plan (spatial plan) with the requirements stemming from Natura 2000;

• Information was disseminated at a one-day high level national round table to discuss the

challenges of the national system of protected areas, with emphasis on Protected Area funding

and the need to adopt a new 2020 target and new biodiversity policy. The new target and

policy will need to identify a number of financing mechanisms to fund the future restoration of

ecosystems and reduction of EU’s ecological footprint;

In terms of disseminating material to SMEs and NGOs, SMEs were engaged face-to-face through a

variety of measures and information provided on the project. Specific activities included:

• A presentation was made at the high level round table organized by WWF on payments for

ecosystem services;

• The BTAU carried out some product and services research in other countries and begun to

share experience with stakeholders on concepts and opportunities.

• Joint work was carried out with the National Hunting Union to identify long term business

initiatives stemming from conservation needs in Natura 2000 sites, such as hare farms

providing food for raptors;

• The following press releases were made about the project on the BSPB website:

1.07.2007: BSPB will assist the SMEs that preserve biodiversity http://bspb.org/show2.php?id=1512&menu_id=33

10.10.2007: The EU Commission finances pro-biodiversity SMEs


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http://bspb.org/show/753-news

07.11.2007: Workshop Business and Biodiversity in the frame of the EU funded project http://bspb.org/show2.php?id=722&menu_id=91

5.06.2008: Business and Biodiversity – is it possible to halt the loss of biodiversity http://bspb.org/show2.php?id=1513&menu_id=33

18.02.2009: Could one make profit from the biodiversity protection?

http://bspb.org/show2.php?id=1514&menu_id=33

1.08.2009: The BTAU assists pro-biodiversity SMEs http://bspb.org/show2.php?id=1515&menu_id=33

25.10.2009: What are the ecosystem services for? Story from a visit to Shumava http://bspb.org/show2.php?id=1516&menu_id=33

01.11.2009: The price of the green business: why the biodiversity protection matters? http://bspb.org/show2.php?id=1517&menu_id=33

11.04.2010: Workshop in Shabla – Ecotourism business: opportunities and financial perspectives http://bspb.org/show2.php?id=1518&menu_id=33

Finally, the BTAU contributed to each addition of the project “Handbook”, which has been

disseminated widely to investors, public sector, some SMEs and NGOs.

2.2.13 Progress in completing a business plan to guide sustainability beyond the project

The BTAU in Bulgaria completed a full business plan in 2008, which was updated in 2009 and finally in

early 2010 (see Appendix 13) to prepare the ground to become a self-supporting organisation once the

project had finished. It is anticipated that funding to continue to forward the development of the BTAU

and its activities will come from a number of sources that include:

1. Project funding from the German Environmental Foundation “Deutsche Bundesstiftung

Umwelt” (DBU) to create a branded certification scheme for PBBs

2. Through the ongoing GEF grassland project;

3. Through a potential LIFE+ communication project;

4. Using Rural Development Programme funding – 5% of each project prepared and approved for

measures 311 and 312 are eligible expenditures for consultancy services for project

preparation, monitoring and assistance in implementation;

5. Through RDP – measure 111 “Training, information and diffusion of knowledge”;

2.2.14 Progress in assessing Protected Area Management plans to identify business opportunities

The Bulgarian National Legislation pertaining to Natura 2000 establishment and management

stipulates the mandatory character of the relevant Management Plans. It also links their contents to


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the regulations governing the allocation of subsidies for activities that impact the natural environment.

The development of such management plans is a relatively long process and as a result, only a two

sites where such plan elaboration is in progress. Therefore, the use of Natura 2000 management plans

as the basis for setting-up natural resource management partnerships at national scale, will only be

possible in the medium to long-term future. Nevertheless, the BTAU analysed 10 municipalities and

Natura 2000 sites, IBAs and nature parks. Six different Natura 2000 sites and six different ecosystems

were identified.

2.2.15 Progress in contributing to and sharing lessons learnt with the EC Business and Biodiversity

Initiative (BBI) project

All BTAUs and the Project Coordinators have been willing to share information and best practices with

the Coordinators of the BBI project. However, due to the late inception of the BBI project, the

Bulgarian BTAU was not able to enter into any substantive discussions.

2.2.16 Conclusions from the BTAU project in Bulgaria

Overall conclusions

The project has helped to mainstream work with business into nature conservation projects and

activities, regional development strategies and other documents, which has provided funding options

for PBBs outside the scope of a financial instrument. High-level EU and national political backing is

required, as well as dedicated funding by international financial intermediaries in order to launch a

financial instrument targeting PBB investments. In the absence of targeted funding, the ‘Business &

Nature Advisory Service’ will continue to mainstream the PBB concept into existing or forthcoming

projects and initiatives, and will continue to provide technical assistance to local communities in

Natura 2000 sites for sustainable economic development. BSPB is increasing its involvement with the

corporate sector in terms of improving their corporate responsibility policy. In the long-term, this will

also feed into promotion of the Pro-Biodiversity Business concept through the supply chain,

distribution chain and other market mechanisms.

• The Pro-Biodiversity Business concept has become the backbone of the Project Portfolio for the

Swiss contribution to the Cohesion Funds in Bulgaria. CHF 2 million will be devoted to support Pro-

Biodiversity Businesses operating in two of the sites, to further develop work already initiated by

the BTAU project. Findings of the BTAU project have been used as justification for the Swiss

contribution15;

• BTAU work and results have stemmed a number of project proposals, such as the Life+ application

for the red breasted geese;

• Banks do not have financial incentives to initiate a targeted credit line for Pro-Biodiversity

Businesses, which is different from their standard SME products;

• Banks are increasingly risk averse and require high credit rating from their customers; 15 Project name is ‘Linking nature with sustainable development’ is listed within the intergovernmental MoU and should begin in 2011.


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• People are generally distrustful of banks, based on overall negative experience – high

administrative taxes, unreasonable collateral requirements;

• Start up businesses have to pay three times higher administrative fee when the business is in

Natura 2000 (even when it is in the urban areas); the size of the fee is the same for all, irrespective

of the size of the investment proposal;

• Corporate Responsibility is a relatively new concept in Bulgaria and is focused on public relations

activities, rather than into the banks’ main business activities.

Business Advisory

• In the case of secured targeted funding for Pro-Biodiversity Businesses (provided by International

Financial Institutions and administered through Bulgarian commercial banks), BSPB can play the

role of advisory service to businesses, interested in applying;

• Project experience has been used to design Natura 2000 management requirements, embedded in

the designation orders, setting up conditions for Pro-Biodiversity Business development and

activities, which can be funded through Rural Development Programme measures;

• The project has increased the awareness of business opportunities in Natura 2000 among local

communities, as well as local administration and representatives of the banking sector, working

with SMEs;

• The project has enabled BSPB to put substance into the Pro-Biodiversity Business concept and

make it understandable by a larger groups of people, such as journalists, PR agencies and other

mediator agencies;

• The process of establishing regional brands for traditional, nature-friendly products has been

launched in three Natura 2000 sites: West Balkan, Bessaparski Hills and Pirin National Park;

Rural SME engagement

• BSPB developed the skills, capacity and reputation to provide technical assistance to local business

and to liaise Pro-Biodiversity Businesses with government agencies;

• On-the-ground work and direct contact with Pro-Biodiversity Businesses have allowed BSPB to

provide valuable input to national legislation update, making it more relevant and applicable;

• The BTAU project has started a series of local fairs and events devoted to promotion of Pro-

Biodiversity Businesses, which are now replicated by local people (NGO and local government);


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2.3 Review of progress and achievements for the Hungarian BTAU

2.3.1 Overview of the Hungarian BTAU

The Hungarian BTAU is located within BirdLife Hungary (MME). The BTAU developed rapidly during the

latter half of 2007, following a late start in 2007. Extra resources have been used and new staff were

recruited, resulting in rapid overall progress and improvement in delivery. From July 2008, a new

Project manager joined the team with an economics background (Levente Huszti), complimenting the

Project Coordinator and Project Assistant. Public relations specialists have been consulted, and regular

advice and guidance from the Ministry of Environment & Water (Eszter Kovács). The Ministry of

Environment & Water has become a strategic partner to bridge the gap between policy, regulation and

practice. The BTAU has become an integral part of BirdLife Hungary renamed as ‘Georgicon Landscape

Advisory Office’, and by now most of the EU-relevant site and habitats conservation issues, the agri-

environmental activities, all Natura 2000 and related policy and advocacy work belong to the BTAU

Hungary – apart from the genuine financial advisory tasks.


We engaged public and private sectors to fully understand the barriers to development and the

perceived problems that currently exist. The results were used to inform the Project deliverable

“Review of development and constraints of pro-biodiversity projects by the private sector and

assessment of existing opportunities”.


We analysed literature and engaged SMEs to fully understand what was required to enable the new

market. The results were used to inform the Project deliverable “Review of development and

constraints of pro-biodiversity projects by the private sector and assessment of existing opportunities”.


The Hungarian BTAU contributed towards the production of the project brochure (which provided

concise guidance on how to develop pro-biodiversity businesses in (or adjacent to) Natura 2000 sites)

in 2007 and wrote a dedicated webpage on the project website (www.smeforbiodiversity.eu) in English

and Hungarian. The main topics covered included an overview of the national financial framework, a

description of the number and types of SMEs in the country, and an overview of Natura 2000 sites

across the country. A national website was also constructed and made live,

(http://www.georgicon.hu). Further detail on the dissemination of information can be seen in section

2.3.12.


assistance to enterprises seeking to develop PBBs

The BTAU has grown into a successful unit in Hungary that will continue its functions beyond the end

of the project. The focus of the BTAU is to assist SMEs and farmers in Natura 2000 sites to enable


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them to understand the implications of operating profitable businesses in these areas and on how to

benefit from the conservation status of their land, without harming it.



The focus during 2007 was to carry out countrywide research, by analysing all SMEs that currently

operate in Hungary. Data was derived from the Central Statistical Office, based on a framework

agreement between the Office and Birdlife Hungary (MME). Filtering mechanisms were tested in order

to identify SMEs that were located within or near to Natura 2000 sites. The main criteria used to filter

the long list of SMEs included:

• Size of SME: micro, small or medium;

• Operational: those that were not operational were excluded;

• Sector: only those that used or interacted with natural resources were selected;

• Location: only those located within or near to Natura 2000 sites

After the filters had been applied, around 100,000 SMEs were identified16. The most important sector

was agriculture with more than 16,000 SMEs operating within or near Natura 2000 sites. Other

databases were also sourced such as lists of organic producers, list of participating SMEs in a previous

Hungarian business and biodiversity project and data from various published research.

During 2008, three focal sectors were chosen in Hungary to enable further filtering of the database.

The sectors chosen related to ecosystems/sectors in the following areas: wetlands (fishponds),

grasslands (grazing, stock breeding and mowing) and vineyards.

• Focus 1- Ecosystem- wetlands, Sector- fishponds

73% of fishponds occur in Natura 2000 sites, particularly in the south-western regions and

along the Tisza River. There were approximately 200 eligible SMEs directly connected to

fishponds and Natura 2000 areas. This sector and ecosystem was chosen, because it contains

an easily manageable number of SMEs for a pilot study. There is also an umbrella organisation

of fishing enterprises and a research institution of fisheries. Both of these organisations were

open to cooperation.

• Focus 2- Ecosystem- Grasslands, Sector- Grazing, stock breeding, mowing

SMEs in this sector are particularly numerous in the middle and eastern parts of the country.

According to the database there are more than 3000 SMEs connected to animal farming within

and directly around Natura 2000 areas. This sector and ecosystem was chosen because it

16 A full database of SMEs is available in Excel format (in Hungarian) with further details on SMEs in Hungary.


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builds on the work already achieved by MME on grasslands (Grasshabit LIFE project); country

specific Natura 2000 land use rules are already in place together with a payment system on

grasslands and this is a country specific, important ecosystem (Puszta).

• Focus 3- Ecosystem- Grasslands, Sector- Wine production focusing on organic wine, barrel

making and ecotourism

SMEs in this sector were particularly numerous in the Tokaj area. According to the database

there were 160 SMEs in the core area of the Tokaj World Heritage Site. This sector was chosen,

because it is a challenging, complex ecosystem (vineyards, forest) with complex sectors (wine

production, barrel production, forestry and tourism). Many micro-enterprises operate in this

sector within and near to Natura 2000 sites and the World Heritage areas were seen to be

robust pilot areas to test the extension of the BTAU into new sectors and ecosystems.

The two focal ecosystems (wetlands and grasslands) are well distributed across the whole country. The

individual sectors within those ecosystems were selected because they are manageable, characteristic

of Hungary and connected to natural resources and Natura 2000.

During 2009 and 2010, some further SME databases were collected which added weight to the

knowledge of SMEs operating in Hungary. One was a list of winners from the Agricultural and Rural

Development Operative Programme, which is publicly available17. The document clearly shows that

Hungarian SME sector (and surprisingly agriculture) maintains development goals, despite the

difficulties in economy. The second database was a record of farms operating and seeking agricultural

payments in Natura 2000 sites. This database was provided by the Agricultural and Rural Development

Agency. These documents have helped to investigate the market demands from within Natura 2000

sites, especially in the agricultural sector.

Some individual SMEs identified by an earlier project or the Ministry of Environment & Water

Management [MoEW/ECNC/National Development Bank (NDB)] were also approached, in order to

investigate the possibilities for cooperation.

A final approach to assessing the demand of SMEs was through development projects in the most

underdeveloped micro regions in Hungary. Figure 2 below shows a map of the most significant areas

where Natura 2000 sites overlap with the most underdeveloped micro-regions from within Hungary.

The dark green areas, where Natura 2000 percentage is above 30% show the most significant areas for

potential future development of the BTAU, as development resources for SMEs are priority for the

government, and conservation is obviously affected there. All the three selected focus sectors are well

represented in these areas (e.g. Tokaj region, Biharugra fishponds, Heves grasslands).

17 Through cooperation with Ministry of Agriculture and Rural Development an Excel form of this document is available.


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Figure 2: Map of areas where Natura 2000 sites overlap with the most underdeveloped micro-

regions in Hungary


The BTAU in Hungary worked with the two other BTAUs during 2007 to formulate a toolkit to assess

any business to see if it was a) commercially viable and b) had an investment plan that would enable it

to qualify as a PBB. This was used to filter a final list of SMEs that could be offered investment, outlined

in section 2.3.8. In Hungary, the toolkit was in fact a useful interview tool which enabled the BTAU to

collect comprehensive data on the social and economic conditions, natural resource use, viability, and

the ‘bankability’ of a particular farm or enterprise.


During 2008, a new approach was tested to analyse the types of SMEs that existed and the ultimate

demand for a financial instrument. Five SMEs (see Table 6 below) were interviewed in order to expand

the knowledge on the potential market of a PBB financial instrument and the market demands related

to such an instrument (the main attributes of the given SMEs, their market behaviour, experiences and

attitudes regarding conservation, networks, development plans, views on a potential PBB financial

instrument). This was seen to be essential as the BTAU in Hungary considered it to be of primary

importance for the PBB financial instrument to be well suited to the local context.


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The interviews were structured in order to:

• Test and provide background information for the further development of the company

assessment toolkit;

• Assess the capacity of the given enterprises, to explore their relevant development projects

with regard to a PBB financial instrument and elaborate a financial model with the involvement

of a PBB financial instrument for these development projects;

• Explore the potential role of the BTAU in the specific Hungarian context;

• Test the capability of the BTAU in working with various outside experts.

Table 6: Five SMEs selected for potential investment in Hungary

Location Main activities Number of

employees

Conservation areas in the area of

operation

Aranyponty Zrt. (Golden Carp Close Company)

Örspuszta-

Rétimajor (Central

Transdanubia)

Fishery (including R+D),

eco-tourism

70, seasonal:

5-6

Natura 2000; “Rétszilasi Tavak” natural

reserve

Balázs Tibor egyéni vállalkozó (sole proprietor)

Hevesvezekény

(Northern Great

Plain Region)

Arable farming 1 Natura 2000, “Hevesi Füves Puszták”

landscape protection area; from 1 January

2009: Environmentally Sensitive Area (ESA)

(Érzékeny Természeti Terület, ÉTT)

Laposa Családi Pincészet (Laposa Family Winery)

Badacsony

(Central

Transdanubia)

Vine producing, on a

smaller scale: catering

(wine cellar)

5, seasonal: 5-

10

National Park area (Balaton National Park)

Nagy István egyéni vállalkozó (sole proprietor)

Törtel (Central

Hungary)

Grazing, stock breeding,

harvesting and selling

locally grown herbs

2, seasonal: 1 No conservation areas, adjacent to Natura

2000 areas and the middle Tisza landscape

protection area; New ESA / HNV area

(Gerje-Perje Plain announced in 2009)

Tolnai István egyéni vállalkozó (sole proprietor), ifj. (jr.) Tolnai István őstermelő (farmer)

Zalaköveskút

(West Pannonia)

Grazing, stock breeding,

arable farming

1+1, seasonal:

3-16

Ex lege protected bog, located between two

Natura 2000 sites.


The BTAU in Hungary worked with the two other BTAUs during 2008 and 2009 to devise a draft list of

criteria that could be applied to any investment to ensure that biodiversity was maintained or

enhanced. The BTAU also worked closely with the BirdLife Hungary Monitoring Centre in order to


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calculate the generic Natura 2000 monitoring costs and resources required in Hungary. The conclusions

in developing a biodiversity monitoring system are summarised in section 2.5.10.

2.3.10 Progress in building capacity to SMEs

The BTAU in Hungary engaged SMEs to enable them to identify opportunities to become a PBB through

workshops and outreach programmes in rural areas, in particular, providing advice on marketing and

supply chain management. Such engagement helped to address, discuss and test the findings of the

project. In addition, the BTAU offered to all organisations engaged with the project in Hungary –

especially financial institutions – to provide conservation related technical assistance through the Unit.

Throughout the project, the BTAU in Hungary listed, screened and interviewed a number of potential

SMEs. During the interviews and through other communication channels a number of people were

directly informed about Natura 2000, similarly their experiences, concerns and conflicts were mapped.

The need for professional advice in the fields of conservation/Natura 2000, agri-envrionmental

measures, but also banking and financing was demonstrated in a number of cases.

A fishpond-management workshop connected to a Global Environment Facility (GEF) project of BirdLife

Hungary was held in September 2009. The BTAU presented the project and highlighted conflict

management possibilities for enterprises that were in conflict with cormorants (fish eating birds) – a

serious barrier between conservationists and pond managers.

Other new SMEs were approached in 2009, and major steps were made in order to bring additional,

pre-assessed enterprises into the project. A contract with the Ministry of Environment and Water

(MoEW) and St Istvan University within the framework of pilot Natura 2000 maintenance plans

communication phase was signed. The contract enabled the BTAU in Hungary to expand SME numbers.

This is a mutually beneficiary act, as SMEs received further development ideas and the MoEW have a

good reputation in Natura 2000 areas. Experts from this cooperation worked for BTAU Hungary,

investigating the possibilities for providing capacity building in the field of business planning for SMEs

within Natura 2000 areas. Three detailed business plan was made for SMEs. 74 other SMEs were

identified in the pilot maintenance plan Natura 2000 sites.

Finally, a joint proposal was written in early 2010 with the Agro-Enterprise Guarantee Foundation in

order to carry out training for SMEs about financial opportunities relating to the management of

natural resources.


The recent international financial crisis has had a significant impact on the small and open economy of

Hungary. Hungary does have potential for economic growth and is forced to deliver solutions (as an EU

Member State) and has experience in financial crisis mitigation (1995, 2005, and 2008). In late 2008 the

conditions of banking instruments became stricter, and interest rates became higher. Customers


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obtained smaller individual credits than before. National financial institutions changed mortgage-based

credit opportunities almost overnight. More recently, banks have calculated the market price based on

risk management and some of the banks approached by the project made it clear that credit

applications of enterprises are now being managed with much more care and rigour.

The recent quick state reaction in 2009 and 2010 to the crisis has increased international financial

trust. The national expenditure decreased (from 10% of deficit to 4% of deficit, respectively) in 2008,

and in 2009, the decrease continued (around 2.9% of deficit).

During 2007 and 2008, a variety of commercial banks were approached and the BTAU concept was

explained but the financial crisis considerably impacted the progress that could be made in

constructing a financial instrument at the national level. Initially, Banco Popolare, a newly established

Italian financial institution in Hungary, showed interest and cooperation towards BTAU project, but the

bank withdrew from Hungary in 2010, and was virtually unavailable from the project's point of view

from early 2009, because of the financial crisis. Another possible partner bank was the CIB bank. This

bank was approached in 2008, and was committed to a green portfolio. However, despite the fact that

the bank continues to factor energy efficiency into its portfolio, biodiversity related issues are currently

not considered within their portfolio.

Since 2008 Advisers for Sustainable Development, Hungarian Green NGO, has been working on a

project aimed to establish an ethical, ecological, green, alternative bank in Hungary. BTAU had the

opportunity to participate on founding discussions of this project. The technical basis is clarified, now

the practical work begins. The role of BTAU would be advisory work and technical assistance on the

field of conservation – as the initiating NGOs are rather environment protection based, there is a lack

of nature conservation knowledge.

Another outcome of the cooperation was some networking, including representatives from existing

European green/alternative banks. Ralph Böhlke from CoopEst and FEBEA18 offered opportunity to

discuss BTAU project in detail and European perspectives and examples of financing Natura 2000

enterprises personally, already in 2010. The outcome of the discussion was very interesting, indicating

that Hungarian opportunities recommended by Mr. Böhlke were the same that BTAU is already

working with: Savings Cooperatives in case of micro credit and loan possibilities and Hungarian

Foundation for Entrepreneur Development in case of micro credit. Ralph Böhlke offered to work with

BTAU in the future as well, e.g. lecturing the handbook.

During 2009, new options became available that offered potential for the creation of a financial

instrument. It was very clear that after the financial crisis, banks would not develop completely new

financial instruments for biodiversity within the project period. The pragmatic solution and key

outcome of the work of the BTAU in Hungary (as in Bulgaria and Poland) was that the likely solution

18 www.febea.org


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would be to create a package of financing options in the form of grants, loans and guarantee

instruments , with the technical support of the BTAU in order to form a ‘pro-biodiversity financial

package’.

The recommended package for the Hungarian BTAU is a loan guarantee fund to match with different

grant or proposal components (EU funds such as agri-environmental and Natura 2000 payments,

development proposals).

• Credit Union Programme

The loan guarantee fund is likely to come from “The Credit Union Programme”, owned by the

Chamber of Trade and Industry and Association of National Entrepreneurs. In this programme an

SME advisory network assesses the development plans and financial demands of SMEs, elaborates

suitable financial constructions, helps finding business partners and takes part in EU tenders. SMEs

are guided through the one-window process, and every financial instrument has the Garantiqa’s

(the programme is made up from the Garantiqa Credit Guarantee company and KA-VOSZ company)

formal commitment. Garantiqa provides the guarantee regardless of what type of financial resource

parties are involved in the development, Garantiqa provides the guarantee. This decreases the risk

for financing institutions and therefore helps the enterprise to obtain financial resources. The joint

financial service company of KA-VOSZ and Garantiqa bring a new credit instrument to the market,

based on Széchenyi Card investment loan, JEREMIE combined with the Hungarian Development

Bank preferential credit line supported by the Ministry of National Development and Economy.

Credit worthy entrepreneurs with a Széchenyi Card may obtain preferential credit for up to a 10-

year period.

• Savings Cooperative

The Savings Cooperative was approached with the help of National Development Bank of Hungary

(NDB), via the Hungarian Economy Development Centre and ITD Hungary. This financial institution

has a history of providing loans to rural areas. The Savings Cooperative was willing to assess some

of the PBBs in the BTAU database for Hungary and examined the potential for a Natura 2000

financial instrument. Once a PBB market can be secured, this office will approach the central body

of the Savings Cooperative (Savings Bank). This office understands the BTAU concept and is

interested in financing enterprises connected to Natura 2000 areas. A formal cooperation

agreement was signed with this Savings Cooperative Office (see Appendices 6 and 7) and it is

estimated that investments for PBB SMEs of BTAU project could be made to two-three businesses

by the end of 2010.

• Hungarian Foundation for Enterprise Promotion

Hungarian Foundation for Enterprise Promotion was also approached by BTAU in 2009. This

Foundation offers a further opportunity for micro credit, using European Union funds, founding its

financing activity with the funding programme “Poland and Hungary: Assistance for Restructuring


59 | P a g e

their Economies” (PHARE), and continuing with other funding programmes. The Foundation has

local offices, facilitates and helps SMEs, provides technical assistance, and operates a micro credit

facility. The BTAU met with the organisation and clarified that the Foundation has similar

experience and goals in terms of financing agrarian businesses as the BTAU in Hungary. The head of

the Foundation exclaimed that because it was small, relatively independent and resilient, Natura

2000 requirements can easily be incorporated into their micro credit opportunity quite easily. In

early 2010, the Foundation and the BTAU also signed an agreement, similar to the one with Savings

Cooperative (see Appendices 8 and 9).

• Rural Credit Guarantee Foundation

The foundation is the most relevant Hungarian body to serve guarantee for micro, small and

medium enterprises, focusing specifically on rural areas and agricultural entrepreneurs. The mission

of the Rural Credit Guarantee Foundation is to increase the creditworthiness of rural small and

medium-sized enterprises by improving their access to financing and ensuring their financial

viability by issuing guarantees. The role of BTAU HU is to incorporate Natura 2000 and conservation

aspects and measures into the financing and guarantee conditions of the Foundation, as well as

providing a conservation knowledge pool for the Foundation and its partners. BTAU HU had several

negotiations with the board of the Foundation and – apart from a common application (2.13.13) – a

cooperation agreement was signed in April 2010.

We consider the Hungarian Foundation for Enterprise Promotion and the Rural Credit Guarantee

Foundation as the most promising cooperation on the field of providing preferential, pro-

biodiversity micro-credits for micro and small enterprises, while the role of BTAU is clear as the

conservation and Natura 2000 expert body. The cooperation with both foundations will be

continued in 2010 and beyond.


The Hungarian BTAU disseminated a wide array of information for investors, the public sector, NGOs,

and SMEs (as well as their trade associations) to raise interest and awareness. The BTAU has promoted

the project to key stakeholders on an ongoing basis.

• Regular communications were made with National Park Directorates and ministries on broad

nature-based business opportunities and issues;

• A national project website was launched in 2008 to highlight the project and appeal to national

SMEs, (http://www.georgicon.hu). A content management system was created to make

improvements easier and to upload news, new SMEs in the project and even existing or expected

financial solutions. A monitoring system for the website revealed that SMEs had made direct

approached to read the website;


60 | P a g e

• The BTAU took part in an Eco-banking initiative and workshop in 2008 and disseminated material on

the project;

• The BTAU had a number of meetings with the Ministry of Agriculture and Rural Development. It

raised issues connected to the BTAU relating to financing Natura 2000 issues, micro-credit and de

minimis issues in agriculture, LEADER and Natura 2000;

• A presentation was made on the BTAU project at a European Network of Environmental Authorities

(ENEA) meeting, in Budapest in September 2009;

• An agri-environment scheme campaign was launched in the project website to highlight the

opportunities for farmers in Natura 2000 sites. Some (about a dozen) SMEs affected by this

campaign have approached the BTAU directly or indirectly for further information;

• Finally, the BTAU contributed to each edition of the project brochure and handbook, which was

disseminated widely to investors, public sector, some SMEs and NGOs.


The BTAU in Hungary completed a full business plan in 2008, which was updated in 2009 and finally in

early 2010 (see Appendix 11) to prepare the ground to become a self-supporting organisation once the

project had finished. The project extension into 2010 helped the BTAU to secure additional financial

resources for the Unit, as well as a larger set of services that the Unit could offer for stakeholders such

as Natura 2000 business planning, other elements within the financial package, and knowledge about

new sectors.

The main focal areas of the business plan to guide the BTAU beyond 2010 include how and when to

launch the financial instrument, ensuring financial stability, and in communications to ensure that the

BTAU continues to engage SMEs and identify further SMEs suitable for investment.

It is anticipated that funding to continue the development of the BTAU and its activities will come from

a number of sources that include:

• A LIFE+ communication proposal

This proposal has significant elements that could assist PBBs. The communication aimed

towards businesses in the proposed project is based on BTAU experiences and solutions.

• European Economic Area (EEA) Financial Contribution NGO Fund

A proposal was written and won for the EEA Financial Contribution NGO Fund. The planned

work will focus on “Conflict mapping and information management in high-nature-value

areas”. The objectives of the project will be to increase visibility and transparency in

conservation and to encourage stakeholders of conservation to participate in processes.


61 | P a g e

Planned activities will include building a webpage – a GIS based conflict map with a web based

conflict upload form, a discussion forum and the collection of conflict resolution best practices,

and internal and external training.

• Training SMEs

A joint proposal was written in early 2010 with the Rural Credit Guarantee Foundation in order

to carry out training for SMEs about financial opportunities.


The Hungarian BTAU made significant progress in assessing Protected Area Management plans to

identify business opportunities. Natura 2000 maintenance plans record the conservation objectives

and define the optimal management proposals together with the land users. The proposals may also

be used for the adjustment/reconsideration of the existing agri-environmental schemes (especially

from the next EU budget period, 2014), which then might be applied for individual Natura 2000 sites or

even farms. The problems associated with assessing SMEs to identify which ones could be categorised

as PBBs were raised at the very first stage of the BTAU project in 2007. How could we decide whether a

given enterprise is a PBB, already operating sustainably, in accordance with conservation goals? In

addition, which SMEs would require adjustments to enable them to become a PBB?

For many of the Hungarian nationally protected areas, the legally binding conservation management

plans are a highly significant mechanism with which to influence SMEs to contribute to nature

conservation. Currently, these plans do not incorporate the role of businesses into their targets and

some of the practical aspects are not always elaborated. For example:

• Who will perform the management, if not the national park?

• Is there enough human resource (i.e: farmers, local enterpreneurs) for all of the required

management measures?

• How much of the existing land could be managed by the private sector?

• What financial resources/subsidies are available to facilitate/encourage private sector uptake

of some of the activities in the plan?

Nationally protected areas cover roughly 900,000 ha of Hungary (9%), one third of which is in

governmental/national park property. These sites are either managed by the national park staff or by

the 2,500 tenants within the sites. The rest of the nationally protected areas are in private property

and management. With the designation of Natura 2000 sites in Hungary in 2004, an additional one

million hectares gained a ‘European level’ of protection. Half of this is state-owned forest, but the rest

is still private property with no specific management prescriptions apart from the very general rules of

the Natura 2000 governmental decree and some additional specifications exclusively for Natura 2000

grasslands. The individual Natura 2000 sites, however, are described with specific, detailed lists of

habitats and species of community importance, the preservation (or at least maintenance) of which is


62 | P a g e

the primary goal, and should be considered during any kind of management/land use. The status and

changes of the habitats and species, as the indicators of the operation of Natura 2000 network, have to

be regularly reported to the European Commission. Serious damages, destructions of Natura 2000

species or habitats might entail legal actions on national and EU-levels.

With regards to the above, there are some key issues for the desired implementation of Natura 2000

with relevance to the development of Pro-Biodiversity Businesses:

• Natura 2000 status with its scientific, legal and economic aspects should be clear for all directly

affected stakeholders, as well as the conservation priorities;

• A realistic, verifiable, site-specific set of management requirements, based on the natural

conditions (species, habitats), should be defined for each Natura 2000 site;

• Social and economic conditions should also be taken into consideration;

• Assessment of existing management (farmers, enterprises) should be carried out against these

requirements and conditions;

• A whole set of different incentives should be set up to enhance Natura 2000-friendly operation of

enterprises (e.g. including subsidies, agri-envrionmental schemes, branding, preferential credits,

advisory services);

• The planning process should be seen as a participatory process with all relevant stakeholders

involved, at least informed.

A Natura 2000 Maintenance Planning project began in Hungary at the end of 2008 within the frames of

a Transition Facility project. The aim was to prepare the first pilot Natura 2000 plans for 20 sites. The

planning process included three main working areas: (1) preparation/revision of baseline studies, (2)

management planning, and (3) communication - continuous negotiations with stakeholders. The key

objectives of the project were to:

• Communicate the concept

Make all stakeholders of the Natura 2000 sites – including chiefly land owners, farmers and other

land users – familiar with the Natura 2000 concept, the site-specific natural values and

conservation objectives. Similarly to planning, communication also builds on the social, natural and

economic background information, and the historical dimension that was collected/analysed in the

first stage of the project. Communication activities were carried out in accordance with a

comprehensive communication plan, which began with a stakeholder analysis, and included

regular negotiations with local stakeholders, personal interviews with farmers, forums and online

tools. Relevant authorities, national parks were also involved from the very beginning;

• Devise management prescriptions

Formulate and negotiate specific management prescriptions together with those stakeholders and

farmers, who are active in the area and directly contribute to the preservation and enhancement


63 | P a g e

of natural values. This part of the study outlined the (1) environmental conditions of the site

(climate, soil, hydrology, geology, etc.); detailed the (2) natural conditions, with a special focus on

the Annex species and habitats of the Habitats Directive, but also listed the non-EU listed but

nationally protected/endangered species; finally (3) ownership relations, the land use and

management of the site. All three aspects had a historical dimension as well, showing the changes

in natural conditions, ownership and land use;

• Provide guidance on business opportunities

Provide guidance and assistance for the farmers, land users, municipalities, potential investors, and

local population concerned. Maintenance planning gives a detailed picture about the ownership

relations, land use and the set of farmers and enterprises on a given Natura 2000 sites. From a

conservation aspect these enterprises have different volume of effect on

environment/biodiversity, and this effect can also be ranked from negative to neutral, even

positive. Optimally, the enterprises/farmers of a given site would be at least neutral or they would

positively contribute to the implementation of conservation goals while, they are sustainable on an

economic and social level as well;

• Devise participatory planning methods

Make planning process as open as possible, taking all stakeholders’ viewpoints into consideration,

and initiate dialogues to discuss different opinions. The planning process takes the natural

conditions (i.e the status, threatening factors of Natura 2000 habitats and species) as a basis in

defining conservation priorities. Management proposals are a combination of (1) existing agri-

envrionmental, forest-envrionmental and other prescriptions, and (2) specific new management

prescriptions if necessary. Management proposals are intended to be as robust as possible, finding

the optimal trade-off between specific conservation needs, and realistic, eligible and monitorable

management measures. During the planning process, maps of management units were drawn on

the basis of habitat maps, then refined with species-specific or other relevant information;

• Expand methodology across the country

Develop a planning methodology that is applicable for the remaining 500 Natura 2000 sites in

Hungary.

Regarding the obvious synergies of the Maintenance planning project and the BTAU project, a

cooperation agreement was signed in July 2009 (see Appendix 8 and 9) for the best possible

implementation. Figure 3 below illustrates the key sites under interrogation by the BTAU in Hungary.

A variety of well-controlled subsidies, direct payments, funds, loans and other financial instruments

should be secured as incentives to a) support the existing PBB enterprises to continue; b) push existing

SMEs that are currently not PBBs in a more positive direct and c) show clear PBB opportunities for

possible enterprises. Financial sustainability of these enterprieses will depend on the current and

close-future market value of the natural resources (animal breeds, land, crops, etc.) that they own and


64 | P a g e

manage, the subsidies above and of course the intrinsic and economic value of the envrionment and

biodiversity they depend on and affect.

A methodology was elaborated by the national BTAU with the help of the Institute of Environmental

and Landscape Management of the Szent István University, Gödöllő, to further elaborate the pilot

methodology for Natura 2000 maintenance plans by adding further data to help identify and then

communicate opportunities for pro-biodiversity businesses in the agricultural sector. The methodology

has recently been incorporated into the work of a special faculty of the Szent István University in order

to test it. This research is anticipated to provide a specialist input to the concept of ‘Natura 2000

Business Opportunity Plans’ developed by the Project Coordinators and national BTAUs during this

project (see 2.5.14). The process is expected to involves:

• The business planning starts with the detailed inventory of the natural resources (natural assets)

used/managed by the enterprise or farm, such as cultivated crops, animal husbandry, viticulture,

and ecotourism;

• The planned developments regarding the above are listed in detail;

• The conservational basis of the business plan is the baseline study of the maintenance plan, which

defines the different management units/treatment units of the Natura 2000 site. The most

challenging issue is to make clear links between management units and farming plots;

• Financial plan of the farm/business - The purpose of financial planning is to present a quantitative

picture measurable in financial terms to ensure a profit and the expenditures associated with the

establishment and operation of properties. The calculation comprises the following steps: First the

SCC (Standard Coverage Contribution) table of the farm is compiled based on the activities of the

farm; second, a cash-flow plan is prepared based on the SCC values; and third, the dynamic

financial indices of the enterprise are determined based on a cash-flow table.


65 | P a g e

Figure 3: sites selected for the development of Natura 2000 maintenance plans to assess business

opportunities in Hungary.

2.3.1


Platform (BBI) project


the Coordinators of the BBI project. However, due to the late inception of the BBI project, the

Hungarian BTAU was not able to enter into any substantive discussions with the Project contractors.

2.3.16 Conclusions from the BTAU project in Hungary

The BTAU in Hungary considers the findings and conclusions of the three and a half-year BTAU Project

as highly useful material both in the assessment of failure of the 2010 Biodiversity target and even

more so in the preparation process of the post-2010 biodiversity strategy. The future plans and

strategy of MME have been strongly influenced by the outcomes of the Project which will be continued

with the successful tendering for the EEA tender showing that innovative and new approaches are

mainstreamed into the organisation.

Financial Instrument

• Despite the banking crisis hindering design and development effectively preventing finalisation

of an operational financial instrument the BTAU Hungary team believe that there is significant

potential, at some point in the future, to develop a series of opportunities that would created

financial instruments in Hungary;


66 | P a g e

• The work carried out with the Savings Cooperative, Hungarian Foundation for Enterprise

Promotion and the Rural Credit Guarantee Foundation will lead to securing financial solutions

for the SMEs chosen by the BTAU in Hungary although this may not take place at the earliest

until 2011;

• Both the Savings Cooperative (via the Cooperative Bank) and Hungarian Foundation for

Entrepreneur Development are committed to develop new financial instruments addressing

the field of Pro-Biodiversity Businesses;

• However, before this situation can be attained a serious regulatory issue must be addressed,

namely the imbalance in the valuation of land that is protected and/or Natura 2000 sites that is

considered to worth less than other land;

• This will affect the provision of collateral necessary for securing investment loans and as such,

the BTAU Hungary believes that this seriously undermines the pursuit towards preferential

financial instruments, especially loans on protected areas, including Natura 2000 sites.

Business Advisory

• Financial demands on SMEs may be lower now, but advisory work about Natura 2000, financial

opportunities, business development, business planning and the combination of these is in real

demand from the BTAU.

• New SMEs will continue to be brought into the BTAU pipeline (the knowledge base of

potential PBBs that could receive investment) from different sources: through the maintenance

planning Project described in section 2.3.14; by further filtering the long-list of SMEs in

Hungary by specific sectors, and through other communication networks that have been built

through the Project;

• The SME database, best practice collection, knowledge brought together about related topics

cannot be done without BTAU Project;

• The involvement of universities and research institutions was a new approach in supporting

SMEs in Natura 2000 areas (business planning for PBBs).


• Despite the financial crisis, SMEs in Natura 2000 sites have to face the requirements of Natura

2000 prescriptions;

• There are mainly micro enterprises in Natura 2000 areas;

• These enterprises contribute significantly to sustaining nature resources:


67 | P a g e

• Financing these micro enterprises in Natura 2000 sites requires using special means, and

Natura 2000 maintenance planning can bring new approach in terms of financing (demands,

development)) and conservation means;

• Defining services for Pro-Biodiversity Businesses, assessing demands of land users in Natura

2000 areas, mapping conflicts and problems of businesses connected to conservation are the

most important deliverables of the Project.

2.3.17 Recommendations from the BTAU project in Hungary

1. The key recommendation from the BTAU in Hungary is that both the financial and banking

circumstances at the national level are currently not conducive to setting up a financial instrument

specifically targeted for rural SMEs. Hungary has been particularly badly affected by the global

banking crisis and the government has had to seek IMF support. This situation effectively closed

down the loan operations of the Hungarian banking system making the design and creation of a

national financing instrument impossible. The situation must be reviewed once normality returns

to the system and then only probably as a transfer of a proven financial instrument from another

Member State to Hungary;

2. The financial instrument should include various components including loans, grants, subsidies and

guarantees;

3. Loans cannot compete with subsidy and grant instruments alone. They should have a

supplementary role to subsidies and grants.

4. In the case of the Farmer card (issued by the Savings Cooperative), conservation goals should be

achieved through stronger financing from the EU, as part of a public-private partnership.

5. Maintenance plans: A variety of well-controlled subsidies, direct payments, funds, loans and other

financial instruments should be secured as incentives to a) support the existing PBB enterprises to

continue; b) push existing SMEs that are currently not PBBs in a more positive direct and c) show

clear PBB opportunities for possible enterprises.

6. A wide range of Technical Assistance is required (confirming the need for the BTAU), not only for

rural SMEs with their business planning, but with also with marketing, promotion, product

development and sales. Once revived, the banking sector itself would need assistance, where

training will be required for loan assessors to identify and evaluate potential PBBs, and for debt

managers who would work closely with the BTAUs in order to monitor debt servicing and

repayments alongside the pre-requisite biodiversity gains.

2.4 Review of progress and achievements for the Polish BTAU


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2.4.1 Overview of the Polish BTAU

The Polish BTAU is located within the Polish Society for Protection of Birds (OTOP). The BTAU consists

of a full time Coordinator. A Natura 2000 expert from within OTOP as well as external economists and

public relations consultants provide advice when needed.


The BTAU in Poland engaged the public and private sectors to fully understand the barriers to

development and the perceived problems that currently exist. The research concluded that

• Access to external funding sources remains the major barrier to development of SMEs, in particular

in rural areas;

• Credits (loans) remain the major source of external funding;

• The major problem experienced by SMEs who seek to access finances is that they struggle to

provide collateral;

• The most effective financial instrument would involve merging public and private capital to provide

attractive cheap credits/loans, with least administrative/procedural burden and without own bank

guarantees i.e. with support of guarantee scheme.

• Private equity/Venture capital is not suitable for direct lending to SMEs. The legal status of most of

SMEs prevents them from being able to access private external funding sources.


We analysed literature and engaged SMEs to fully understand what was required to enable the new

market. The BTAU in Poland revealed that:

1. Subsidy schemes can help to create of PBB investment markets;

2. Branded certification can help SMEs to gain competitive advantages;

3. Creation of dedicated preferential loan schemes (programmes) and guarantee schemes are

required;

4. A Public-private-partnership is required which merges entrepreneurial capital with EU/national

public funds, Private equity and Bank loans.


The Polish BTAU contributed towards the production of the project brochure (which provided concise

guidance on how to develop pro-biodiversity businesses in (or adjacent to) Natura 2000 sites) in 2007

and wrote a dedicated webpage on the project website (www.smeforbiodiversity.eu) in English and

Polish. The main topics covered included an overview of the national financial framework, a description

of the number and types of SMEs in the country, and an overview of Natura 2000 sites across the

country. The BTAU also established various communications material to ensure that information was

delivered in a professional manner to SMEs, public officials and financial bodies. These included the


69 | P a g e

use of a logo, a brochure, a presentation template and business cards. Information was disseminated

nationally through the OTOP website19.


assistance to enterprises seeking to develop PBBs

The BTAU was established at the beginning of the project and will continue its functions beyond the

end of the project. The main goal of the BTAU is to assist SMEs operating in Natura 2000 (and other

High Nature Value) sites to enable them to understand the implications of operating profitable

businesses in these areas and on how to benefit from the conservation status of their land, without

harming it. The BTAU has grown in its size and remit over the course of the project.



The BTAU in Poland was fortunate enough to be able to benefit from a previous demand study that

had been performed in Poland through The DOEN Foundation project coordinated by Fauna & Flora

International, during 2005. The project was entitled “Creating pro-biodiversity business in new

member states of the European Union”. Over 5,600 potential PBBs were identified within seven pilot

Natura 2000 areas.

In the first year of the BTAU project, further analysis was carried out on the SME database and the

breadth and depth of research was increased. The entire SME sector in Poland was analysed with a

focus on the types of activities that are relevant for the economic use of natural resources. The initial

analysis in 2007 demonstrated that around 15 % (just over 100,000) of the registered SMEs (out of a

total of 1,673,940) were potential pro-biodiversity enterprises, according to NACE20. This figure does

not include farmers who account for roughly two million enterprises. If only 20% of SMEs and farmers

are located within Natura 2000 sites or other high nature value areas, the project estimated that there

are some 550,000 potential beneficiaries of biodiversity financing facility In Poland. The list of sectors

and number of potential PBBs registered in rural and urban districts is shown below in Table 7, below.

Results on the number of SMEs and PBBs in Poland in 2005 are illustrated in Figures 4, 5, and 6.

19 http://www.otop.org.pl/kat_48_114/Przedsiebiorcy.html 20 NACE stands for Nomenclature statistique des Activités économiques dans la Communauté Européenne. It is a pan-European classification system that groups organisations according to their business activities.


71 | P a g e

Table 7: The number of SMEs in Poland that fall into sectors that directly or indirectly impact natural

resources

NU

MB

ER

OF

PR

O-B

IOD

IVE

RS

ITY

SM

Es IN

PO

LA

ND

IN 2

005

01000

2000

3000

4000

5000

6000

7000

8000

9000

10000

11000

12000

13000

14000

15000

16000

17000

18000

Farm

ing

of c

attle

, dairy

farm

ing

Farm

ing

of s

he

ep

, go

ats

, ho

rse

s,

Land

scap

e m

anag

em

ent &

gard

enin

g

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g, tra

pp

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and

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e p

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and

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st n

urs

ery

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and

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d s

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ish fa

rmin

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and

op

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tions o

f pe

at

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ing

of o

rnam

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l and

build

ing

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ne

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Min

ing

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lays a

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f fish a

nd

fish p

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Pro

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ssin

g fru

it and

ve

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tab

les

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g fru

it and

ve

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f dairie

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, etc

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f dye

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f org

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ctu

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f pharm

ace

utic

al p

rep

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Manufa

ctu

re o

f esse

ntia

l oils

Manufa

ctu

re o

f chairs

and

se

ats

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f offic

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reM

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ities o

f tour o

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anag

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f waste

Bo

t & z

oo

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natu

re re

s. a

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ities

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BA

N G

MIN

AS


72 | P a g e

Figure 4: The number of SMEs in Poland by category, in 2005 (micro, small and medium).

Figure 5: The number of Pro-biodiversity businesses in Poland by category, in 2005 (micro, small and

medium).

NUMBER OF SME IN POLAND IN 2005

Micro; 1 615 167

Medium; 14 254Small; 44 519

NUMBER OF PRO-BIODIVERSITY SME IN POLAND

IN 2005

Medium; 1 750

Micro; 99 934

Small; 6 248


73 | P a g e

Figure 6: The percentage of micro, small and medium enterprises in Poland, in 2005.

Figure 5 demonstrates that over 92% of all potential PBBs are micro enterprises employing a maximum

of nine people (in fact, according to the European Commission, 41% of all businesses in Poland are

micro-enterprises21). Usually, in practice these are family undertakings. This has important

ramifications for the design of any financial instrument to support Pro-Biodiversity Businesses, as it will

need to take into account both the challenging number of potential beneficiaries; the enormous

fragmentation and distribution across the country. This is also a major conclusion to argue for

providing grant funding to blend or soften a loan profile to make it more acceptable by these SMEs.

During 2008, the database of SMEs was reviewed and made more robust using experience and

procedures applied by ecological financial institutions and banks (such as the EcoFund; Bank for

Environment Protection; National Fund for Environment Protection and Water Management, European

Economic Area and Norwegian Financial Mechanisms). In order to prioritise on one significant sector in

Poland to test the BTAU’s approach, the lowland grassland ecosystem was selected and the following

additional steps were taken:

• The Department for Natura 2000 of the Ministry for Environment & Water was consulted in

setting up a priority list of areas for engagement with businesses;

• The priority lowland grasslands ecosystem was finally selected and the list was officially

approved by Department for Natura 2000 of Ministry for Environment; 21 http://ec.europa.eu/enterprise/entrepreneurship /facts_figures.htm

SIZE STRUCTURE OF PRO-BIODIVERSITY SMEs IN POLAND

IN 2005

Medium

1,6%Small

5,8%

Micro

92,6%


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• Economic sectors (activities) most relevant for active protection of these sites and this

ecosystem were identified, analyzed and selected.

Lowland grasslands in Poland represent approximately 3.2 million hectares and 20.15 % of the total

agricultural land. There are also still in a relatively natural state, are significant for biological diversity

and are usually traditionally managed. They are inhabited by a high percentage of the threatened

plants and animals, such as 80% of the population of aquatic warblers, 30% of the population of

corncrakes and 40% of the population of white stork.

Nature friendly farming on grassland is currently subsidized by agri-environmental schemes (AES).

However, a long-term sustainable solution can be achieved by establishing market-based supporting

measures. Investment credits will accelerate the economic effect of AES by creating a market for

grassland products (e.g. hay, wool, meat), increasing livestock, encouraging biomass utilization, and

supporting tourist activities, as examples.

Natura 2000 areas with at least 1000 hectares of grassland were considered within the selection

process. All Nature 2000 sites were analyzed for the presence and density of important grassland

habitats & species. In Special Areas of Conservation (SACs), the distribution of the following habitats

was analyzed: 6210, 6410, 6510, 6510, 7140 and 7230. In Special Protected Areas (SPAs), selection was

based on the percentage and the total area of grasslands and the number of breeding pairs of priority

birds. As a result, nine SACs were chosen with area 40,576.86 ha (1.6 % of total SACs) and 13 SPAs with

an area of 824,562 hectares (14.5% of total SPAs).

By the end of 2008, the BTAU in Poland had established within the priority ecosystem of lowland

grasslands a long list of SMEs, which amounted to over 6,000 enterprises. The selected lowland

grassland areas are shown in Figure 7, below. Figure 8, the lowland grassland areas are shown on the

background of designated Natura 2000 sites. Table 8 below provides data on the number and structure

of PBBs identified within the selected lowland grassland areas.


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SME demand study.


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SME demand study set against the background of designated Natura 2000 sites.


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Table 8: The number and structure of the short-listed Pro-Biodiversity Businesses identified within

the selected lowland grassland areas in Poland.


The BTAU in Poland worked with the two other BTAUs during 2007 to formulate a toolkit to assess any

business to see if it was a) commercially viable and b) had an investment plan that would enable it to

qualify as a Pro-Biodiversity Business. This was used to filter a final list of SMEs that could be offered

investment, outlined in section 2.4.8. An interesting finding in the Polish case was that financial experts

questioned the need for the toolkit to provide a financial/economic evaluation of enterprises if each

enterprise applying for a project loan would have to undergo independent evaluation and risk

assessment by an intermediary bank. Having this in mind, it was suggested to reduce the economic

part of the toolkit aimed at financial evaluation and risk assessment to a minimum and to make it fully

compatible with assessment/evaluation methodology to be run by a potential partner bank.


A selection of enterprises was assessed in Poland to ascertain the types of investments that could take

place as well as the likely future funding needs. Each enterprise selected in the lowland grassland

ecosystem (see section 2.4.6) was sent a letter with information on the BTAU and the potential for a

future financial mechanism as well as short questionnaire with two major topics covering the main

barriers to establishing and running PBBs and what they would expect in terms of technical assistance

from BTAU. The questionnaire also covered topics on interests of the business in getting more

information and on useful communication tools and channels. Based on former studies as well as this

marketing research, the BTAU selected five enterprises for which the developed methodology was

tested in order to gather information in order to understand the financing needs required.

Economic activity types of the identified PBBs No %

Agriculture, hunting and related service activities 1,159 21.2

Fishing, fish farming and related service activities 88 1.6

Mining and quarrying 14 0.3

Manufacture of food products and beverages 23 0.4

Manufacture of wood and of products of wood and cork straw

and plaiting materials 305 5.6

Electricity, gas, steam and hot water supply 219 4.0

Camping sites and other provision of short - stay accommodation 3,583 65.5

Water transport 65 1.2

Botanic & zoo gardens and nature reserves activities 14 0.3

Total - 5,470 100


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The BTAU in Poland worked with the two other BTAUs in Bulgaria and Hungary during 2008 and 2009

to devise a draft list of criteria that could be applied to any investment to ensure that biodiversity was

maintained or enhanced. The conclusions in developing a biodiversity monitoring system are

summarised in section 2.5.10.


The BTAU in Poland was fortunate to benefit from previous work that had been carried out in Poland

through a Doen Foundation funded project (outlined in section 2.4.6). Studies on the potential

demand for a financial supporting mechanism were performed and the results of the project were

used as the basis for EBRD to develop a preliminary concept for a ‘Biodiversity Financing Facility’ (BFF).

Apart from a series of meetings in the Ministry for Environment, a number of banks in Warsaw

including the Bank of Food Economy, the Polish Cooperative Bank and the Raiffeissen Bank, were

investigated as potential collaborators in the running of a future BFF.

The BFF was conceived as a mechanism operating in Poland to invest in SMEs working in Poland’s

Natura 2000 sites, with the dual aim of supporting and maintaining viable businesses and the

sustainable management of high-value natural resources. At that stage, EBRD believed that the size of

the BFF could be in the range of €10 to €15 Million, thus requiring €2-3 million of grant financing.

Once the BTAU project officially started (on 20 December 2006), contact was also made with the

Department of International Financial Institutions and Foreign Cooperation of the Ministry of Finance.

Representatives of the Department participated in consultations on 21 June 2007 in the headquarters

of EBRD in Warsaw, along with representatives of four other Ministries – Ministry of Environment,

Ministry of Agriculture and Rural Development, Ministry of Regional Development and The Ministry of

Economy. The objective of the meeting was to introduce the EBRD planned BFF and to receive

immediate feedback and support for implementing the facility, including the identification of a possible

source for a co-financing grant. The meeting gave support for the idea of the BFF and a set of

guidelines were provided covering the implementation mechanism of a future BFF.

Despite the opportunities offered by the High level Biodiversity Conference in Lisbon in November

2007 no progress was made until 2008 when a new team in the Ministry for Environment was provided

with analyses of the implementation costs of different implementation models to enable the Ministry

to request the National Fund for Environmental Protection and Water Management (NFEP&WM) for a

grant to complement the EBRD funds.


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In the autumn 2008 a national conference focussed on the socio-economic aspects of the BFF was held

in the Ministry of Economy by the BTAU in Poland and the BirdLife partner (OTOP) in partnership with

the Ministry of Environment and Ministry of Economy. The Ministry of Economy funded both the

conference and the Project Handbook as well as publishing a special brochure and desk diary to

promote the BTAU and its work.

In February 2009, EBRD met with the Head of the Minister's Political Cabinet. Full political support of

the Ministry was offered.

This support manifested itself at the Conference on EU Biodiversity Policy Beyond 2010 in Athens22, on

April 27/28, 2009. A message was delivered on the role of small businesses in nature conservation in

Poland, highlighting the potential BFF. The meetings resulted in a pre-agreement for the

implementation of the BFF in two pilot areas, the Bialowieza Forest and Warta Mouth Natura 2000

sites

At the end of June 2009 a planning meeting was held in Warsaw.

The meeting resulted in the identification of several barriers to progress. These included:

• Management plans existed for the two National Parks but not for the two Natura 2000 sites;

• There was a lack of knowledge and understanding of the potential demand for a BFF in both

sites;

• The grant component for technical assistance and the blending loans was absent, which could

possibly be secured from the National Fund for Environmental Protection & Water

Management;

• There was an absence of support for PBB in the National Rural Development Programme.

Meetings were also held with the National Fund for Environmental Protection & Water Management

and with the Cooperative Bank Group, which has over 1,000 banking outlets in entire Poland.

As a result three additional barriers to progress were defined, which included:

• A lack of to-date cooperation between the Cooperative Banking Group and EBRD. The EBRD

needed to undertake due diligence with the Cooperative Banking Group;

• A lack of grant funding for technical assistance and co-funding of loans to ensure setting both

financial and technical support mechanisms;

22 http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/649


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• A need to assure the attractiveness of the facility for potential clients, especially with a view of

securing funds available through the current Financial Perspective.

A series of follow up steps were identified:

• EBRD performing due-diligence on the Cooperative Banking Group;

• EBRD bankers working with the Cooperative Banking Group to design the BFF;

• BTAU carrying out expanded demand studies of the two pilot sites;

• BTAU assisting EBRD in drafting the “Concept Review Document”;

• BTAU facilitating EBRD in approaching others banks as desired;

By October 2009 the way forward had been identified:

1. The pilot BFF will be established in the two pilot areas - Warta Mouth and Bialowieza Forest Natura

2000 sites to test all procedures, methodologies and tools;

2. Setting up the BFF will require a market demand study for both pilot areas. EBRD will elaborate a

Terms of Reference for this work and identify a list of potential consultants to run the study, with a

deadline to identify consultants by the end of February 2010;

In 2010 the EBRD raised the necessary funds to carry out the Demand Study with a delivery date of

October 2010.


A significant amount of information was disseminated to investors, the public sector, NGOs, and SMEs

(as well as their trade associations) to raise interest and awareness of the aims, objectives and vision of

the BTAU in Poland.

An article was produced on the BTAU project in “Die Pro-Biodiversitäts-Wirtschaft stärken!” and in the

IUCN Business 2010 newsletter, in February 2008. Briefing notes were also circulated to the Ministry of

Environment in Poland and the project was discussed at the “Management and financing activities on

Natura 2000 areas” National Conference, 27-28 March 2008, organized by WWF and the Ministry of

Environment. The project was also exhibited at the OTOP General Assembly on 5 April 2008 in Warsaw.

The Polish BTAU coordinator represented the project at the IUCN World Conservation Congress in

Barcelona in October 2008 and distributed 250 project leaflets via the EC and EIB stand. The project

was very well received. All candidates for the IUCN Presidency were also approached and introduced to

the BTAU project. Two presentations were given on the BTAU project at specialist seminars. The first

was held by the European Sustainable Use Specialist Group of IUCN’s Species Survival Commission


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(SSC) on “Birds and business”. The second was hosted by IUCN on “Trade and biodiversity”. Both

events were successful and well attended.

The Coordinator participated in a “Business and Natura 2000" event on November 19th 2009, hosted by

the Ministry of Economy in Warsaw, to raise awareness of the project. The Ministry funded the

translation of a draft of the BTAU handbook into Polish for circulation at this event only. The national

project website has been revised and will go live shortly.

In order to raise awareness of beneficial links between Natura 2000 sites and SMEs, and attract

support for the project, the project team also held a series of events and gave presentations including:

• Workshop to raise the awareness of the role of the BTAU project

A workshop was held on the sustainable management of Natura 2000 with a focus on generating

rural employment and business, in July 2007;

• “Supporting Small & Medium Enterprises for biodiversity benefits”.

Presentation to the High level Biodiversity Conference, 11 and 12 November 2007, Lisbon

• “Supporting business for biodiversity – Biodiversity Technical Assistance Unit”.

Presentation to the conference “Development if infrastructure investments in Poland” held by

Gazeta Prawna (Law Magazine), 08 October 2007, Warsaw.

• “Supporting business for biodiversity – Biodiversity Financing Facility”.

Presentation to the conference “Management and financing activities on Natura 2000 areas”, held

by Department for National Park and Natura 200 Areas of the Ministry of Environment and WWF.

27-28 March 2008, Józefów nb. Warsaw.

• “Supporting business for biodiversity” – Biodiversity Technical Assistance Unit”.

Presentation to the conference “Reforms of Common Agricultural Policy and Environment”, held

by IUNG and OTOP, 28-29 October 2008, Puławy.

• Pro-biodiversity investments and development of SMEs on Natura 2000 areas.

A national conference was held by OTOP, Ministry of Economy and Ministry of Environment on

19th November 2008, Warsaw

• “Supporting business for biodiversity” – Biodiversity Technical Assistance Unit”.

Presentation to the conference “NATURA 2000 - a chance for sustainable development and local

partnership”, held by Social Ecological Institute within the project “Between the Bug and Narew

River, partnership for ecological effectiveness” on 24th March 2009, Łochów.

• “Investing in SMEs within the Natura 2000 Network”.


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Presentation at the Amsterdam conference “Boosting investments in Biodiversity and Ecosystem

Services” held by Nyenrode Business University/IUCN NL/ECNC, 11th - 12th November 2009.

• “Development of entrepreneurship on rural high nature value areas”.

Presentation to the Conference “Influence of Natura 2000 on development of rural communities -

impulse or barrier” by the Institute for Rural Development and Agriculture, Polish Academy of

Sciences, 15th April 2010, Warsaw.


The BTAU in Poland completed a full business plan in 2008 that was updated in 2009 and revised again

in early 2010 (see Appendix 12) to prepare the ground to become a self-supporting organisation once

the project had finished. It is anticipated that funding to continue to forward the development of the

BTAU and its activities will come from a number of sources that include: governmental subventions

and commercial contracts for training PBBs.


The Ministry of Environment confirmed in late 2009 that between 400 – 500 Natura 2000 site

management plans would be developed over the next 3 – 4 years. The Head of the Natura 2000 Unit,

expressed initial interest in cooperating with the Project Coordinators and national BTAU to design and

test ‘Business Opportunity Plans’ from these plans that would identify business activities that are

already compatible, or could become compatible with Natura 2000 site management prescriptions.

The interest of the Ministry of Environment in testing the ‘Natura 2000 Business Opportunity Plan’

concept in Poland was reconfirmed by the Head of the Natura 2000 Unit. Very significantly, the

Ministry of Environment also specifically stated that they want to link the pilot SME loan facility in

Bialowieża and Warta Mouth Natura 2000 to their programme of work under their EU Presidency in

2011.




the Coordinators of the BBI project. However, due to the late inception of the BBI project, the Polish

BTAU was not able to enter into any substantive discussions.

2.4.15 Conclusions from the BTAU project in Poland

Overall conclusions

• The project maintained very good consistency with both national and international processes

regarding the greater integration of the private sector into biodiversity protection;

• The BTAU project has developed a template for implementing general principles and primary

objectives of the Business & Biodiversity Initiative (B@B) in the SMEs sector;


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• Establishing a Biodiversity Financing Facility will require effective cooperation and support form all

levels – (i) the European – EC, (ii) the national - Ministry of Environment and its agencies, and (iii)

the regional – managing authorities of Natura 2000 and other High Nature Value areas;

• Successful implementation of the B@B Initiative will require a complex, integrated approach –

including establishing the ‘Business & Nature Advisory Service’ and the ‘Biodiversity Financing

Facility’, and also work on linked priorities including raising awareness and education, promotion

and certification, risk management, and product development;

• The “seeds are sown” – so there is growing interest in the initiative manifest by presentations to

the Polish Parliamentary Commission in May 2010 and many others.

Financial instrument

• The successful implementation of the BTAU project needs strong institutional leadership on the

side of the government;

• Declared political support from the Polish Government to the project needs to be converted into

pragmatic and affective institutional leadership to establish a pilot financial instrument with

conditions that favour and protect the Natura 2000 network;

• More active role of the EC in communicating importance of the project towards official authorities

of the three countries via official channels is desired;

• International events, such as in Lisbon (2007) and Athens (2009) played a major role in catalysing

the process of establishing a Biodiversity Financing Facility at the institutional stakeholder level;

• Public-private partnership and public support for creating commercial market is needed for initial

period to encourage investments of commercial funds and private enterprises, in existing or

potential pro-biodiversity businesses;

• The bottleneck appeared to be the public funding component – a grant to provide incentives for

SMEs, partner banks and technical assistance to be assured by operations of BTAU.

Business Advisory

• Through its interactions with a wide range and large number of businesses, the Polish BTAU

contributed directly to changing the perception of Natura 2000 network as the problem into an

opportunity approach by SMEs and business sector;


• There is currently little communication between relevant state agencies, private sector

associations, NGOs or professional individuals working on biodiversity protection and rural

economic development sectors over the role of SMEs in achieving the objectives of Natura 2000

area as well as impact of N2000 network on development of SMEs within and around its areas;

• Effective Private-Public Partnerships require broader openness amongst all stakeholders to enable

the novel incorporation of biodiversity protection criteria consistent with the EU Birds and Habitats

Directives, Convention on Biological Diversity and other international legal commitments.


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• The vast majority of Natura 2000 areas in Poland require identification of business development

opportunities that are compatible with biodiversity management prescriptions not only at the local

level with existing companies/farms but also at the landscape scale and ecosystem management

approaches;

• The future good status of the Natura 2000 areas requires development of Business Opportunity

Plans based on transfer of biodiversity knowledge, provision of dedicated extension service,

innovative thinking and finally supportive financial mechanism;

2.4.16 Recommendations from the BTAU project in Poland

1. The EBRD, as main driver key to establishing the Biodiversity Financing Facility in Poland, should

manage the Market Demand Study in the two pilot areas, and then evaluate and communicate its

findings to the Ministry of Environment and BTAU Coordinators.

2. The Biodiversity Financing Facility in Poland should ideally be established on basis of capital loan

from the EBRD or its shareholders, in cooperation with Cooperative Bank Group as an intermediary

partner bank best meeting the necessary banking criteria in Poland. This could be as a specialised

subcomponent of the new EBRD financed generic SME loan facility, or as a standalone instrument.

3. Launching the Biodiversity Financing Facility in two pilot areas is necessary to demonstrate how

SMEs can benefit from opportunities within Natura 2000 sites and can contribute to delivery of

management plan activities and thus conservation objectives through their business operations. If

successful, the Natura 2000 management and local socio-economic would both benefit, and

positive evidence would encourage investment in expansion of the approach across the entire

Polish Natura 2000 network

4. Further development of the Biodiversity Financing Facility with accompanying ‘Business & Nature

Advisory Service’ in cooperation with the Ministry of Environment should be viewed in light of

Poland’s forthcoming EU Presidency in the second half of 2011, and its contribution to developing

and delivering the Europe 2020 strategy.

5. Grant funding to establish the Biodiversity Financing Facility should be provided by the National

Fund for Environmental Protection and Water Management as (i) grant co-funding to provide

incentives to individual SME investment projects supported by bank loans, which are designed to

achieve neutrality or provide tangible biodiversity benefits, and (ii) funding BTAU operations

(renamed as the ‘Business & Nature Advisory Service’) that provides an SME extension service to

access grants and payments. Additionally, funding the BTAU to offer business development advice

and training for SMEs to become Pro-Biodiversity Businesses.


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6. The Biodiversity Financing Facility of preferential targeted SME loans with biodiversity conditions

should be used to support (i) entirely new businesses designed to immediately be compatible with

Natura 2000 management prescriptions (i.e. neutral or Pro-Biodiversity Businesses); (ii) existing

business that need to change their operations to become compatible with site management

prescriptions, and (iii) existing SMEs already compatible with management plans that want to

expand their operations.

7. The BTAU team will aim to provide support to the B@B Platform in Poland will seek to cooperate

wherever possible during implementation of the B@B Platform

8. The BTAU team should continue to promote the Biodiversity Financing Facility as a vital component

that is complementary to the Government of Poland’s ‘Programme for Sustainable Development of

the Bialowieza Forest’, and will seek to use the Biodiversity Financing Facility to fill recognised gaps

in the Programme regard support for the SME sector;

9. The BTAU team should start to provide extension (advisory) services for SMEs within Natura 2000

sites, using funds from within Operational or Sectoral Programmes such as Fish, Innovative

Economy, Human Capital, National Programme for Rural Development, as well as most of Regional

Operational Programmes, which embrace financing opportunities so far rarely used by SMEs in

rural and remote areas;

10. BTAU PL continues work on establishing an Academy of Biodiversity Business by developing project

proposals and applying for funding to various operational and sectoral programmes on national

and regional levels;

11. The BTAU PL should seek to cooperate with the Ministry of Environment’s national project to

develop approximately 400 Natura 2000 management plans over the next 3 years, as this offers an

exceptional opportunity to develop ‘Natura 2000 Business 0pportunity Plans’ that are intended to

support establishment of the Polish Natura 2000 network and contribute to creating neutral or

positive perceptions of Natura 2000 sites in the private sector;

12. BTAU actively participates as an observer in management plans under development for the pilot

areas to understand well the methodology being applied and how this relates to developing

‘Business Opportunity Plans’ and starts providing advice on demand access to advice, grants,

payments for business development under existing rural development programmes.


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2.5 Review of progress and achievements for Coordinating Partner

2.5.1 Overview of the Coordinating partner

The RSPB was the Project Coordinator for the BTAU project. Its role was to be the interface between

the requirements of the EC and the implementation of the project on the ground in Bulgaria, Hungary

and Poland. The RSPB provided oversight and management of the project and coordinated all reporting

to the EC. They also provided strategic direction for each national partner. Significantly, RSPB also

carried out international research tasks relating to key areas of the project, particularly the financial

instrument, but also into some of the key enabling mechanisms that could enhance a new market for

pro-biodiversity businesses. The RSPB drew on internal expertise in a number of areas, notably from

environmental policy and economics departments. Finally, The RSPB coordinated all project

communications at the International level, sought to raise awareness of the project, and was

responsible for writing, printing and disseminating major publications, such as the Project Handbook.

2.5.2 Strategic project guidance and project reporting

The Project Coordinator was responsible for all Project reporting and for providing the strategic

direction for the project which included:

• Liaising with the EC to determine annual objectives and work plans;

• Issuing contracts and annual work plans to national BTAU partners;

• Providing ad hoc updates to the EC on project progress;

• Collating information from national BTAU partners to produce the Annual Reports, and this Final

Report for the project;

• Providing strategic direction and advice to national BTAU partners;

• Arranging and convening bi-annual steering committee meetings during each year of operation.

Meetings were convened in 2007 (Kick-off meeting, Sandy, UK, 22nd-23rd February, Warsaw, Poland

24th-25th July and Tilburg, the Netherlands, 12th December); 2008 (Aranyponty Ltd, Rétszilas,

Hungary, 17th July and Brussels, Belgium, 28th November); and in 2009-10 (Dospat, Bessaparski Hills,

Bulgaria, 9th July and Brussels, Belgium, 20th April 2010).

Steering Committee

Steering Committee meetings were hosted by the EC and attended by the EBRD and the EIB, as well as

the Project Coordinator, the National Coordinators from each BTAU, and ECNC. The EBRD and the EIB

were envisaged from the outset to be potential investors or guarantors of the pilot financial

instruments in the three focal countries, as well as advisors on financial instruments to the BTAU

Project. Both the EBRD and the EIB operate extensive SME loan packages across their Countries of


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Operation, both within EC Member States and beyond the EC. In both cases, these banks have also

developed, invested in and delivered specialised SME instruments that are designed to change private

sector behaviour through preferential targeted loans with performance conditions, including improving

environmental performance. The EC DG Environment, by its nature, was never seen as a potential loan

investor in the same way. In this context, DG Environment was expected to facilitate political and

policy support across the EC and as well as dissemination of findings.

EC DG Environment:

DG Environment carried out an overseeing and guiding role on the RSPB and partners delivering the

project. It was not anticipated that DG Environment would directly invest in the pro-biodiversity loan

facility, beyond the contract itself. The DG Environment was responsible for enabling the Project to be

presented at the high-level ‘Post 2010 future biodiversity policy meeting in Athens. This created three

clear benefits for RSPB – specific preparatory work with the Polish Ministry of Environment led directly

to high-level engagement with the Undersecretary for Environment and his advisors, and equally high-

level access to the EBRD Vice President for Environment, Procurement & Administration. The meeting

between these two parties facilitated by the RSPB and OTOP resulted in significant new progress on

the Polish pilot financial instrument. Lastly, valuable contacts were made with speakers and

participants of direct relevance to the Project.

European Bank for Reconstruction & Development

The EBRD role was to provide advisory support to the development of the financial instrument in all or

any of the three focal countries of Bulgaria, Hungary and Poland. At the institutional level, the EBRD

proved to be open, receptive and highly constructive in exploring opportunities to support the attempt

to establish financial instrument models. EBRD committed significant staff time and travel resources to

the investigation, design and development of financial instruments in both Poland and Bulgaria.

Understandably, EBRD’s much smaller and more specialised portfolio in Hungary naturally had less

relevance and from the beginning made the chances of being able to invest there negligible, and this

was exasperated by the extreme financial crisis in Hungary.

EBRD offered highly relevant experience with SME loans linked to specific environmental performance,

including reducing water pollution, and increasing energy efficiency. They provided invaluable and

extensive guidance to the National Units in Poland and Bulgaria for preparation of the pilot financial

instruments, leading negotiations with potential intermediary banks, and assisting significantly with

the political negotiations with key ministries. Engagement was with the EBRD Environment Team, and

the SME Business Development Team, and the Vice President for Environment, Procurement & Human

Resources.

European Investment Bank


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EIB were also open, receptive and constructive in exploring opportunities to support BTAUs, but

initially had minimal engagement with the BTAU project. This was primarily caused by three changes in

the EIB representative focal point on the Steering Committee. Fortunately, towards the end of the

Project, key staff made valuable contributions, clearly recognising the strategic potential of this far-

reaching opportunity during the ‘2010 International Year of Biodiversity’, and were keen to support

development of the financial instrument. Project Coordinator staff met with key EIB staff in April 2010,

to ensure that BTAU project findings could be built into high-level ongoing EIB discussions with DG

Environment on the potential for future cooperation. It is hoped that the EIB will fully engage with

testing the concept of a Biodiversity Financing Facility in Poland for SMEs within the two Natura 2000

sites, by investing loan capital or funding technical assistance required to operate the pilot facility.

Discussions illustrated that EIB’s Sustainability Unit understood and supported the concept of

preferential financial instrument targeted at SMEs to enable them to become or remain Pro-

Biodiversity Businesses operating within or around Natura 2000 sites of the EU. EIB also recognised the

potential of the novel ‘Business Opportunity Plan’ approach developed by this Project to identifying,

communicating and then investing in SMEs with a mix of technical assistance, grants and loans in order

to improve their biodiversity performance, would be applicable in any biodiversity rich environment,

not only within the Natura 2000 network of the EU.

Of greatest relevance is the EIB clear mandate for and function of helping to finance implementation of

EU policy, when combined with the recognised major deficit in financing Natura 2000, and the failure

of the EU to halt the loss of biodiversity in 2010. The new EU 2020 Biodiversity Strategy23 provides the

context for EIB’s response with rural SMEs within the EU. The Project Team concluded that the EIB was

the ideal institution to create and host an EU-wide Biodiversity Financing Facility targeted at Natura

2000 and/or wider biodiversity, which operates through national intermediary banks. The EIB’s new

global financing platform , the EIB Interact Climate Change Fund is being designed for investing in

climate change mitigation across the EU and globally was proposed by EIB as the most appropriate

model to follow, especially during the establishment phase. EIB proposed that creating a new

‘Biodiversity Financing Platform’ might be developed most realistically and effectively developed as a

specialist sub-component of the Zona Fund with ring-fenced loan, grant and technical assistance

funding.

This would enable the EIB to capitalise upon the BTAU project findings, and meaningfully contribute to

the objective of creating or maintaining neutral or positive SME operations in relation to biodiversity

without the costly negotiations from first principles of another EU or global fund.

23 http://ec.europa.eu/eu2020/pdf/COMPLET%20EN%20BARROSO%20%20%20007%20-%20Europe%202020%20-%20EN%20version.pdf


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2.5.3 Project development

The Project Coordinator carried out a number of international research tasks relating to key enabling

instruments of the project, particularly the financial instrument that could enhance a new market for

pro-biodiversity businesses. Significant areas include:

1. Financial mechanisms for investments in SMEs

The Coordinator researched and then developed a range of exploratory meetings with banks (other

than EBRD and EIB), financial institutions and philanthropic foundations and with national banks to

gauge their interest and suitability.

• Agora Partnerships24 and Verde Ventures25

In Washington DC (USA), the Project Coordinator held exploratory meetings with both Agora

Partnerships, an independent micro-venture capital fund, and Verde Ventures, a green enterprise fund.

Both of these organisations individually research priority businesses to invest in directly. Theirs is a

company-by-company approach. Neither has a pro-active approach on a sectoral basis to locate and to

evaluate companies, neither has considered nor measured the precise impact of the investment on the

biodiversity of the investment location in terms of a monitoring scheme, nor an investment release

trigger-mechanism (investment input linked to biodiversity gain). Equally neither has a methodology to

develop a pipeline of projects for investment as this Project created. They were clearly interesting

lessons learnt and experiences exchanged. Nevertheless, they have successfully designed and activated

‘biodiversity investment funds’ and secured a series of diverse investors into a single fund. However,

our approach remains highly innovative and technically advanced, so there are some aspects where we

could choose to contribute to them in terms of identifying a pipeline of projects, use of the company

assessment toolkit, technical advisory unit approach to capacity building and technical support offered

to potential or existing pro-biodiversity businesses, and monitoring of investment impacts.

• DOEN Foundation26

/ Triodos Bank27

The Dutch DOEN Foundation offered the initial grant funding to investigate pro-biodiversity businesses

in Europe, linked to SMEs and Natura 2000. Their courage to take the risk led to the political success of

the EC’s Lisbon Business and Biodiversity Conference, the technical elaboration of the pro-biodiversity

model, and the initial development of a platform for commercial financial institutions. These funded

pro-biodiversity business research projects directly informed the development of this contractual

approach. In 2009, the Project Coordinator met with the DOEN Foundation to update existing contacts

on the recent findings of this and related work. Potential involvement in further development of

innovative pro-biodiversity business activities was also provisionally discussed. Currently, the DOEN

Foundation project portfolio is largely concentrated outside the EC.

24

http://www.agorapartnerships.org/ 25

http://www.conservation.org/sites/verdeventures/ 26 www.doen.nl 27 Triodos Bank (www.triodos.com) provides loans and equity investments to promote sustainable development, which includes investments towards biodiversity businesses.


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However, if a link could be established between corporate green procurement (by EU-based

corporations) and SMEs based in and near to Natura 2000, then the DOEN Foundation may be

prepared to invest in technical assistance or grant funding for the establishment of an SME loan fund

for one of the pilot countries of the EC. Nevertheless, and despite the political will that exists for

business and biodiversity, DOEN has set the condition the EC-based financial institutions lead in the

establishment of the instrument with a significant capital investment.

The DOEN Foundation is a key shareholder in the ethical Triodos Bank, also based in the Netherlands,

which could be a suitable host for a financial platform for the EU SME Biodiversity Financing Facility.

The Triodos Bank is one of the world's leading sustainable banks. Their stated mission is to “make

money work for positive social, environmental and cultural change”.

2. Exploration of expansion of BTAU concept to other EU Member States

From the outset, the BTAU concept was designed as a pilot for possible expansion to other or all EU

Member States. Our conclusion is that an EU-wide policy and financial package is certainly needed as a

new tool, based upon the demand studies from the three focal countries. It is expected that only the

EIB together with the EC can elaborate an EU-wide instrument that targets rural SMEs with a public-

private partnership loan arrangement (like JEREMIE has attempted for urban SMEs28). It is already

possible to plan for expansion, with lessons learnt from the current BTAU project are being evaluated

to enable rapid assessments of the banking and SME environment in other EU countries to ascertain

the potential for pro-biodiversity business development. The Project Coordinator investigated how to

develop such activities and recognise that further funding would be needed for any expanded EU

coverage. The Member States expected to be initially best placed to utilise and absorb a financial

instrument of this type are those with a high percentage of land designated as Natura 2000 sites, and

where designation has been followed by development and implementation of management

prescriptions, as is expected for a well developed Natura 2000 network. Draft Terms of Reference were

developed to fully explore the role of branded certification as a market development tool linked to

Natura 2000 (see 2.5.6) and separately to test the ‘Natura 2000 Business Opportunity Plan’ concept

across the nine EU biogeographic regions (see 2.5.14). The concept of testing in all nine EU

biogeographic regions is to ensure that robust testing across the diverse habitat types, and to ensure

that relevant examples will be available for the majority of habitats across the EU Member States.

3. Concepts for linking pro-biodiversity SMEs with large companies and governments

The Project Coordinator undertook limited investigations into large corporation supply chains,

sustainable production and sustainable procurement in relation to pro-biodiversity SMEs, following the

Lisbon High Level Experts Meeting on Business & Biodiversity Conference in Portugal29. This conference

called for effective ways to link the corporate sector investment potential to the on–the–ground

28

http://ec.europa.eu/regional_policy/funds/2007/jjj/jeremie_en.htm 29 http://countdown2010.net/site/business


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activities of SMEs and particularly Pro-Biodiversity Businesses. It is hoped that the mechanism to start

realising these opportunities fully will be the EC Business & Biodiversity Platform beginning in 2010.

Evidently, if clusters of businesses operating within Natura 2000 sites were verified and distinguished

as creating products that are compatible with site management prescriptions, these could potentially

feed into supply chains for green procurement by both the private and public sectors, and help to fuel

the call for green growth in the EU made by Environment Commission Janez Potocnik.

2.5.4 Progress in relation to identifying the barriers to Pro-Biodiversity Business development

The Project Coordinator produced a review in 2007 in collaboration with national BTAUs and ECNC to

summarise lessons learnt in terms of identifying the barriers to PBB development. We carried out

research and engaged private and public sector representatives to better understand the barriers and

perceived problems that currently block the development of Pro-Biodiversity Businesses.

The key problems identified were associated partly with the inability for investors, the public sector

and NGOs to negotiate innovative public-private partnerships, due to the differing objectives of each of

these actors and a misunderstanding of the opportunities. In addition, biodiversity – or natural

resources – are still largely considered public goods with few markets or prices. Bottlenecks to

investing in ‘biodiversity-friendly’ SMEs were also identified. The finance sector often views investment

in SMEs as risky and of individual businesses being too small to achieve economies of scale. SMEs

themselves lack a clear understanding of biodiversity financing opportunities. They also lack expertise

in identifying and developing profitable state-of-the-art projects with biodiversity benefits. Table 9

summarises some high level barriers the development of Pro-Biodiversity Business in the private,

public and third (NGO) sectors.

The way forward was tested through the creation and development of the BTAUs in order to build the

bridge between the financing institutions and the public authorities as well as put in place the

conditionality for guaranteeing biodiversity benefits from every investment.

The full findings of this work area are summarised in the Project handbook.


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Table 9: Problems perceived by the Private Sector, the Public Sector and NGOs that create both

constraints and opportunities for developing Pro-Biodiversity Businesses

1. Private Sector:

• Understanding of biodiversity and its long-term value is very limited in most cases

• Understanding of Natura 2000 and other protected areas management regimes and its implications for

business operations is very limited in the majority of cases

• Biodiversity is assigned a low priority over other environmental issues including climate change, access to

water (or other primary resources) or food security

• Normal SME loan terms and conditions currently prohibit borrowing to develop Pro-Biodiversity Businesses

in most cases

• Investing in Pro-Biodiversity Businesses provides a lower rate of return over a longer period than other

environmental investments such as renewable energy

• Insufficient information is available for responsible investors to identify investment opportunities that are

neutral or positive for biodiversity

• Rural SMEs often lack adequate collateral and therefore considered a higher risk investment option by banks

• Rural SMEs as single businesses are often too small to provide acceptable return on investments

• Rural SMEs hard to identify, require extensive business development, which results in unfeasibly high

transaction costs for typical investors

• Rural SMEs, predominantly micro-enterprises or small businesses, lack critical mass and product volume to

negotiate access to markets, especially those with added value from environmental criteria

• Costs of certification with international sustainable commodity standards is often prohibitively high for SMEs

• Elements of the processing and supply chain are often missing in rural areas so SMEs are often relegated to

selling primary produce that is unprocessed, and so lacks added value

• Businesses in new EU Member States often show reluctance to starting or expanding businesses on the basis

of commercial loans

• Understanding of the technical language and process used by NGOs is not fully understood

• Understanding of the value systems and motivations of NGOs is not always fully understood


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The Project Coordinator assisted the national partners to identify key market conditions that were

favourable to PBB development. Much of this work involved research into branded certification to

assess its applicability to PBB development.

The 2008 Terms of Reference for the project required that a seminar for the national teams should

take place to explore “the opportunities, benefits and best practice in relation to the grouping of pro-

biodiversity business activities within Natura 2000 sites, from clustering producers and branding

products”. In the July 2008 Steering Committee meeting held in Budapest, it was decided that the

workshop should be refined by concentrating more on branded certification, rather than branding and

2. Public Sector:

• There are insufficient public funds to fully finance Natura 2000 management, as well as wider nature

conservation across the Europe Union

• Whilst numerous opportunities exist for funding Natura 2000 from across EU instruments, the variability

nationally makes a fully integrated approach to Natura 2000 financing not yet operational

• Only an estimated 20% of the 26,000 Natura 2000 site have management prescriptions, and when these are

developed there is highly variable quality in stakeholder engagement

• Protected areas management administrations and wider Environment Ministry staff often have limited

experience of the private sector, its language and processes, so find it hard to engage

• High turnover in staff in some new Member States causes significant capacity problems

• Inter-ministerial cooperation is often challenging, and Natura 2000 is seen as ‘only’ and environmental issue

• A contributing factor to the failure to meet the 2010 target for ‘halting the loss of biodiversity in the EU’ was

that the public sector did not sufficiently engage the vast majority of businesses (SMEs), many large

corporations and market mechanisms, so they do not take biodiversity concerns into account

3. NGOs (Third Sector):

• There are insufficient funds from the public sector to finance nature conservation across the EU

• There is inadequate recognition of the potential role that NGOs play in empowering SMEs linked to key sites

or types of activities, especially branded certification with environmental or social criteria

• There is a lack of funding from investors and public sector to support market development and provide

technical assistance to SMEs, even though NGOs are often well placed to deliver it

• Relationships between the public sector and NGOs are often strained by campaigns that apply pressure on

the government and impinge upon constructive cooperation

• Social empowerment, development, education and environmental NGOs don’t always cooperate well

• Understanding of the technical language and processes used by the private sector is limited

• Understanding of the value systems and motivations of investors is not always adequate


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clustering as this had more practical relevance to BTAUs. A workshop was convened during 15th-16th

September 2008. The Project Coordinator assisted to convene the workshop.

The workshop lasted for two days. Day 1 was hosted and run by the European Centre for Nature

Conservation (ECNC) under a subcontract to the RSPB. Background information on the concept of

branding was provided, with the aim of developing a clear understanding of what branding is, the

specific aspects of branding nature-friendly products and services, and the difference between

branding and certification, was presented. Day 2 was hosted by the National BTAU Coordinator for

Bulgaria, and concentrated on the applicability of a certification system for Pro-Biodiversity Businesses

with an associated brand initially in the three BTAU pilot project countries. The aim of Day 2 was to

determine whether the use of a certified brand would be advantageous as a marketing tool, and the

basic criteria for awarding a potential certification label was explored. How to proceed with generating

a clear set of general rules for awarding a potential Pro-Biodiversity Business label and the registration

of a PBB brand was also investigated.

The conclusions were that further research would be needed to determine applicability and

replicability. If a viable approach for use at the EU level is to be determined to be a key enabling

activity, then this require additional funding outside of this contract to fully develop this concept of

PBB certification in the EU and an associated brand. A number of certification systems were analysed

during 2008/2009 in order to gather background information on how such schemes had been put

together and the main biodiversity criteria that had been applied. The results of this initial research are

shown in Appendix 14. The lessons learnt and success factors involved in key branded certification

schemes with environmental and/or social criteria such as Marine Stewardship Council30 (MSC), Forest

Stewardship Council, (FSC)31, The Soil Association32, Rainforest Alliance33 (RA) and the Fairtrade

Association34. For example, it is clear that EU consumers are amongst the most demanding and

lucrative market for authentic products that adhere to verifiable social and environmental standards35.

The Project Coordinator also visited the Czech Republic in October 2009 with the national BTAU

Coordinator for Bulgaria. The aim was to study and draw out lessons from a notable regional branded

certification project created by the NGO APUS and the Czech ‘Association of Regional Brands’ to

support products originating from specific rural regions or protected areas in order to make them more

noticeable36.

Under the Czech system, a certification is granted to products that have been produced within one of

eleven regions across the country that has a clear relationship with that region, for example, a

30 www.msc.org 31 www.fsc.org/ 32 www.soilassociation.org 33 www.rainforest-alliance.org 34 www.fairtrade.org.uk/ 35 ‘Plenty more fish in the sea? Consumer research showed that 80% of the people surveyed thought that supermarkets should only sell fish supplied from verified, sustainable sources. Which? June 2010 p26 – 27. 36 www.regional-products.cz ; www.regionalni-znacky.cz ; www.domaci-vyrobky.cz


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traditional local product, a product made of local raw materials or a product made by hands of the

local people. The product also has to be of a certain quality and it must not cause harm to the

environment. The brand is usually granted to handicrafts or artwork, food, agricultural and natural

products and sometimes to industrial products. A certification commission that consists of local

producers, regional authorities, nature-protection organisations and agrarian and commerce bodies

awards the brands. The Project Team concluded that the Czech regional branding approach had

relatively weak environmental indicators and were inadequate to work as biodiversity indicators.

Figure 9: Integrated regional branded certification network in the Czech Republic (APUS / Czech

Association of Regional Brands 2009)

APUS initiated and managed their foundation on the national level within its project to enhance

awareness of Natura 2000 areas and the EC financed establishment of the branding scheme in three

initial regions. From 2005, starting with three regions, by 2010, it had been expanded to 11 regions. In

total, over 250 certificates have been granted for products or groups of products. Most of the

enterprises are micro-enterprises in the handicraft and food processing sectors.

The project was able to draw out lessons from the Czech project such as how to create a branded

certification scheme, how to improve the markets for branded products and how to monitor and

evaluate organisations that had been awarded certification. Some of this information has been used to

create a terms of reference for a future branded certification project for pro-biodiversity businesses.


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However, the cultural, geographical and social indicators were relatively well developed, so would be

flexible enough to contribute to either an initiative for regional branded certification or a Natura 2000

branded certification system in future. The relative merits of regional branding versus Natura 2000

branding were evaluated as part of the project. The Project Team identified:

Advantages of Regional Branded Certification with strengthened biodiversity criteria

• Clear rural development benefits

• Good match with regional government structures

• Good potential for integration with other rural development structures, tools and schemes

• Strong link with regional cultural identity, making it more recognisable and inclusive

• Applicable to a wider area with biodiversity value and far more businesses

• Simple concept that is widely accepted by EU citizens

• Existing concept with diverse examples

• Not restricted to Natura 2000 sites, but does not exclude them, so national branding becomes

easier and coverage more likely to be contiguous

• Simple to communicate and create a family of brands based on local visual identities

• Could benefit from indicators developed to meet Natura 2000 requirements being applied to the

wider rural landscape, thereby improving Natura 2000 connectivity

Advantages of Natura 2000 branded certification (assuming existing ‘Business Opportunity Plans’)

• Rural development benefits, but which require additional communication

• Good match with Natura 2000 management administration structures

• Stronger link with biodiversity conservation, but not one that excludes cultural aspects

• Lower risk of omission of Natura 2000 sites in areas without strong regional identity

• Direct link to establish biodiversity indicators in a straightforward manner

• Applicable to a better defined and more manageable area

• Many Natura 2000 sites include iconic landscape features that lend themselves readily to be

communicated easily, although this is not always the case

• Valuable EC tool for creating positive perceptions of the Natura 2000 network across the EU

Overall, it was concluded that at this stage there were strong arguments in favour of both approaches

and that this component of the Project warrants further research. It was also determined that the two

approaches were not mutually exclusive, and even if both approaches were applied, there were no

reasons why some products could not receive joint branding. The comparative value of either

approach at the national level would depend on a series of factors including the extent and distribution

of the Natura 2000 network, the strength of regional identity and the national approaches to both rural

development and nature conservation.

With respect to Natura 2000 branded certification, the two primary challenges were identified as

limited public understanding and in some cases direct hostility against the Natura 2000 network at


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present. This is combined with difficulties in administering branded certification of products from the

very large number of smaller Natura 2000 sites that have not been recognised geographically, prior to

designation. In the case of Regional branded certification, the primary area of concern was in relation

to establishing meaningful biodiversity indicators that could act as eligibility and performance criteria

for products seeking certification within diverse regions without biodiversity management plans.

A separate Terms of Reference was prepared by the Project Coordinators in 2010 to investigate the

relative merits and constraints of the two approaches within the EU.


The Project Coordinators assisted to produce the project brochure to promote the concept of PBB to

SMEs and local and regional public sector bodies. The Project Coordinators also designed the

International project website37 (www.smeforbiodiversity.eu) during early 2007, with inputs from the

national partners. Regular updates were made to the website throughout the project to update

external parties on project developments and achievements.


assistance to enterprises seeking to develop Pro-Biodiversity Businesses

The structure and functions of the BTAU, although varying dependent on the national circumstances,

have been guided by the lessons learnt from the earlier completed project funded by the DOEN

Foundation. The procedures of the project followed the proven procedure as tested in the DOEN

project and this was reflected in the composition of the staffing of the Units. The Project Coordinator

helped to establish the three Technical Assistance units in Bulgaria, Hungary and Poland, by ensuring

the necessary staff were in place to perform the activities required of the project and to build capacity

in their functioning as business and biodiversity units.


The Project Coordinators facilitated between EIB and EBRD to ensure that both partner banks had

access to a selection of enterprises and their potential demands in terms of access to financing. For

EBRD, information was provided for the Polish case and the Project Coordinators worked closely with

the BTAU in Poland to re-assess the potential financing needs of SMEs within the Bialowieza Forest and

Warta Mouth pilot areas chosen in 2009. Importantly, EBRD decided that they required an

independent demand study that was delivered by a business consultancy, rather than that provided by

the national BTAU. This is logical as in order to maintain independence and enable each stakeholder to

play to its strengths. At the request of EIB in early 2009, the Project Coordinators also designed a

template to collect information on the financial needs of selected enterprises through each national

partner. The EIB requested information on the types of funding opportunities that were being

identified through the project in order to assess if their funding mechanisms were applicable to some

37 www.smeforbiodiversity.eu


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of the identified needs. While the process was valuable, unfortunately, the outcome was that EIB only

grant loans to a minimum value of €5 million, and individual company requests below this were

ineligible for funding. The largest application was for a €1 million investment for expansion of a

Bulgarian sturgeon farm.


All business development loans require commercial and/or operational indicators to evaluate the

actual delivery of a business against agreed expectations of the lender. Equally, all financial

instruments that have environmental performance objectives have commercial business indicators and

additional simple quantifiable indicators that usually relate to specific resource use or emissions. In the

case of the proposed Biodiversity Financing Facility, alongside the business indicators would be

biodiversity indicators. The effective achievement of biodiversity indicators by the SME would be the

only trigger to release the grant funding and/or other incentives.

Initial screening by the national BTAUs using the toolkit developed by this project means that only

SMEs that have the potential to become or remain Pro-Biodiversity Businesses would be able to access

the preferential conditions of the Biodiversity Financing Facility. The development of a business

proposal to apply for the SME loan would require the national BTAU to identify simple, accessible and

cost-effective indicators that the business owner could easily understand. Once investment has been

made, ongoing monitoring will then be required. This will check actual biodiversity outcomes against

the expectations stated as explicit conditions in the loan application. Consequently, any biodiversity

indicators and monitoring system will need to be results oriented. It should also be simple, accessible

and be delivered at a minimum cost.

The Project Coordinators facilitated discussions with national partners on how to monitor loan

investments once funding had been disbursed to a Pro-Biodiversity Business. Any investment must be

made on the basis that an SME would not have a negative impact on biodiversity (no net ecological

loss) by the end of the loan period if it was in transition, or would remain neutral or pro-biodiversity if

it was evaluated to already have achieved that status. Monitoring of the company against indicators

specified in the loan conditions would be undertaken by an independent agency contracted by the

national intermediary bank.

The full application of a monitoring system was not an intended aim of the BTAU project. However, a

review of potential indicators and monitoring criteria to be applied for future loan investments was

scoped. The Project concluded that the most suitable high-level indicators to be applied in Europe

should be based on those devised by the European Environment Agency (EEA)38.

In November 2007, the EEA published a list of biodiversity indicators that could be used as the basis for

monitoring European biodiversity39. This indicator set was selected by the Project as the basis for

monitoring the ecological performance of PBBs, wherever possible to avoid creating a new set of

38 EEA technical report No 5/2009 Streamlining European 2010 Biodiversity Indicators (SEBI 210) 39 http://ec.europa.eu/environment/nature/knowledge/eu2010_indicators/index_en.htm


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indicators. With respect to ecosystems in the pilot focal countries of Bulgaria, Hungary and Poland, at

least ten relevant biodiversity indicators are available, including:

1. Abundance and distribution of selected species: a. common birds; b. butterflies;

2. Red List Index for European species;

3. Species of European interest;

4. Ecosystem coverage;

5. Habitats of European interest;

6. Livestock genetic diversity;

7. Nationally designated protected areas;

8. Sites designated under the EU Habitats and Birds Directives;

9. Critical load exceedance for nitrogen;

10. Invasive alien species in Europe;

11. Occurrence of temperature-sensitive species;

12. Marine Trophic Index of European seas;

13. Fragmentation of natural and semi-natural areas;

14. Fragmentation of river systems;

15. Nutrients in transitional, coastal and marine waters;

16. Freshwater quality;

17. Forest: growing stock, increment and fellings;

18. Forest: deadwood;

19. Agriculture: nitrogen balance;

20. Agriculture: area under management practices potentially supporting biodiversity: a. High

nature value farmland area; b. Area under organic farming; c. Area under biodiversity;

supportive agri-environment schemes;

21. Fisheries: European commercial fish stocks;

22. Aquaculture: effluent water quality from finfish farms;

23. Ecological footprint of European countries;

24. Patent applications based on genetic resources;

25. Financing biodiversity management;

26. Public awareness.

These indicators offer significant potential from which to identify and develop appropriate simple and

understandable indicators that can be applied to a range of SMEs that operate in Natura 2000 sites.

Additionally, these generic indicators may need to be augmented by specific indicators that suit the

particular circumstances of the specific Natura 2000 site.

Further work will be needed to identify the best mechanism that incorporates the most appropriate

SEBI indicators, alongside specific derived from individual site management prescriptions. The process

of creating Business Opportunity Plans would enable the identification of specific Natura 2000


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indicators that would initially be pertinent at the individual site. In some cases, it would be expected

that generic indicators would be derived after indicators were identified from sites that shared many

characteristics in terms of key species, habitats or management issues (see 2.5.14).


In addition to the activities outlined in 2.5.3, the Project Coordinators offered significant support to

national BTAUs in order to explore all opportunities for developing a financial instrument. Significantly,

this involved attending and facilitating discussions between The National Fund for Environment

Protection and Water Management; the Ministry of Environment, and EBRD in order to further

progress and developments in relation to forming a financial instrument in Poland.

The Project Coordinators also attended the Conference on EU Biodiversity Policy Beyond 2010 in

Athens, on April 27/28, 2009 to provide extensive assistance to the Head of Political Cabinet of MoE in

preparing a presentation on the BTAU project in Athens.


The national BTAU Project Coordinators led the dissemination of information at the national level. A

significant part of this involved the production and update of the Project Handbook that synergised

best-practice and lessons learnt through the project. The first draft of the Handbook was produced in

2007. It was revised in 2008 and further revised and publically released in the spring of 2009, prior to

the EC conference in Athens in April 200940.

The Project Manager was also a co-author with national BTAU partners of an article produced for the

EC Natura 2000 newsletter on “The role of small businesses in managing the Natura 2000 network”,

number 24, produced in May 2008.

The BTAU project leaflet was updated by the national BTAU Project Coordinators in September 2008

and a small run of 500 copies were printed for the IUCN World Conservation Congress, in Barcelona, in

October 2008.


The national BTAU Project Coordinators designed a Business plan for each national BTAU to populate

in order to guide the activities of the BTAUs, firstly between the project period and secondly post-

2010. The business plans were designed to ensure that each BTAU understood, managed and mitigated

the risks associated with its activities in enhancing a new market for PBB. They also analysed

opportunities and set objectives linked firstly to the achievements of deliverables under the EC project,

but also related to becoming self-sustaining entities beyond the course of the project. A review of

future funding opportunities was thus central to the business plan. The Project Manager worked with

each BTAU to offer advice and guidance in its completion and for subsequent re-drafts and

40 http://ec.europa.eu/environment/nature/partnerships/docs/btau_handbook.pdf


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amendments. 2010+ Business Plans for each of the three National Biodiversity Technical Assistance

Units are provided in appendices 13, 14 and 15.


Currently there are approximately 26,000 Natura 2000 sites, covering approximately 18% of the

European terrestrial area, which together form a network of the most important sites for biodiversity

conservation in Europe41. However, the number and extent of sites designated in each country, the

number and complexity of conservation activities required, and the amount and diversity of funding

available is not uniform across Member States. Natura 2000 sites are predominantly in rural areas, and

their economies are dominated by micro, small and medium sized enterprises42. The accepted and

expected sources of funding for the ongoing management to maintain or enhance the biodiversity

conservation value of these sites are a combination of Member State and European Union

contributions43. However, whilst national governments have a responsibility to protect and manage

their sites, in practice in many countries there is a significant shortfall between the funding required

for effective management and the actual funding available to do so.44 Therefore, both governments

and protected areas site managers regularly face the challenge of how to find sufficient funding to

achieve conservation objectives necessary to maintain sites in favourable conservation status.

There are a series of options that have been suggested for addressing inadequate levels of funding,

ranging from grants or loans from international organisations as diverse as multi-lateral banks and

NGOs, through to national sources including tax incentives and lotteries as well as site-based initiatives

such as corporate donations and ‘Friends of’ schemes45. However, much of this type of funding is short-

term and often linked to major discrete projects that are linked to the development of infrastructure.

Obtaining funding for routine, ongoing management is often extremely difficult. Financial shortfalls

result in incomplete management, ultimately leading to biodiversity loss.

Until relatively recently the attitude towards involving the private sector in site management was

either negative, ignored completely or focussed on a relatively small number of specific activities such

as nature tourism activities, payments linked to the provision of ecosystem services such as clean

water supplies and, especially in the tropical regions, carbon sequestration. Equally, the attitude of the

private sector to protected areas networks, such as Natura 2000, has also often been negative, based

on suspicion and fear of damaging constraints that restrict business activities and opportunities46.

Throughout much of European history, human activities have played an important role in creating and

maintaining many habitats of importance to biodiversity conservation. Therefore, by adopting a

41 http://ec.europa.eu/environment/nature/index_en.htm 42 Business opportunities and Natura 2000 in Natura 2000 European Commission DG Env Nature Newsletter no. 24, July 2008 43 Torkler, P (ed) (2007) Financing Natura 2000 Guidance Handbook European Commission DG Environment 44 BirdLife International (2009) Financing Natura 2000: assessment of funding needs and availability of funding from EU funds BirdLife International, Cambridge, UK 45 Financing Protected Areas Task Force of the World Commission on Protected Areas (WCPA) of IUCN, in collaboration with the Economics Unit of IUCN (2000) Financing Protected Areas. IUCN, Gland, Switzerland and Cambridge, UK 46 As footnote 40


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positive engagement approach towards the private sector, there is significant potential to offset some

management costs of site management through compatible private sector activities. There is also clear

potential to increase business and community support for protected areas through the creation of

benefits in terms of local livelihoods in rural economies, as well as for biodiversity conservation.

It is recommended that all Natura 2000 sites have a management plan or prescriptions in place to

maintain or enhance the qualify biodiversity value of the site47. These plans should be produced in a

consultative, cooperative manner that involves all key stakeholders, including the private sector. There

is significant potential for analysing existing plans to identify the range of existing activities already

taking place within and around a site, and then assessing which of these are compatible and

incompatible with site management objectives. Effective communication of business compatibility,

required improvements in business performance and opportunities for new private sector activities,

combined with financial incentives to encourage these changes in business operation will represent a

coherent integrated approach to rural development and biodiversity conservation.

Operation of the ‘Business Opportunity Plans’ concept

The concept of ‘Business Opportunity Plans’ was developed by the Project Coordinators linked to the

Hungarian experience of Natura 2000 ‘Maintenance plans’, feedback from the national BTAU

Coordinators, as well as much wider experience from wider protected areas management planning.

The primary objective of ‘Natura 2000 Business Opportunity Plans’ is to enhance the management of

the Natura 2000 network and comparable high nature value rural areas by the active engagement of

the private sector, with a particular focus on SMEs as contributing to the delivery of the future 2020 EU

Strategy. The secondary objective is to contribute to creating positive associations of Natura 2000 in

the local private sector and communities in and around Natura 2000, by removing uncertainty in

relation to business operations inside Natura 2000, and offering positive private sector opportunities

and beneficial services explicitly linked to designation of a Natura 2000 site.

The process of developing Natura 2000 Business Opportunity Plans is outlined below:

1 Prerequisite inputs

Evaluate Natura 2000 site management prescriptions

• Review objectives and associated activities to achieve them

• Consider the threat analysis and stress based assessment

• Identify ‘best practice’ implementation of management prescriptions from comparable sites

Undertake a Management Authority capacity audit

• Staff skills audit

• Equipment audit

47 Managing Natura 2000 sites – the provisions of Article 6 of the ‘Habitats’ Directive 92/43/EEC available as a downloadable pdf (ec.europa.eu/environment/nature/natura2000/management/docs/art6/provision_of_art6_en.pdf)


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• Annual budget

Audit SME activities within and around the Natura 2000 site

• Desk based study using national data

• Local agency assessments to filter local site-related data

• Face to face interviews to refine knowledge of SME operations (sectors, number, diversity,

distribution, calendar, business approaches and natural resources used)

2 Assess SME compatibility against Natura 2000 site management prescriptions

• Categorise SMEs' activities as one of the following (incompatible, potentially compatible,

compatible, neutral) plus potential SME opportunities

3 Identify options for delivery of each prescribed management activity

• Identify options for delivery of prescribed actions (e.g. grasslands - grazing, haying, biomass)

• Assess the potential of the Management Authority to deliver the options for each activity

• Assess the potential of the SMEs to deliver the options for each activity

• Plan delivery of management prescriptions by optimal combination of Management Authority

and SME capacity

• Review ‘best practice’ implementation of management prescriptions from comparable sites in

relation to private sector involvement

4 Identify opportunities for SME financing & technical assistance to achieve compatibility

• Identify technical assistance needs (advisory service)

• Identify one-off grant requirements to achieve SME compatibility

• Identify environmental payments to sustain compatible activities

• Define generic indicators for SME loan biodiversity conditions

• Consult with pertinent nature conservation, rural development and private sector stakeholders

to build understanding, ownership and acceptance, and ensure integration

5 Define ‘Business Opportunity Plan’ for the Natura 2000 site

• Introduce the Natura 2000 site and its key features

• Describe compatible activities that the private sector needs to achieve

• Offer opportunities for licensed or contracted work from the Management Authority

• Offer conditional opportunities for SMEs to receive professional advice and technical

assistance (e.g. access to information, business development, access to markets, certification)

• Offer conditional opportunities for SMEs to receive financial support (e.g. grants, payments,

loans) to achieve, maintain or develop compatible businesses

6 Deliver the ‘Business Opportunity Plan’ through the ‘Business & Nature Advisory Service’

• Launch the plan to the local business community


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• Advise or provide technical assistance to individual SMEs

• Provide assistance to SMEs to access grants, payments and conditional loans

• Monitoring delivery of the ‘Business Opportunity Plan’ and evaluate against conservation

objectives, management effectiveness and socioeconomic benefits

• Communicate the results on a regular basis to the local business community through the most

appropriate mechanisms locally

Additional activities for pilot sites only

• Poll the knowledge, understanding and beliefs of SMEs in relation to the Natura 2000 site

before and after delivery of the ‘Business Opportunity Plan’

• Complete a detailed cost-benefit analysis for the Management Authority in relation to site

management, human resources and financial resources

• Socioeconomic analysis of the Business Opportunity Plan approach in relation to meeting

national Natura 2000 commitments, and in relation to rural livelihoods

Expected constraints

• A 2009 EC study estimated that only approximately 20% of Natura 2000 sites have defined

management prescriptions. This is not only a problem for new Member States, as Italy only has

management plans for 29% of its Natura 2000 network. As management prescriptions are a

prerequisite for using the ‘Business Opportunity Plan’ approach currently this would represent

a major constraint for comprehensive delivery across the Natura 2000 network

• There is asymmetric development of the Natura 2000 network in Member States and the

associated compensatory or incentive environmental management payment schemes linked to

Natura 2000 and priority species that results in an incomplete ‘toolkit’ of financial instruments

available to SMEs

• The is clear evidence from across different EU and national funding lines that the absorption

capacity for existing rural development measures associated with Natura 2000 is a major

constraint for SMEs accessing funds for either compensation or pro-biodiversity activities.

There has been real progress in Bulgaria through this project to develop the ‘Business & Nature

Advisory Service’ mobile advisory teams to address this constraint.

Expected outcomes

• Improved management of Natura 2000 sites, contributing to ‘Favourable Conservation Status’

• Reduction in site management costs due to outsourcing and compatible activities

• More effective use of site management staff and equipment

• Wide range of targeted advisory and financial benefits to rural SMEs operating within and

around the Natura 2000 site

• Improved private sector engagement, understanding and acceptance of the Natura 2000 site


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• Long-lasting socioeconomic benefits for local communities

• Potential incentive for the creation of Natura 2000 site management prescriptions

• Potential opportunities for green procurement of ‘Natura 2000 friendly’ products for the

private and public sector

If this approach is successful, the DG Environment and all 27 Member States will be indirect

beneficiaries, as all have obligations under the Birds and Habitats Directives to maintain or

enhance their national sites designated as Natura 2000 sites. As there are major concerns over

inadequate financing to manage the Natura 2000 network, the benefits in terms of long-term

sustainability of the Natura 2000 network will be far more widely felt.



An informal meeting was held with ECNC and IUCN personnel responsible for the implementation of

the BBI Project during the Conference in Nyenrode University in Amsterdam on 12th November 2009.

Initial discussions focussed on the BBI Project benefiting from the work of the BTAU Project in general

and on the application of individual experiences from the BTAUs themselves.

The Project Coordinators met with the EC lead on the Business and Biodiversity Platform (BBI) project,

on 11th December 2009. A summary overview of the BTAU project was provided and contacts

exchanged, as well as the offer for full collaboration, at the request of the BBI implementing

coordination team. Due to the late start of the BBI project, it was not possible through this project to

share lessons learnt and to input to the BBI project. However, both the coordinating partner and

national partner BTAUs remain open to sharing information beyond the BTAU project.


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3. Communicating the Biodiversity Technical Assistance Unit Project

3.1 Overview

This section provides an overview of the key activities that were used to communicate the Project.

Whilst some of these elements are captured in sections 2.2 - 2.5, this section is designed to provide a

concise summary of the main activities and achievements. These include the provision of the

international project website, presentation and participation at international conferences and

workshops, the hosting and facilitation of workshops directly through the Project, the generation of

media coverage, and the production of printed publications to disseminate information. It is important

to note that this section captures some the significant communications activities carried out through

the Project, but does not attempt to capture all of the regular ongoing dialogue between each of the

BTAUs with their respective national finance sector, SMEs and their trade associations, public officials

and other NGOs. Communications between the national BTAUs and these actors naturally formed part

of the daily work programme for each BTAU to highlight the existing and potential role of SMEs in

supporting and enabling nature conservation.

3.2 International Project Website

An international project website was designed during 2007 to fulfil three main aims, which were to

promote awareness of the BTAU project to key audiences, to provide easy access to the information

gathered throughout the project’s implementation and its lessons learned, and to share important

project contacts and links to other relevant business and biodiversity websites.

The key messages communicated through the website were:

• Engaging business in the long-term sustainable management and use of natural resources is a

key to the aim of halting the loss of biodiversity;

• Pro-biodiversity businesses can be engaged in delivering economically viable biodiversity

conservation activities in rural areas across Europe;

• Opportunities are being designed that would provide support for small companies to access

investment with biodiversity management conditions in the selected countries.

The website details the project activities, provides a background to the Natura 2000 network offers

information on SMEs, as well as a number of project resources and reports. The site was regularly

updated as the project developed and can be visited at www.smeforbiodiversity.eu.

In Hungary, a national project website was launched in 2008 to highlight the project and appeal to

national SMEs, (http://www.georgicon.hu). A content management system was created to make

improvements easier and to upload news, and introduce new SMEs involved with the project, and even


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existing or expected financial opportunities. A monitoring system for the website revealed that SMEs

had made direct approached to read the Hungarian BTAU website.

3.3 Presentation at and participation in international and national conferences and workshops

Project staff attended and in some cases presented at the following key international workshops:

1. EC High Level Conference on Business and Biodiversity, Lisbon, 12th -13th November 2007

The Project Manager and the BTAU Coordinator in Poland attended this conference that was

hosted as part of the Portuguese Presidency of the EC in order to promote the BTAU project

and gather information on business and biodiversity as it relates to SMEs. The BTAU

Coordinator in Poland made a presentation entitled “Supporting Small & Medium Enterprises

for biodiversity benefits”.

2. IUCN World Conservation Congress, Barcelona, 5th -14th October 2008

The BTAU Coordinator in Poland gave two presentations on the BTAU project at specialist

seminars. The first was on “Birds and business” held by the European Sustainable Use

Specialist Group (ESUSG) of IUCN Species Survival Commission (SSC), and the second was held

by IUCN on “Trade and biodiversity”. Both events were successful and well attended.

3. EC High Level conference to frame EU post-2010 biodiversity policy in Athens, 27th

-28th

April

2009.

The Project Manager and the BTAU Coordinators from Poland and Hungary attended this

conference and provided extensive assistance to the Head of Political Cabinet of the Polish

Ministry of Environment in preparing a presentation on the BTAU project. The presentation

outlined the achievements of the BTAU project and the intentions of the Ministry of

Environment in Poland to collaborate in creating a financial instrument for SMEs in Poland.

4. Meeting of the Conference of Parties for the Convention on Biological Diversity, Bonn, 26th

-

28th May 2009

The BTAU Coordinator in Bulgaria represented the project at the business and biodiversity

section of the Conference of Parties for the Convention on Biological Diversity and presented

the BTAU Project.

5. European National Environmental Authorities (ENEA) meeting, Budapest, 17th

and 18th

September 2009.

A presentation was made on by the BTAU Coordinator in Hungary to highlight the role of the

project and MME in Pro-Biodiversity Business development.


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6. Conference on “Investments in biodiversity and ecosystem services” hosted by Nyenrode

University in Amsterdam on 12th November 2009.

The Project Manager and the BTAU Coordinator in Poland attended this conference and gave a

presentation on the project. Further contact was made with investment Fund Managers (from

a wide range of capital funds, pension funds, aid agencies, foundations and family offices) who

attended the conference. However, it was agreed that until the design of the fund was

completed, the timing was not optimal to make concrete and assertive demands on fund

managers, but instead to conduct research to identify those organisations which could be

interested in investing in the PBB approach.

7. EC Stakeholder Conference on Financing Natura 2000 (15 – 16 July 2010)

The Project Manager and the BTAU Coordinator in Poland will present ‘Supporting Business for Biodiversity – Public-private partnerships for financing Natura 2000 in Poland, Hungary and Bulgaria’ at this conference, with a particular emphasis on financial instruments and the ‘Business Opportunity Plans’, and will also contribute to panel and wider discussions Stakeholder Conference on Financing Natura 2000

3.4 Project Workshops

In order to raise awareness of both the opportunities for Pro-Biodiversity Businesses nationally, and to

attract support for the idea equally both nationally and internationally, all BTAU national partners and

the Coordinating Partner hosted or participated in a series of project workshops during the project. All

major international presentations were undertaken often at the instigation of the EC and with the full

agreement. Workshops and presentations included:

2007

1. National workshops to test key findings of the project at the local level.

Each of the national BTAUs held workshops to introduce, promote and test the findings of two

Deliverables from Lot 1, namely the Review of the scientific information on Pro-Biodiversity

Businesses, and the Template of the Generic Tool Kit. The sessions were also used as the primary

vehicle for raising the awareness of the wider range of stakeholders of the Project. The cumulative

result was the endorsement of the Review document, the approval of the Toolkit and its

elaboration into a practical instrument for use at the national level, as well as an increased level of

understanding by external stakeholders of the Project objectives. In Hungary and Poland, the

Workshop discussions and the accompanying documents (all of which are attached to the Final

Report) stimulated sufficient interest in the concept of SMEs working with biodiversity at the

government level that both countries sent Ministerial delegates to the Portuguese Presidency

High Level Conference on ‘Business and Biodiversity’ in November 2007.

2. Workshop to raise the awareness of the role of the BTAU project, Warsaw, July 2007


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A workshop was organised by the BTAU Coordinator in Poland in Warsaw, which focussed on the

sustainable management of Natura 2000 areas with a focus on generating rural employment and

business opportunities.

2008

1. Branding and certification workshop, Sofia, 15th -16th September 2008

The Project Manager and all three national BTAU coordinators attended a seminar organised by

the BTAU Coordinator in Bulgaria that focussed on “the opportunities, benefits and best practice in

relation to branding and certification. Day 1 was hosted and run by the European Centre for Nature

Conservation (ECNC) under a subcontract to the RSPB. Background information on the concept of

branding was provided, with the aim of developing a clear understanding of what branding is, the

specific aspects of branding nature-friendly products and services, and the difference between

branding and certification, was presented.

Day 2 was hosted by the national BTAU Coordinator for Bulgaria, and concentrated on the

applicability of a certification system for Pro-Biodiversity Businesses with an associated brand

initially in the three BTAU pilot project countries. The aim of Day 2 was to determine whether the

use of a certified brand would be advantageous as a marketing tool, and the basic criteria for

awarding a potential certification label was explored. How to proceed with generating a clear set of

general rules for awarding a potential Pro-Biodiversity Business label and the registration of a PBB

brand was also investigated.

Examples varied from the Forest Stewardship Council for forest products and organic farming

certification, to Fair Trade, Slow Food, and some national schemes for branding traditional regional

products. These brands have developed different levels of complexity and criteria, but they all

broadly promote wise use of natural resources and protection of the environment. Workshop

participants unanimously agreed that the system of regional brands implemented in the Czech

Republic appears to show the greatest potential as a relevant certification scheme, and one that

shows provides a reasonable level of administration and recognition, but that does not exclude the

opportunity for products to be both regionally and internationally certified.

2. SME engagement workshops, Hungary, 2008

The BTAU in Hungary engaged SMEs to enable them to identify opportunities to become a Pro-

Biodiversity Businesses through workshops and outreach programmes in rural areas. In particular,

the BTAU in Hungary provided advice on marketing. Such engagement helped to address, discuss

and test the findings of the project.

2009-10

1. Tasting workshop for High Nature Value farm products, Sofia, 25th

April 2009


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The BTAU in Bulgaria co-organized a degustation of High Nature Value farm products in Sofia that

generated very wide media coverage in relation to SMEs creating traditional, nature friendly

products;

2. Training workshops on agri-tourism, alternative recreation and funding sources, Bulgaria,

throughout 2009

The BTAU in Bulgaria organized three training workshops in three Natura 2000 sites (West Balkan

Mountain, Ponor Mountain, and Bessaparski Hills) on agri-tourism, alternative recreation and

funding sources for business development;

3. Fishpond-management workshop, Hungary, September 2009

A fishpond-management workshop connected to a Global Environment Facility (GEF) project of

the Hungarian BTAU Project Coordinators, BirdLife Hungary The BTAU Coordinators presented the

project and highlighted opportunity for conflict resolution management. Particular emphasis was

placed on presenting opportunities for enterprises that were in conflict with cormorants that

remain as a serious barrier between conservationists and fishpond managers;

4. Business and Natura 2000 event, hosted by Ministry of Economy, Warsaw, November 19th

The BTAU Coordinator in Poland participated in a “Business and Natura 2000 event on November

19th 2009, in order to raise awareness of the project. The Ministry funded the translation of a draft

of the BTAU handbook into Polish for circulation at this event only. The national project website

has been revised and will go live shortly.

5. Project workshop on the Handbook, management planning, financing instruments and branded

certification, Budapest, February 9th

to 12th

2010

The BTAU project teams convened in Budapest in February 2010 to synergise the lessons learnt

through the project and to share best practice in a number of key work areas for the project.

3.5 Media articles, published and printed materials produced

In order to raise awareness of the opportunities for Pro-Biodiversity Businesses, and attract support for

the idea, all BTAU national partners and The Coordinating Partner contributed to generating a a

number of articles, publications and leaflets which included:

1. Brochure on the opportunities for small business development- 2007

All partners contributed project brochure was produced in 2007 that provided concise

guidance on how to develop pro-biodiversity businesses in (or adjacent to) Natura 2000 sites.

This was disseminated to SMEs in high nature value rural areas and Natura 2000 sites by

national BTAUs.

2. Publication on business and biodiversity -2007

Karpowicz Z., Tederko Z. (2007) Die Pro-Biodiversitäts-Wirtschaft stärken! Im: Die Zukunft der


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Europäischen Union “Business and Biodiversity“. Artenschutz durch Wirtschaftsunternehmen-

zwischen Grünfärberei und Glaubwürdigkeit. EU-KOORDINATION des Deutschen

Naturschutzrings (DNR) e.V., Sonderheft III/2007.

3. Biodiversity and small businesses: an opportunity to grasp - 2007

Karpowicz Z., Tederko Z. (2007) Biodiversity and small businesses: an opportunity to grasp - a

way forward from Lisbon, in Sustainable The newsletter of the IUCN Species Survival

Commission Sustainable Use Specialist Group December 2007 p16-17.

4. Project handbook- 2007, 2008, 2009

The Project Coordinators led the dissemination of information at the National level. A

significant part of this involved the production and update of the Project Handbook which

synergised best-practice and lessons learnt through the project. The first draft of the

Handbook was produced in 2007. It was revised in 2008 and further revised in the spring of

2009, prior to the EC conference in Athens in April 2009.

5. Project leaflet describing the aims and objectives of the project- 2007, 2008

A Project leaflet was designed to provide an overview of the key aims of the project. The

leaflet was disseminated at conferences, workshops and other public events. The Polish BTAU

coordinator represented the project at the IUCN World Conservation Congress in Barcelona in

October 2008 and distributed 250 updated project leaflets via the EC and the EIB stand.

6. Publication on “Promoting ‘pro-biodiversity’ SMEs” -2008

Frentz, J-M., Karpowicz, Z. and Tederko, Z. Promoting ‘pro-biodiversity’ SMEs. In: Food, feed,

fiber & fuel. An overview of biodiversity and agribusiness. Business.2010. Vol. 3, Issue 2.

February 2008.

7. Publication on business and biodiversity – 2008

Day, M and Karpowicz, Z (2009). Role of small businesses in managing the Natura 2000

network. Business and Biodiversity. EC Natura 2000 News, Issue 24, June 2008.

8. Publication on business and biodiversity I - 2009

Tederko Z. Nowe Partnestwo: Biznes i Bioróżnorodność, Część I W: Ptaki. Kwartalnik OTOP, Nr

2’09(64) – czerwiec 2009. Str.: 30-32.

9. Publication on business and biodiversity II - 2009

Tederko Z. Nowe Partnestwo: Biznes i Bioróżnorodność, Część II. W: Ptaki. Kwartalnik OTOP, Nr

3’09(65) – wrzesień 2009. Str. 30-32.

10. Publication on business and biodiversity III - 2009

Tederko Z. Wspieranie biznesu na rzecz bioróżnorodności. W: Wybrane elementy regionalnego


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zróżnicowania rolnictwa w Polsce. Studia i Raporty IUNG–PIB, Nr.15, Puławy,2009. Str.153-160

11. Promotion of direct sales by farmers in Bulgaria- 2009

The adoption of a national decree on direct sales in Bulgaria will provide High Nature Value

(HNV) farmers with the opportunity to add value to their products and secure income, which

will enable them to develop sustainably and to continue to maintain semi-natural pastures in

Bulgaria. At least 50 publications were made in national newspapers and magazines devoted to

the regulation of direct sales, where BTAU Coordinator has been quoted or interviewed.

12. Publication on business and biodiversity - 2010

Tederko Z. Rozwój przedsiębiorczości na cennych przyrodniczo obszarach wiejskich. Wieś i

Rolnictwo. Nr 1’2010. Warszawa

3.6 Conclusions

3.6.1 Internet profile

• The access to the overall Project website was primarily linked to presentations at international

events that raised the profile of Project. This was valuable in sharing basic project information with

a highly disperse group of external stakeholders.

• National language website content proved useful for providing basic factual information on Project

objectives and activities to key national institutions, the media, the government and trade

associations, but were not sufficient to engage with rural SMEs themselves.

• Correctly, the Project Team did not expect that the BTAU Project would require or seek a major

Internet profile, as the primary beneficiaries of the Project are micro, small and medium sized

enterprises in rural areas of Bulgaria, Hungary and Poland, for whom face-to-face meetings,

workshops and printed materials are known to be most appropriate and effective.

3.6.2 National / regional workshops

• A combination of informational, and technical training workshops at the national or regional level

for SMEs and other key stakeholders proved the single most valuable tool to engage large numbers

of stakeholders in all three focal countries. In spite of not being able to offer business development

funding, the level of participation reflected the level of interest amongst SMEs who are clearly

hungry for information and reliable independent professional advice.

• Independent, professional technical assistance and advice is an essential component of any

financial instrument due to relatively low level of engagement with SMEs, and the relatively small

number of opportunities for SME support.


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3.6.3 International meetings

The BTAU Project received a high profile internationally, with presentations of the objectives,

operation and findings of the BTAU Project given at the IUCN World Congress (Barcelona), Conference

of Parties for the Convention on Biological Diversity (Bonn), and the international biodiversity financing

conference (Amsterdam). Additionally, the BTAU concept was presented at two EC high-level expert

meetings in Lisbon and Athens. All presentations and participation benefited the Project by promoting

the concept and learning from presenters and participants alike. The following conclusions emerged:

• Presentations and thinking at international events in relation to business are concentrated primarily

on large corporations requirements (and efforts) to monitor and reduce their biodiversity impacts.

In limited cases, consideration is beginning to be given to ‘greening’ the supply chains of large

companies, but this is usually the sole consideration of SMEs, and even then they are usually applies

to their environmental pollution, energy or water use, and carbon emissions.

• Highest profile at international events is given to payments for ecosystem services, as a novel

financing mechanism, primarily in relation to carbon and water provision, with biodiversity

‘bundled’ either with climate change mitigation or water resource management. Often the BTAU

Project was the unique example of both ‘traditional’ financing for enhancing the growth of SMEs

and improvement in their environmental performance.

• Much greater profile at the international events is given to tropical forest case studies from Africa,

Asia and Latin America than to temperate case studies, so in many cases the BTAU Project was the

unique example from Europe. This situation was true for both Pro-Biodiversity Businesses and

branded certification with biodiversity criteria.

• The BTAU concept was recognised as providing multiple potential benefits in terms of improved

SME development, better biodiversity performance, greater private sector and community support

for Natura 2000 (or other protected areas), and greater sustainability. This conclusion is drawn

because when technical assistance, grants or loans were completed, the SMEs were believed to be

far more likely to maintain their operations than if receiving environmental subsidies or payments,

as their business development was linked to improved viability and access to markets, so

abandoning biodiversity performance gains would result in reduced viability and restriction from

markets.

• The BTAU concept combining technical advisory, grant and loan financing was recognised as an

appropriate, relevant and innovative approach that could be applied with great relevance across

the EU Natura 2000 network, and was equally transferable to any high nature value rural area with

significant SMEs, inside or outside the EU.

3.6.4 Project workshops


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Internal meetings with specialist technical staff invited proved very useful in helping the Project Team

to develop ideas into concepts and challenges faced during implementation into solutions. Equally

valuable was providing the opportunity for the Bulgarian, Hungarian and Polish teams to share and

explain their activities, findings and challenges, as well as visiting pertinent Natura 2000 sites and

associated SMEs

3.6.5 Media articles, published and printed materials

• To National media interestingly the Project represents a new work area beyond typical corporate

responsibility focussed on large companies. It is therefore relevant to a far wider range of

businesses in each of the focal countries

• Print media and especially television were found to be the most effective channels to reach out to

rural SMEs, and their trade associations as these were most widely accessed. Print materials were

also useful to reinforce Project messages after workshops or face-to-face meetings.


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4. Review of problems encountered during Project Implementation

4.1 Project design and elaboration of the financial instrument

The construction of a financial instrument was a challenging area of work during a period of global

financial risk aversity. The Project Contract required not only researching and designing, but also

negotiating, creating, and launching an innovative financial instrument to provide targeted support for

Pro-Biodiversity Businesses in all three focal countries. The Project invested its resources into:

a) Scoping the types of financing mechanisms that would be of interest and value to Pro-

Biodiversity Businesses, which proved to differ between each focal country;

b) Identifying financial institutions that would be willing to invest in Pro-Biodiversity Businesses

throughout its three years of operation;

However, it was learned through the project implementation that a number of external constraints

made it extremely difficult, if not impossible to fulfil all the steps identified above to enable the release

of direct loan investments to SMEs within the time-period of this Project. Nevertheless, the Project

team working both nationally and with institutions with a wider focus to learn as much as possible and

take the process forward as far as possible with the same ambition.

Note was made of an initiative of the EIB, with collaboration of the EC, aimed at SME support called

JEREMIE (Joint European Resources for Micro and Medium Enterprises) that could be an example of a

potential structure eminated by the BTAU Project (see 6.1).

Significant other related constraints included:

• Investors: prerequisites for committing investments

Somewhat paradoxically, it became clear during Project implementation that across the range of

investors, are all relatively risk averse to investing in the Pro-Biodiversity Business concept

because they saw it as new or unproven. This was surprising, given that many were approached

because they were already recognised as working with SMEs, and/or investing with those SMEs in

the broad area of environmental performance, such as energy efficiency, renewable energy or

pollution abatement.

As a direct result of the financial crisis, institutional investors became even more cautious. They

demanded to have a critical mass of investment proposals before they will even consider

investing. Therefore, preparing five, 10 or even 20 SMEs ready for investment was not considered

sufficient for these investors at this time. Based on feedback from investors, a critical mass of at

least 100 investment opportunities would be needed for the initial risk assessment in each


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country. Preparing and collating this quantity and quality of information during the Project was

impossible for the national BTAU teams with the resources available. This was not only because of

the time required to identify and build working relationships with SMEs. Additionally, the

understandable reluctance of SMEs to invest their unpaid time in creating investment or business

plans for a financial instrument that as yet did not exist, and for banks that could, at the end of the

day, walk away from the venture.

It also became evident from discussions with national and international banks that when new

investment funds were being created that Fund Managers would expect the first allocation of

investments upon launching a new fund to be oversubscribed immediately, in order to give

confidence to those investing in the fund, and to make it attractive to the Fund Manager.

Developing such a portfolio of investor-ready businesses was unrealistic for the BTAU Project

Team for the reasons outlined above.

Hence, the problems are that institutions (banks) and investors are risk-averse (dislike new,

untested and innovative approaches) and have limited uncommitted funds and thus insist on solid

and verifiable evidence of a critical mass of potential clients prior to committing investments.

• Timing- a great deal of time is required to create a new market financial instrument

Working in all three pilot countries, but particularly in the Polish example has revealed that

creating a public-private-partnership and brokering entirely new relationships between the

financial sector and the public sector takes significant time. It represents a major undertaking that

requires the collation of a significant amount of information, as well as a significant number of

face-to-face meetings to define a new partnership. It is believed that a fair assessment that it

could take two to three years, once a financial model has been chosen, to create, negotiate and

launch a new instrument at the national level.

• Political circumstances at the national level

Challenging political environments in some of the pilot countries made it difficult to promote a

new market. Most notably in Bulgaria, severe problems were experienced in relation to the

consequences of national elections and a deep multi-level changes that came due to both the

replacement of political appointees, resulting in the loss of contacts and understanding of the

BTAU Project and Pro-Biodiversity Business concept. Additionally, emerging accusations of misuse

of EU funds linked to the previous regime created an overall pessimistic attitude towards any new

EU kind of programmes, funds or other targeted activities. Working in transition economies is

recognised as facing such problems, but the recognition and access of the BTAU Project team,

even with support from EBRD and EIB, meant that BTAU team in Bulgaria found themselves very

low down the list of priorities with the new government.

• Engaging with the European Investment Bank


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Active engagement with the EIB proved to be more difficult than expected, despite the wishes of

both parties, until the later stages of the Project. Three changes of EIB representatives supporting

the Steering Committee badly impeded EIB continuity, and this resulted in restricted access to key

EIB staff until late on. In turn, this reduced the opportunities to develop high-level support.

In 2008, EIB requested a digest of potential SME loans from Bulgaria, Hungary and Poland, which

was provided in an agreed format. Unfortunately, these all had to be discounted, as all fell below

the €5m minimum EIB loan threshold, which had not been communicated. In 2009, EIB

recommended that the National Units investigated nationally whether there were EIB loans

through national intermediary banks that were under-spent. The theory was that a proportion of

unspent funds could potentially be reallocated with additional pro-biodiversity conditions to test

SME loans in the three pilot countries. The National Units accessed provided this information, but

nothing resulted from this research, primarily because the national BTAUs learned that any

contractual arrangements between EIB and partner banks would have to be renegotiated, and

loan renegotiation would require as much work as the negotiation of an entirely new loan, so

there was insufficient comparative value to pursue this.

Once the EIB Sustainability Unit (which incorporates EIB’s biodiversity expertise) became fully

engaged, EIB’s understanding of and support for the BTAU concept grew quickly. Unfortunately,

despite their engagement, increasing workload during the global credit crisis made it practically

impossible for them to devote staff time to internally promoting the Pro-Biodiversity Business

concept and/or externally support the BTAU project team with the development of a new

financial instrument of the Project. Fortunately, Project Coordinator staff met with key EIB staff in

April 2010, and believe that in the future, EIB will fully engage with testing the concept of a

preferential loan and technical assistance package that will facilitate pro-biodiversity SMEs within

the EU. As the world’s largest lender, with enormous experience in SME loans as well as very

significant portfolios in all EU Member States, EIB with national intermediary banks should

logically be perfectly placed to enable the true testing of this strategic project concept to

encourage pro-biodiversity SME operations through preferential loans.

4.2 Project design and engagement with SMEs

All BTAUs revealed that effective engagement with SMEs takes a considerable amount of time and skill.

Micro-enterprises in particular, which dominate the Natura 2000 landscape, often do not have the

resources to actually receive technical assistance when they are only staffed by one or two people and

cannot stop working or spend significant time to consider alternative forms of business. Even more

significantly, the Project revealed difficulties in approaching SMEs to discuss new financing

mechanisms in the absence of a guaranteed fund. There was clear evidence that even established

simple grant funds, such as agri-environment compensation measures were poorly taken up in some

areas due to their lack of capacity to recognise the opportunities, their reluctance to provide

information, and their capacity to complete application forms with associated evidential requirements.


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This revealed a significant problem as information needed to be collected from SMEs to prove the

market existed for investors, but most SMEs were reluctant to spend a great deal of time with BTAU

staff in the absence of a guaranteed financial instrument.

Importantly, these findings fully endorse the importance of professional, independently funded

technical advisory services (e.g. BTAUs) to engage and support SMEs in Natura 2000 (or wider rural

areas) in order to provide the full spectrum services of providing access to technical advice, grants and

loans would be essential to the delivery of any Natura 2000 (or wider biodiversity) financing facility.

4.3 EC institutional support and involvement

The Project Team found that the national BTAUs worked not only with ministries responsible for the

environment and nature conservation, but also included those ministries whose portfolio was fisheries,

agriculture, forestry, rural development, economy, finance, and enterprise. This integrated approach is

expected to be the only way to ensure effective changes in SME biodiversity performance at a

meaningful scale nationally.

Similarly, the approach to climate change mitigation (formally led by DG Environment, but now by DG

Climate) that enables the majority of Directorates General to develop an integrated series of initiatives

to mitigate climate change should be seen as the model for the same approach to halting biodiversity

loss. The key services that should be further engaged in relation to Pro-Biodiversity Businesses includes

include DG Agriculture, DG Climate, DG Development, DG Economics & Finance, DG Enterprise, DG

Marine, DG Regio and DG Research.

The Project Team believes that this approach is critical at the EC level for the successful development

and delivery of mechanisms for advising and financing SMEs to become Pro-Biodiversity Businesses at

the necessary scale across the Natura 2000 network and the wider rural landscape. Whilst the Project

Team fully recognises DG Environment’s engagement of other Directorates General at the inter-service

level, it is clear that further engagement will be needed in future. Firstly, this will help with this concept

being adopted as a mainstream tenet for SME development. This inter-service approach was most

notably initiated at the Lisbon Business & Biodiversity conference, during this BTAU project and will be

continued with the implementation of the new Business & Biodiversity Platform (BBI) initiative. To

ensure further integration, DG Environment should seek to continue and expand inter-service

cooperation, planning and action.


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5. Conclusions

5.1 Overview

The Project has used five key elements, namely: a financial instrument, a business advisory instrument,

a rural SME engagement instrument, a branded certification instrument, and lastly a ‘Business

Opportunity Plan’ instrument, conceived by the Project Team. There are general conclusions to be

highlighted on each of these five elements from the overall work in the three pilot countries.

5.1.1 Financial instruments

Financial instruments have been explored in each country and although they share similarities and

components, each of the financial instruments is unique to the country of operation. Inherent

flexibility to adapt to national and local financial structures will be key in the potential expansion of this

pilot phase that was somewhat de-railed due to the financial crisis and the global credit crisis.

Nevertheless, in 2009, a number of events took place that maintained and enhanced the high profile of

the business and biodiversity focus. These include the European Biodiversity Conference in Athens,

Greece, and the launch for the tender for the Business and Biodiversity Platform project. There were

also clear indications that certain Member States (for example, Poland) were actively exploring the use

of PBB in a landscape-scale rural development approach, whilst international financial institutions

(namely EIB and EBRD) were continuing to seek a public-private partnership arrangement to work on

business and biodiversity issues.

5.1.2 Business advisory instruments

Business advisory instruments were explored as part of an understanding that these are major

enabling mechanisms that are required to encourage and promote pro-biodiversity business.

Particularly significant is the need for viable BTAUs that mainstream work with business into nature

conservation projects and activities, with regional development strategies and other documents, and

which provide funding options for PBBs outside the scope of a financial instrument. Precisely such an

approach is for NGOs and public sector bodies to promote the use of product marketing and

certification for small businesses in Natura 2000 areas. A recognised “pro-biodiversity” certification

scheme, focussed at defined regions and defined sector products could help to develop support new

profitable businesses, although this would only come on stream in the medium-term.

5.1.3 Rural SME engagement instrument

This was developed as ‘Business Opportunity Plans’ based on the discovery that in each pilot country,

there is a strong willingness of rural SMEs situated in or near Natura 2000 sites to take loans, and to

provide services, commercial viable services, that fulfil part of the Natura 2000 management

requirements. Governments have shown both a clear understanding of the concept and a willingness

to test the approach. They appear to see this as an innovative rural development tool to stimulate

small businesses that will also enable them to reduce private sector concerns about the restrictions

brought by Natura 2000 designation, and to reduce their (the national governments’) Natura 2000


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management costs. The prerequisite development of Natura 2000 management prescriptions from

which the conditions and performance indicators for loans can be extracted is well advanced in two of

the three pilot countries.

5.2 Main conclusions by theme

From the start of the Project, the aim was to construct the means by which the BTAUs in the three pilot

countries would tackle each of the three sub-section activities outlined in section 5.1. Indeed, each of

the three pilot countries did work on each of the sub-section activities. However, as the project

developed, each pilot country specialised primarily on one of these themes, which will continue to be

developed after the project terminates.

This “three country/three instrument” approach is considered the best way forward given experiences

in each respective country at this stage. The lessons learnt as each country fully develops its chosen

instruments will be shared and made available, and there is the intention that a successful

development at the Member State level will then be offered to be extended to the European Union as

a whole.

5.2.1 The Financial instrument: Poland

The BTAU in Poland has had the greatest successes with work on the financial instrument approach

and thus this was the main focal area. As the Project itself is finishing, the BTAU in Poland, working

closely with the European Bank for Reconstruction and Development (EBRD) and the Cooperative Bank

and PostBank networks, with the support of the Ministry of Environmental Protection, has established

a General SME Facility capitalised with €20 million. Parallel to this, EBRD with the BTAU is just

launching a market feasibility study in two areas of Poland (the biodiversity financing facility will be

established in two pilot areas - Warta Mouth and Bialowieza Forest Natura 2000 sites to test all

procedures, methodologies and tools). The aim will be to then link a PBB Facility with the newly

established General SME Facility and thus creating a viable financial instrument for investing in Pro-

Biodiversity Businesses in Natura 2000 sites in Poland.

A great deal of detailed ground research and assessment has already been completed over a period of

time longer than the EC project and is describe in detail in section 2.4.10 above and will not be

repeated here.

5.2.2 The Business Advisory instrument: Bulgaria

Bulgaria focussed on the Business Advisory instrument approach and is pioneering the development of

a viable Business and Nature Advisory Service (BNAS) with, as its prime aim, the creation of a

certification process for PBBs.

• The BNAS is providing assistance to SMEs and farmers in Natura 2000 sites to enable them to

understand the implications of operating profitable businesses in these areas and on how to

benefit from the conservation status of their land, without harming it;


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• The BNAS is establishing mobile teams, which cover certain areas and establish direct contacts

with economic actors in that area. Their functions are not limited to advisory services, but they

also monitor biodiversity and the threats to it in their region;

• Presentation of the certification idea to stakeholders in four Natura 2000 sites, where the

Project has been active;

• Approached DBU (a major German foundation) for the possibility to fund a regional branding

and certification Project in Bulgaria. The project proposal is under preparation;

• Three regions have expressed interest to participate as pilot sites in the certification process.

Initial workshops were organized there, to select the name and logo of the brand.

Both the successes of the BNAS and the challenges for the further development of the BNAS are

detailed in section 2.2.16 above and will not be repeated here. The particular aspect of branded

certification for PBBs is elaborated further in section 5.5 of these Conclusions.

5.2.3 The rural SME engagement instrument: Hungary

The BTAU in Hungary focussed on the ways and means that can best engage with rural SMEs such that

PBBs can provide benefits to Natura 2000 sites at the same time and benefiting commercially

themselves. An innovative approach has been devised in the form of the elaboration of ‘Business

Opportunity Plans’ (BOP) for Natura 2000 sites with management prescriptions being implemented by

locally-based SMEs.

The level of detailed nation-wide work that has been completed in Hungary by bringing together

Natura 2000 management planning with SME/PBBs engagement is describe in detail in section 2.3.14

above and will not be repeated here. The particular aspect of BOP creation based on existing Natura

2000 management plans is elaborated further in section 5.4 of these Conclusions.

5.2.4 Development of Business Opportunity Plans from Natura 2000 management plans

It is often the case that the private sector has a negative attitude towards protected areas as they are

deemed to restrict or limit certain activities, reducing the options for economic development. This is

certainly the case for Natura 2000. Additionally, it is the perception of the Project Coordinators that

many of the existing financial instruments are geared to ‘compensate for the loss of’ business

opportunities, which in some senses reinforces this perception. In order to achieve long-term

sustainability, this perception in the private sector needs to change, otherwise rural depopulation and

economic declines will continue unchecked, which is bad for biodiversity and bad for business.

Therefore, the ‘Business Opportunity Plan’ concept was developed by this project as a positive tool

combining technical and financial assistance to inform, engage and empower SMEs working in or

around Natura 2000 sites . The intention is to remove unsubstantiated fear, provide options for change

and recognise that new opportunities can also exist for businesses to grow, as long as they work within

simple and understandable limitations. All these opportunities need to be provided in the context that


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Natura 2000 ‘Business Opportunity Plan’ are only available because of designation and can give

tangible benefits, to become good for biodiversity and good for business.

The ‘Business Opportunity Plan’ concept developed by this project requires thorough testing across a

range of different Natura 2000 sites in order to understand better its potential and limitation. A draft

Terms of Reference have been developed by the Project Team to fully explore the role of branded

certification as a market development tool linked to Natura 2000, and during the pilot phase to

separately test the ‘Natura 2000 Business Opportunity Plan’ concept across the nine EU biogeographic

regions (see 2.5.14). The concept of testing in all nine EU biogeographic regions is to ensure that robust

testing across the diverse habitat types, and to ensure that relevant examples will be available for the

majority of habitats across the EU Member States.

5.2.5 The value of branded certification for Pro-Biodiversity Businesses

Branded certification is growing rapidly across the world to meet the demands of consumers for

products and services that meet recognised social and environmental standards, that are credible and

reliable and independently audited to ensure compliance and consumer confidence 48. EU citizens are

amongst the best educated in relation to ethical and environmentally branded certified products, and

as a result, the EU represents one of the most lucrative and growing markets for businesses both

within and beyond the EU.

The range of different approaches to branded certification already operational within the EU provide a

series of significant parallel opportunities that can encourage and support the development of Pro-

Biodiversity SMEs within Natura 2000 sites and the wider rural landscape. They can do this by creating

a market for products made to verifiable standards that are sold a premium price to discerning

customers.

Firstly, internationally recognised thematic branded certification schemes including the Marine

Stewardship Council for coastal and deepwater fisheries, and the Forest Stewardship Council

certification for timber, wood and paper products both have an extensive series of environmental and

social criteria, and both operate within the EU as producers and wholesalers. Such schemes should be

encouraged as they have wide public support and robust certification criteria that protect biodiversity

as well as verifiable chain of custody for products. Such systems should be encouraged by the EC within

the EU. However, the compatibility of international branded certification schemes with Natura 2000

management prescriptions has not yet been reviewed, and this should be a future priority. Equally, the

overlap with and impact of the EU Protected Designation of Origin, Protected Geographic Indication

and Traditional Speciality Guaranteed for the production of food and drinks, in terms of Natura 2000

and biodiversity is unclear and requires further research as this is of growing economic importance.

48 www.isealalliance.org


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Secondly, Regional branding of traditional products from specific geographic areas is well developed

within the EU, and has many cultural, social, economic, environmental and political advantages that

recommend further investigation. Regional branding of certified products and services, from the wider

rural landscape that supports biodiversity, both for its intrinsic nature value, but also for its ‘green

infrastructure’ benefits from improving connectivity between Natura 2000 sites. However, the Project

research showed that the biodiversity indicators were weak amongst the regionally certified brands

that were investigated, and instead wider environmental indicators were applied. Therefore, regional

branded certification should only be encouraged if clear biodiversity indicators are developed and

applied to SMEs seeking certification. Ideally, these biodiversity indicators should be derived from the

combination of Natura 2000 management prescriptions from those sites within the region and

European Environment Agency biodiversity indicators. Although a lower priority in terms of

biodiversity conservation, regional branded certification with clear biodiversity performance criteria

would potentially apply to much a far larger rural area across the EU’s green infrastructure with

considerable benefits in the same way that rural development programme measures apply across the

wider rural landscape beyond Natura 2000.

There is considerable interest in combining the principles of international branded certification

schemes with geographically defined branded certification schemes and Natura 2000 management

prescriptions, to develop a new EU ‘Natura 2000’ branded certification scheme. Products and services

that are proven to be compatible with the site management prescriptions would be recognised with a

nature-friendly branded certification offers a very positive opportunity for all EU Member States on a

series of levels. If successfully developed, there are expected to be tangible economic benefits in terms

of rural livelihoods, SME development, and improved management of Natura 2000 sites, as well as a a

significant improvement of perceptions of Natura 2000 by both the public and the business

community.

SMEs operating within Natura 2000 sites that are compatible with the site management prescriptions

should certainly be well placed to capitalise upon the international trend towards various types of

branded certification, as this can offer direct market access and added value for direct B2C (Business-

to-Customer) transactions, especially when linked to domestic and international tourism. In fact, over

time significantly larger scale and volume opportunities may come from SMEs meeting the increasing

government and corporate commitments to ‘green procurement’ by providing commodities, products

and services in B2B (Business-to-Business) transactions.

The Project Team has developed a draft Terms of Reference to explore ‘best practice’ in terms of

branded certification to support Pro-Biodiversity Businesses within the EU.


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5.2.6 Communicating the Pro-Biodiversity Concept

Internet profile

• The access to the overall Project website was primarily linked to presentations at international

events that raised the profile of Project. This was valuable in sharing basic project information with

a highly disperse group of external stakeholders.

• National language website content proved useful for providing basic factual information on Project

objectives and activities to key national institutions, the media, the government and trade

associations, but were not sufficient to engage with rural SMEs themselves.

• Correctly, the Project Team did not expect that the BTAU Project would require or seek a major

Internet profile, as the primary beneficiaries of the Project are micro, small and medium sized

enterprises in rural areas of Bulgaria, Hungary and Poland, for whom face-to-face meetings,

workshops and printed materials are known to be most appropriate.

National / regional workshops

• A combination of informational, and technical training workshops at the national or regional level

for SMEs and other key stakeholders proved the single most valuable tool to engage large numbers

of stakeholders in all three focal countries. In spite of not being able to offer business development

funding, the level of participation reflected the level of interest amongst SMEs who are clearly

hungry for information and reliable independent professional advice.

• Independent, professional technical assistance and advice is an essential component of any

financial instrument due to relatively low level of engagement with SMEs, and the relatively small

number of opportunities for SME support.

International meetings

The BTAU Project received a high profile internationally, with presentations of the objectives,

operation and findings of the BTAU Project given at the IUCN World Congress (Barcelona), Conference

of Parties for the Convention on Biological Diversity (Bonn), and the international biodiversity financing

conference (Amsterdam). Additionally, the BTAU concept was presented at two EC high-level expert

meetings in Lisbon and Athens. All presentations and participation benefited the Project by promoting

the concept and learning from presenters and participants alike. The following conclusions emerged:

• Presentations and thinking at international events in relation to business are concentrated primarily

on large corporations requirements (and efforts) to monitor and reduce their biodiversity impacts.

In limited cases, consideration is beginning to be given to ‘greening’ the supply chains of large

companies, but this is usually the sole consideration of SMEs, and even then they are usually applies

to their environmental pollution, energy or water use, and carbon emissions.


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• Highest profile at international events is given to payments for ecosystem services, as a novel

financing mechanism, primarily in relation to carbon and water, with biodiversity ‘bundled’ either

with climate change mitigation or water resource management. Often the BTAU Project was the

unique example of both ‘traditional’ financing for enhancing the growth of SMEs and improvement

in their environmental performance.

• Much greater profile at the international events is given to tropical forest case studies from Africa,

Asia and Latin America than to temperate case studies, so in many cases the BTAU Project was the

unique temperate example from Europe. This situation was true for both Pro-Biodiversity

Businesses and branded certification with biodiversity criteria.

• The BTAU concept was recognised as providing multiple potential benefits in terms of improved

SME development, better biodiversity performance, greater private sector and community support

for Natura 2000 (or other protected areas), and greater sustainability. This conclusion is drawn

because when technical assistance, grants or loans were completed, the SMEs were believed to be

far more likely to maintain their operations than if receiving environmental subsidies or payments,

as their business development was linked to improved viability and access to markets, so

abandoning biodiversity performance gains would result in reduced viability and restriction from

markets.

• The BTAU concept combining technical advisory, grant and loan financing was recognised as an

appropriate, relevant and innovative approach that could be applied with great relevance across

the EU Natura 2000 network, and was equally transferable to any high nature value rural area with

significant SMEs, inside or outside the EU.

Project workshops

Internal meetings with specialist technical staff invited proved very useful in helping the Project Team

to develop ideas into concepts and challenges faced during implementation into solutions. Equally

valuable was providing the opportunity for the Bulgarian, Hungarian and Polish teams to share and

explain their activities, findings and challenges, as well as visiting pertinent Natura 2000 sites and

associated SMEs

Media articles, published and printed materials

• To national media, interestingly the Project represents a new work area beyond typical corporate

responsibility focussed on large companies. It is therefore relevant to a far wider range of

businesses in each of the focal countries

Television and print media were found to be the most effective channels to reach out to rural SMEs,

and their trade associations as these were most widely accessed. Print materials were also useful to

reinforce Project messages after workshops or face-to-face meetings.


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6. Recommendations

6.1 Financial instruments

1. If the European Commission intends to achieve the 2020 biodiversity target adopted by EU

Heads of States in March 2010, one of the critically important measures is to improve the

policy framework in relation to the potential negative and positive impacts of SMEs on

biodiversity conservation, in Natura 2000 sites and across the wider countryside.

2. The EC must recognise that a full spectrum of financial mechanisms, including grants,

environmental payments and conditional loans must be made available to rural SMEs at

different stages of development to all fundamentally improve their biodiversity performance

over the long-term to secure the future of the Natura 2000 network.

3. New financial instruments to support Pro-Biodiversity Businesses in the EU must be designed

with blended structure that combines a loan, incentives for both the national banks and

businesses, and technical assistance.

4. It is too early in the evolution of financing biodiversity to create a stand alone dedicated

financial instrument that invests in Pro-Biodiversity Businesses, therefore new financial

instruments must be designed and created as specialised components within the structure of

large existing or proposed national or international financial instruments.

5. The explicit function of the EIB to implement EC policy through strategic investments to

governments and the private sector must be utilised if a biodiversity financial instruments is to

be designed to operate across the EU27. Logically, EIB with national partner banks should be

perfectly placed to enable the true testing of this strategic financial instrument to encourage

pro-biodiversity SME operations through preferential loans with biodiversity conditions.

6. As all rural areas will have SMEs at differing stages of development, it is essential to offer a full

spectrum service of technical advice, grants, environmental payments and loans with

biodiversity conditions.

7. SMEs are open and ready to accept biodiversity conditions on business loans with preferential

terms, as long as those conditions are simple to understand.

8. National Banks are open and ready to market loans to improve biodiversity performance, as

long as they are provided with both the necessary incentives and the technical assistance to

develop and monitor biodiversity conditions.


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9. International Financial Institutions recognise the potential value and impact of SME business

development loans with biodiversity performance conditions, as a specialist instrument

derived from established financial instruments with condition that improve SMEs

environmental performance in relation to pollution reduction and resource efficiency.

6.2 Business advisory & rural engagement instruments

10. Any new financial instruments developed to create incentives that improve SME biodiversity

performance must incorporate a ‘Business & Nature Advisory Service’ component to provide

professional, independent advice, access to grants, environmental payments and conditional

loans for rural SMEs.

11. In terms of increasing understanding, changing perception of and building support for the

Natura 2000 network in the medium term professional, independent advisory services are an

invaluable resource to support businesses operating within Natura 2000 network and the

wider rural landscape.

6.3 Natura 2000 ‘Business Opportunity Plans’

12. The novel ‘Business Opportunity Plans’ instrument conceived by this Project should be fully

tested at a series of selected Natura 2000 sites that are representative of the nine European

biogeographic regions within the EU. The test should develop the process and provide clear

recommendations for the organisational structures, advisory and promotional activities,

financial mechanisms required to develop and deliver Business Opportunity Plans, and should

analyse the budgetary and socioeconomic implications for all major stakeholders.

13. Natura 2000 management plans are developed primarily to retain or achieve ‘Favourable

Conservation Status’ for the over 26,000 sites that cover more than 17% of the EU land area,

and as such are dedicated biodiversity management tools developed, implemented and

monitored by specialists

14. Natura 2000 management authorities that administer the implementation of site management

plans are typically poorly positioned to engage with the SMEs operating within any given site,

and to maximise the value and minimise any negative impact of those SMEs.

15. Evaluate the potential reduction of site management costs by the issuing of licences, franchises

and consultancy contracts, as well as compatible activities that businesses maintain without

cost


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16. The private sector economic benefits of the ‘Business Opportunity Plan’ approach must be

quantified in pilot projects in order to quantify the cumulative value of the advice, payments,

grants, credit loans & certification

17. The local community socioeconomic benefits of the ‘Business Opportunity Plan’ approach must

be quantified in pilot projects in order to quantify the cumulative value of the advice,

payments, grants, credit loans & certification

18. Any changes in attitude of the local communities, especially the private sector, towards Natura

2000 conservation must be determined through the application of opinion polls at the

beginning and end of pilot projects in order to quantify the impact of the ‘Business

Opportunity Plan’ approach.

19. Underpinning the ‘Business Opportunity Plan’ approach, management plans/prescriptions

should be developed for all Natura 2000 sites not only to assist the identification of potential

SME involvement but also to ensure that resources are used in the most cost-effective manner

to maintain or achieve Favourable Conservation Status of sites.

6.4 Branded certification for Pro-Biodiversity Business products & services

20. Branded certification of products and services using certification schemes that apply

biodiversity criteria that make them compatible with Natura 2000 management prescriptions

have great potential to encourage SMEs operating Natura 2000 sites to positively change their

behaviour, and to enable EC consumers to make ‘nature friendly’ choices.

21. The EC should seek to develop a full ‘Natura 2000’ brand for certified products and services for

application across the EU, with the specific conditions that Natura 2000 management

prescriptions, ‘Business Opportunity Plans’, Business & Nature Advisory Services and strong

communications campaigns are all prerequisites for launching this approach. Prerequisites are

needed due to clear evidence that there is often very poor recognition of and limited support

from EC citizens and the private sector for the Natura 2000 network. The Natura 2000 brand

could contribute significantly to improved perception of and greater support for Natura 2000

amongst EC citizens, as well as contributing to both Natura 2000 management and socio-

economic development objectives. A Natura 2000 branded certification scheme for products

and services could be applied in all Member States, but may not be applicable to all 26,000

Natura 2000 sites due to or management constraints or size.

22. Additionally, the EC should also seek ways to encourage Member States to develop regional

branding of certified products and services, from the wider rural landscape that supports

biodiversity, both for its intrinsic nature value, but also for its ‘green infrastructure’ benefits


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from improving connectivity between Natura 2000 sites. However, such regional branded

certification should only be encouraged if clear biodiversity indicators are developed and

applied to SMEs seeking certification. Ideally, these biodiversity indicators should be derived

from the combination of Natura 2000 management prescriptions from those sites within the

region and European Environment Agency biodiversity indicators.

23. Some internationally recognised branded certification systems for the sustainable production

of commodities and products that incorporate biodiversity criteria (e.g. the Marine

Stewardship Council, Forest Stewardship Council)) are applicable within the EU, and the EC

should encourage increased certification by supporting SMEs operating within Natura 2000

sites and the wider landscape and seascape to become certified. However, all certification

must be verified against Natura 2000 management prescriptions to ensure full compatibility.

24. Specific research should investigate the geographical relationship between EU Protected

Designation of Origin, Protected Geographic Indication and Traditional Speciality Guaranteed

for the production of food and drinks, and the Natura 2000 network. Once the overlap is

understood, the compatibility of production methods should be evaluated against Natura 2000

management prescriptions to ensure that EU certification for food and drink production is not

accidentally having a deleterious effect on the Natura 2000 network. If so, each of the three

mechanisms could then apply strengthened biodiversity criteria to ensure they become

compatible.

25. Research should be undertaken with DG Marine to map marine Natura 2000 sites against EU

fisheries across the EU, and then in relation to Marine Stewardship Council certified fisheries.

This should enable the identification of opportunities to support MSC fishery certification that

can encourage proactively fisheries that work in compatible accordance with marine Natura

2000 management prescriptions.

26. DG Environment should cooperate with DG Marine to implement recent European Parliament

recommendations49 to develop a single unified branded certification system for EU aquaculture

in order to enable freshwater fisheries to be certified with biodiversity indicators. This will

enable them many freshwater fishponds in Central and Eastern Europe are also designated as

Natura 2000 sites to remain or become compatible with site management prescriptions.

6.5 Communicating the Pro-Biodiversity Business concept

27. To successfully develop and deliver mechanisms for advising and financing SMEs to become

Pro-Biodiversity Businesses at the necessary scale, it will be essential for DG Environment to

49http://www.europarl.europa.eu/news/public/focus_page/008-75601-158-06-24-901-20100607FCS75591-07-06-2010-2010/default_p001c018_en.htm


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engage across the EC and mainstream the Pro-Biodiversity Businesses concept into other key

sectoral policy areas. In practical terms, if SME biodiversity performance is to improve

significantly, DG Environment must secure a commitment from all other relevant DGs to

develop an integrated series of initiatives to contribute to halting biodiversity loss during the

financial perspective 2014 - 2020.

28. Within DG Environment, opportunities should be found to communicate the findings of the

BTAU Project with key units, including the Natura 2000 Unit and Life Unit.

29. Within the EC, opportunities should be sought to communicate the findings of the BTAU

Project with other pertinent Directorates, including DG Agriculture, DG Marine, DG Enterprise

and DG Research.

30. Cross-sectoral communication using accessible language must be actively encouraged across

the public sector, private sector and NGOs, in order to build greater understanding, create

shared objectives and develop more common ground between these three major

stakeholders, specifically in the areas of Natura 2000 sites, as well as in the wider issue of

biodiversity conservation.

31. Presentation of the BTAU Project findings, especially in the national context, should form part

of the 2011 Hungarian and Polish EU Presidencies to encourage effective cross-sectoral

cooperation and raise awareness of the project findings amongst other Member States.

32. EU funding lines that support public private partnerships (e.g. Life+) should explicitly focus on

encouraging greater involvement of SMEs whenever possible.

6.6 Future development of the pilot national Biodiversity Technical Assistance Units

6.6.1 Main recommendations for Bulgaria

33. The BTAU (Business and Nature Advisory Service) in Bulgaria should continue to focus on providing

advisory services to SMEs and farmers inside and outside Natura 2000 sites to enable them to

understand the implications of operating profitable businesses in these areas and on how to

benefit from the conservation status of their land, without harming it;

34. The BTAU (Business and Nature Advisory Service) in Bulgaria continue to develop and

operationalise a regional branding and certification project in Bulgaria through funding obtained

from DBU (a major German foundation).


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6.6.2. Main recommendation for Hungary

35. The BTAU in Hungary should elaborate the ‘Business Opportunity Plan’ approach (BOP) for Natura

2000 sites by facilitating the production of management prescriptions to be implemented by

locally-based SMEs.

6.6.3. Main recommendations for Poland

36. The BTAU in Poland should launch the Biodiversity Financing Facility in two pilot areas to

demonstrate how SMEs can benefit from opportunities within Natura 2000 sites and can

contribute to delivery of management plan activities and thus conservation objectives through

their business operations.

37. The BTAU in Poland should seek to cooperate with the Ministry of Environment’s national project

to develop approximately 400 Natura 2000 management plans over the next 3 years, as this offers

an exceptional opportunity to develop ‘Natura 2000 Business 0pportunity Plans’ that are intended

to support establishment of the Polish Natura 2000 network and contribute to creating neutral or

positive perceptions of Natura 2000 sites in the private sector;


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7. Bibliography

The following section summarises key sources used in this Final Report and key documents in the field

of pro-biodiversity business.

Avalon, and Crem. (2009). Pro-biodiversity business: Let’s get it going. A preliminary survey into the

development of pro-biodiversity business in South East Europe and beyond.

Bishop, J., Kapila, S., Hicks, F., Mitchell, P. and Vorhies, F. (2008). Building Biodiversity Business. Shell

International Limited and the International Union for Conservation of Nature: London, UK, and Gland,

Switzerland.

Bovarnick, A., Gupta, A. (2003). Local Business for Global Biodiversity Conservation: Improving the

design of small business development strategies in biodiversity projects.United Nations Development

Programme, New York.

Dickson, B. Watkins, D. Foxall, J. (2007). The Working Partnership: SMEs and Biodiversity. Fauna & Flora

International, Cambridge, UK.

European Commission, (2006a), Halting the loss of biodiversity by 2010 – and beyond. Communication

from the Commission, Brussels.

European Commission (2006b) The EC Biodiversity Communication on EU 2010 Biodiversity target

(COM 216), Brussels.

European Commission (2007) High Level Conference on Business and Biodiversity, European Initiative

on Business and Biodiversity, Lisbon 12-13th November, 2007.

European Communities, (2008) The economics of ecosystems and biodiversity. Banson Production,

Cambridge.

Faccer, K. (2009). The time for biodiversity business: a guide to enterprise development for

conservation organisations. IUCN Business and Biodiversity Programme, Gland.

Frentz, J-M. (2006) Scoping study to assist in the structuring of a Biodiversity Financing Technical

Assistance Facility. European Bank for Reconstruction and Development, London

Frentz, J-M, Karpowicz, Z, Tederko, Z (2008), Small Business banking and biodiversity, in CBD Business-

2010 Newsletter, Volume 3. Issue 2. February 2008.


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Karpowicz, Z. and Tederko, Z (2007a) Supporting Business for biodiversity: an opportunity to grasp, in

Sustainable: The newsletter of the IUCN SSC Sustainable Use Specialist Group, December 2007

Mulder, I (2007) Biodiversity, the next challenge for financial institutions? A scoping study to assess

exposure of financial institutions to biodiversity business risks and identifying options for business

opportunities. IUCN, Gland.

Nyenrode Business Universiteit., IUCN., ECNC., (2009) Conference paper- “Boosting Investments in

Biodiversity and Ecosystem Services”, Amsterdam, 11-12 November, 2009.

United Nations Environment Programme (2009) TEEB – The Economics of Ecosystems and Biodiversity

for National and International Policy Makers – Summary: Responding to the Value of Nature 2009,

Welzel+Hardt, Wesseling

WRI, Meridian Institute, and WBCSD (2008) The Corporate Ecosystem Services Review. Washington DC:

World Resources Institute.


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Appendix 1: Project objectives and outputs for 2009-10

BTAU national unit objectives for 2009-10

The Table below outlines the generic objectives for each BTAU for 2009-10. However, these were

tailored at the national level, based on priorities for the year. A review of achievements against

national objectives can be seen in Appendix 2.

# Objective Outcome

Financial instrument

1 Financial instrument identified in

2008 in place

Agreement signed between BTAU and financial

institutions involved, establishing the rules of

the working partnership.

2 Credit disbursement launched At least 10 loan applications approved and

disbursed

SME Portfolio

3 Number of eligible SMEs who are

ready for investment expanded

Promotion of the loan opportunity and

mechanism to a wider range of SME businesses

across all Natura 2000 sites through partner

banks, government, business associations and

the media

4 Monitoring system for SME

activities devised

Monitoring system in place which links to

national management plans

Awareness raising: SMEs, FI’s and public officials

5 Awareness raised on new financial

instrument and BTAU services to

SMEs

Workshop held for SMEs to launch new financial

instrument. SME publication circulated.

6 Awareness raised to all

stakeholders to assist them in their

understanding and decision making

processes

Final project handbook circulated to key

audiences

Strengthen internal capacity

7 Update business plan Each BTAU has a realistic business plan,

considering multiple income streams

8 Staff, location, cash flow, image Each BTAU is strengthened to provide greater


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and reputation is satisfactory for

effective growth

capacity for increased delivery of professional

services. Logo and branding devised leading to

development of a clear business identity.

9 Additional sources of funding found

to enhance operational

management of the BTAU and

monitoring of biodiversity

investment impact

Each BTAU has clearly identified its financial

needs for 2009 and 2010 to enable prioritisation

of its income generation activities.


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Coordinator objectives for 2009-10

# Objective Outcome

Project oversight and management

1 Provide Project secretariat and

management support

Assist in development and initial delivery

of financial instruments in pilot countries

Liaise with steering committee on project

developments

Communicate the project to key internal

EC audiences, and internationally

Provide support from other RSPB

departments, such as Economics

Support implementation of the EC

Business & Biodiversity Initiative (BBI) by

cooperating fully with the implementing

contractor(s)

BTAU meets objectives in 2009. EC, EIB, EBRD

kept updated of key developments and any risks

are highlighted in advance

Financial instruments launched and operational

in three countries

EC/EBRD/EIB kept up to date with developments

Project communicated to priority audiences as

agreed with steering committee

RSPB additional expertise provided to project as

needs dictate

BTAU project fully integrated into the delivery of

the EC Business & Biodiversity Initiative

Project reporting and strategic direction

2

Organise and run two project steering

committee meetings

July (Bulgaria) and November (Brussels)

Final report for entire project delivered in

December 2009

Securing future funding

3 Additional sources of funding secured for

operational management of the BTAUs

Funding secured from multiple sources for

ongoing development


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Appendix 2: Overall Progress against outputs and deliverables for

2009-10

BTAU Bulgaria - specific objectives, 2009

Objectives Planned Outputs Achievements

1. Financial instrument

1.1 Work with project coordinators and steering committee members to ensure that the financial instrument identified in 2008 is in place

Dependent on the receptivity of financial partners, a signed agreement is made between BTAU and financial institutions/partners involved, establishing the rules of the working partnership.

The national political and financial circumstances in Bulgaria do not lend themselves to securing a financial instrument as at March 2010. EIB and EBRD were unable to facilitate the process under the current financial climate.

Quarterly progress reports on progress achieved with recommendations for next quarter

Quarterly updates were received outlining any new developments.

1.1.1 Update demand study Updated demand study The demand study remained the same as in 2008.

1.1.2 Maintain communication with UBB on the parameters of the FI

Good relationship with the bank

UBB were engaged to gain an update on potential. A letter was secured from UBB stating why it could not enter further discussions as at March 2010.

1.1.3 Continue to monitor the credit market and new developments relevant for the FI design

Collected information on the market conditions

An updated synopsis of the credit market was carried out in order to write the Bulgarian section of the Project Final Report.

1.1.4 Update IFIs on country specific demands and conditions; provide feedback on potential customers.

Feedback provided to SCM members (especially EBRD)

EIB were updated through the provision of a selection of investment plans in early 2009. Regular discussions were made with EBRD regarding the potential to partner with UBB, by offering a guarantee to the financial package.

1.1.5 Negotiate parameters of FI with donors and commercial bank, prepare contracts

FI details, procedures, etc. designed and agreed upon.

This was dependent on a financial instrument being in place so was not possible although the likely structure of a national fund was realised and documented.

1.2 Launch credit disbursement via partner banks

At least 10 loan applications approved and disbursed (dependent on partner banks completing their procedures)

N/A following 1.1

2. SME Portfolio

2.1 Ensure that the relevant number of SMEs are ready for investment, given the scale of funding

Investment plans completed by SMEs to apply for loans

A selection of SMEs have been engaged and information is available on the investment opportunities.


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that is available

2.1.1 Continue collaboration with WWF, Bioselena and other organizations working with SMEs in and around Natura 2000 sites to fill in the short (EIB) template

Gather information on a further 20 SMEs and gain potential customers

Information on a further 20 SMEs has been gathered and documented although with the absence of a financial instrument, investment plans cannot be taken that step further. More than 20 SMEs have been engaged as potential future customers.

2.1.2 Meet with suggested SMEs (under 2.1.1) to fill in long questionnaire and discuss investment needs / intentions

Developed investment ideas for new SMEs engaged under 2.1.1, ready to be developed into proposals

As above.

2.1.3 Participate in the process of developing national legislation allowing direct sales for farm products

Contribute to develop national legislation allowing direct sales for farm products

A great deal has been achieved in this area. The project supported a press-conference on the issue of direct sales in February 2009 and ongoing lobbying has taken place.

2.2 Analyse available management or maintenance plans

Available management or maintainence plans analysed to identify business opportunities

There are few maintenance plans in Bulgaria although lobbying was carried out to outline the role of businesses in Protected Areas / Natura 2000 sites.

2.3 Devise and undertake biodiversity monitoring of SME activities to ensure loan conditions are met, in the Bulgarian context

Biodiversity monitoring system devised and when loans provided, conditions are monitored

N/A following 1.1

2.3.1 Devise the biodiversity conditions associated with each loan

For 20 businesses (only if loans in place)

N/A following 1.1

2.3.2 Devise the biodiversity monitoring system associated with each loan


N/A following 1.1

2.3.3 Assuming that the loans are given with biodiversity conditions, devise the system to monitor the conditions

Conditions monitored to ensure biodiversity benefits

N/A following 1.1

3. Awareness raising to SMEs, financial institutions and public

officials

3.1 Raise awareness on new financial instrument and BTAU services to SMEs

Workshop held (or publication made) for SMEs to launch new financial instrument. SME publication circulated.

With the absence of a financial instrument SMEs were engaged with greater intensity to build capacity and provide knowledge and resources to become more sustainable enterprises.


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3.2 Raise awareness to all stakeholders to assist them in their understanding and decision making processes

Loan opportunity and mechanism promoted to a wider range of SME businesses within and around all Natura 2000 sites through partner banks, government, business associations and the media

As 3.1

Final project handbook circulated to key audiences

This will be achieved once the project has terminated. The Final Handbook will be disseminated to relevant audiences across Bulgaria.

3.2.1 Fill in project web site and produce information materials with up to date information on PBBs

Improved national website; updated hand out materials

The International project website was kept updated. Information materials were provided to PBBs at the national level

3.2.2 Deliver training to SMEs on Natura 2000 requirements, links to sustainable development, and their role in managing the sites

Increased interest and understanding among SMEs on their potential role in managing Natura 2000 sites.

Maintaining interest within SMEs operating in Natura 2000 sites has been achieved through various approaches, such as regional branding workshops and field visits, training in how to diversify business activities in a sustainable way, preparation of business plans for Rural Development Programme (RDP) axis 3 measures, training on agri-tourism and alternative forms of recreation and participation in several fairs and markets for traditional products.

3.3 In collaboration with RSPB, support the implementation of the EC Business and Biodiversity Initiative (BBI) by cooperating fully with the implementing contractor(s)

BTAU project fully integrated into the delivery of the EC BBI *(awaiting instruction from EC)

This has not been possible due to the late start of the BBI.

3.4 Assist RSPB to examine the outputs of LOT2 of the Technical Assistance tender (Natura 2000 Preparatory Actions) No. ENV.B.2/SER/2007/0076 to assess the relevance to the BTAU project

Information provided to RSPB, as requested

N/A following discussions with the EC and the absence of available information / overlaps

4. Strengthening internal capacity

4.1 Update business plan A realistic business plan is in place which considers multiple income streams

The business plan for Bulgaria was updated in early 2010.


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4.2 Ensure that staff, location, cash flow, image and reputation is satisfactory for effective growth

A strengthened BTAU with greater capacity for increased delivery of professional services. Logo and branding devised leading to development of a clear business identity.

The BTAU has grown into a successful unit in Bulgaria which will continue its functions beyond the end of the project. The BTAU team is the core part of BSPB’s Business and Nature Advisory Service. The main goal of the BTAU is to provide assistance to SMEs and farmers in Natura 2000 sites to enable them to understand the implications of operating profitable businesses in these areas and on how to benefit from the conservation status of their land, without harming it. The BTAU has established mobile teams, which cover certain areas and establish direct contacts with economic actors in that area. Their functions are not limited to advisory services, but they also monitor biodiversity and the threats to it in their region.

4.3 Source additional funding to enhance the operational management of the BTAU and the monitoring of biodiversity investment impact

Financial needs for 2010 clearly identified to enable prioritisation of income generation activities.

Funding sources have been identified and were outlined in the Final Project report.

5 PBB branding

5.1 Work with RSPB to set up a working group with interested NGOs (and other stakeholders) to establish the criteria and an award system for a PBB brand. Use the experience from the Czech republic to learn lessons for the potential construction of a Pro-biodiversity business brand

Criteria for branding system devised and examination of existing regional, national and international branding schemes made

The criteria for a branding system has been devised, following an in-depth analysis of regional, national and international branding schemes during 2009.

5.1.1 Field visit with RSPB in Czech Republic with representatives of selected SMEs

Lessons learnt from Czech Republic

This was achieved in October 2009.

5.2 Work with RSPB to develop a proposal for an EU Pro-biodiversity business branding scheme

Proposal developed and submitted

See 5.2.


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BTAU Hungary – specific objectives, 2009




A signed agreement between BTAU and financial institutions/partners involved, establishing the rules of the working partnership.

The recommended package for the Hungarian BTAU will be a loan guarantee fund to match with different grant or proposal components (agrienvironmental payments, EU funds, Natura 2000 payments, development proposals). Three organisations have expressed an interest to work with the BTAU to potentially form a financial instrument. The finalisation of this process is still underway.



1.1.1 Complete the draft demand study and amalgamate the financial options paper

Draft demand study completed

The demand study was updated in 2009.

1.1.2 Research into the priority funding areas for NDB

Document outlining priority areas

Research was completed and priority areas were chosen.

1.1.3 Draw up a list of activities for help Eszter Kovács (MoEW) in her discussions with NDB

List of activities for Eszter Kovács (MoEW)

Eszter Kovács was briefed and helped to broker the growing relationship with the National Development Bank. Eszter Kovács left her position at the Ministry of Environment and Water at the end of 2009 but she remains engaged with the BTAU and discussions develop.

1.1.4 Approach commercial banks and EBRD Hungary and follow-up from FI research

Outcomes learnt and options developed for working with commercial banks and EBRD in Hungary

The Savings Cooperative was approached with the help of National Development Bank of Hungary (NDB), via the Hungarian Economy Development Centre and ITD Hungary. Once a PBB market can be secured, this office will approach the central body of the Savings Cooperative (Savings Bank). This office understands the BTAU concept and is interested in financing enterprises connected to Natura 2000 areas. A formal cooperation agreement was signed with this Savings Cooperative Office and it is estimated that investments for PBB SMEs of BTAU project could be made to 2-3 businesses by the end of 2010. EIB and EBRD were unable to assist the BTAU in Hungary for the period of this project.


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N/A following 1.1 although it is hoped that credit disbursement will be made at the end of 2010, early 2011.

2. SME Portfolio

2.1 Ensure that the relevant number of SMEs are ready for investment, given the scale of funding that is available


A selection of SMEs have been engaged and information is available on the investment opportunities.

2.1.1 Work through short-list to identify 8-10 SMEs, also using SME lists from previous project

SMEs identified As 2.1.

2.1.2 Approach SMEs to prepare a profile for investment

Profiles ready on expanded list of SMEs

As 2.1.



The Hungarian BTAU made significant progress in assessing Protected Area Management plans to identify business opportunities.

2.2.1 Identify the overlap between priority sites and those which have draft management plans in place. Produce a map outlining those areas that have management plans in place

Map produced and identification of priority sites

Work began to complete the first pilot Natura 2000 plans for 20 sites. The planning process included three main working areas: (1) preparation/revision of baseline studies, (2) management planning, and (3) communication - continuous negotiations with stakeholders. A map was produced.

2.2.2 Support project coordinators and work with BTAU Poland to explore a draft methodology to extract business opportunities from such plans

Draft methodology produced

A draft methodology has been devised and added to the Final Report.

2.2.3 Test the methodology on the management plans of the sites identified in 2.2.1

Methodology tested The methodology was tested and the results added to the Final Report.

2.3 Devise and undertake biodiversity monitoring of SME activities to ensure loan conditions are met, in the Hungarian context


N/A following 1.1, although much of the criteria is now in place

2.3.1 Devise the biodiversity conditions associated with each loan



2.3.2 Devise the biodiversity monitoring system associated with each loan



2.3.3 Assuming that the loans are given with biodiversity conditions, devise the system to




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monitor the conditions


officials


Workshop held for SMEs to launch new financial instrument. SME publication circulated.

With the absence of a financial instrument SMEs were engaged with greater intensity to build capacity and provide knowledge and resources to become more sustainable enterprises.



As 3.1.


This will be achieved once the project has terminated. The Final Handbook will be disseminated to relevant audiences across Hungary.









The business plan for Hungary was updated in early 2010.



The BTAU has grown into a successful unit in Hungary which will continue its functions beyond the end of the project. The project extension into 2010 helped the BTAU to secure additional financial resources for the project and the Unit, as well as a larger set of services that the Unit could offer for stakeholders such as Natura 2000 business planning, other elements within the financial package, and knowledge about new sectors.


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A proposal was written and won for the EEA Financial Contribution NGO Fund. The planned work will focus on “Conflict mapping and information management in high-nature-value areas”. The objectives of the project will be to increase visibility and transparency in conservation and to encourage stakeholders of conservation to participate in processes. The work will form part of the future activities of the BTAU.


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BTAU Poland objectives, 2009-10




Dependent on the receptivity of financial partners, a signed agreement is made between BTAU and financial institutions/partners involved, establishing the rules of the working partnership.

Many discussions took place during 2009 and during the first quarter of 2010 to finalise an agreement between proposed partners involved in the identified instrument. The good news is that the intention is there and a financial instrument will be formed through the project. However, disbursement to SMEs is not likely until the end of 2010, early part of 2011.



1.1.1 Expand the level of detail on national financial climate in Poland, financial partners (National Environment Fund and the cooperative bank) and produce an updated financial options paper

Updated financial options paper

A detailed updated financial options paper has been produced and a summary of options presented in the Final Report.

1.1.2 Meet with EBRD and visit Ministry, BOS, NEF between 25th and 27th February

Understanding of the potential role of each financial partner and action plan for development

The meeting was held in order to further the role of each financial partner. Subsequent meetings were also held during the year.

1.1.3 In addition to rolling out a full programme of investment, explore the potential for a set of pilot investments in an initial small number of SMEs (20)

Pilot roll-out options The pilot fund, once operational, will be piloted in the Warta Mouth and Bialowieza Forest Natura 2000 sites to test all procedures, methodologies and tools

1.1.4 Continue to work with key financial partners and EBRD

Extension dependent on outcomes of initial EBRD visit

As in 1.1. Engagement with EBRD and other financial partners has been regular and consistent through 2009-10.

1.1.5 Provide additional information to EIB, when required

Extension dependent on outcomes of initial meeting between RSPB and EIB

EIB were updated through the provision of a selection of investment plans in early 2009.



N/A following 1.1 although it is hoped that credit disbursement will be made at the end of 2010, early 2011.

2. SME Portfolio

2.1 Ensure that the relevant number of SMEs are ready for investment, given the scale of funding that is available


A selection of SMEs have been engaged and information is available on the investment opportunities, although a new set will be collected through a contract currently being negotiated with EBRD and private companies to perform a new demand study in Warta Mouth


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and Bialowieza Forest Natura 2000 sites.

2.1.1 Assuming that a national full fund or national pilot fund are under development, review the top fifty businesses in the pipeline to assess their readiness for and interest in investment. Prepare at least 20 SMEs for investment

Reviewed database of top 50 SMEs. Top 20 prepared for investment

As 2.1.

2.1.2 Expand the number of eligible SMEs who are ready for investment within and around the entire Polish Natura 2000 network

A two-phase approach to identifying potential relevant SMEs from existing data sources, followed by an intensive phase of direct development with SMEs to prepare investment plans

Due to the focus of the new demand study being prepared by EBRD, efforts have been directly towards assisting in identifying SMEs in the Warta Mouth and Bialowieza Forest Natura 2000 sites



Some maintenance plans have been analysed to identify business opportunities, particularly in the Warta Mouth and Bialowieza Forest Natura 2000 sites. The Ministry of Environment confirmed in late 2009 that between 400 – 500 Natura 2000 site management plans would be developed over the next 3 – 4 years, and have expressed initial interest in cooperating with the RSPB and OTOP to develop ‘Business Opportunity Plans’ from these that would identify business activities that are already, and could become compatible with Natura 2000 site management prescriptions. Very significantly, the Ministry of Environment specifically stated that they want to link the pilot SME loan facility in Bialowieża and Warta Mouth Natura 2000 to their programme of work under their EU Presidency in 2011.

2.2.1 Identify the overlap between priority sites and those which have draft management plans in place. Produce a map outlining those areas that have management plans in place

Map produced and identification of priority sites

See 2.1

2.2.2 Support project coordinators and BTAU Hungary in exploring a draft methodology to extract business opportunities from such plans

Draft methodology produced

This was completed during the Project Workshop in Budapest in February 2010.


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2.2.3 Test the methodology on the management plans of the sites identified in 2.2.1

Methodology tested See 2.1

2.2.4 Explore with the ministry the potential for incorporating a tool to identify business opportunities into the format to be used for the planned 300 management plans

Potential explored and recommendations made

See 2.1

2.3 Devise and undertake biodiversity monitoring of SME activities to ensure loan conditions are met, in the Polish context



2.3.1 OTOP to identify and lead the team to devise the biodiversity conditions associated with each loan



2.3.2 OTOP to identify and lead the team to devise the biodiversity monitoring system associated with each loan



2.3.3 Assuming that the loans are given with biodiversity conditions, OTOP conservation team to independently monitor the conditions




officials


Workshop held (or publication made) for SMEs to launch new financial instrument. SME publication circulated.

See 2.1



Much of the awareness raising has been focussed on building the capacity of the identified financial partners by providing regular updates and information. SMEs have been engaged within the Warta Mouth and Bialowieza Forest Natura 2000 sites to raise awareness and collect case studies.


This will be achieved once the project has terminated. The Final Handbook will be disseminated to relevant audiences across Poland.


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3.2.1 Support Polish Government to prepare the Athens biodiversity conference presentation and provide briefing at the event

Government briefed sufficiently to enable presentation in Athens. RSPB to provide support

Both RSPB and the BTAU in Poland provided extensive assistance to the Head of Political Cabinet of MoE – Joanna Maćkowiak-Pandera in preparing a presentation on the BTAU project in Athens. A strong, politically acute message was delivered on the role of small businesses in nature conservation in Poland, highlighting the potential BFF. Working together, the RSPB Project Coordinator and BTAU Poland Coordinator arranged number of meetings involving the State Undersecretary of Polish MoE, Head of Political Cabinet and representatives of EBRD – The Vice President – Brigita Shmognerowa, EIB, and several other institutions. The meetings resulted in a pre-agreement for the implementation of the BFF in two pilot areas, the Bialowieza Forest and Warta Mouth Natura 2000 sites









The business plan for Poland was updated in early 2010.



The BTAU was further strengthened in 2009-10 with new communications material produced.



The BTAU will continue to broker the financial instrument in Poland and will have a role in providing technical assistance and monitoring of those SMEs which receive funding. In addition, a new opportunity arose from a new Natura 2000 planning project managed by the General Directorate for Environmental Protection. The first phase of the project will result in


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developing management plans to which the BTAU will input into.


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BTAU Coordinator objectives

2009-10


1. Provide oversight and management

1.1 Provide project secretariat and management support

BTAU meets objectives in 2009. EC, EIB, EBRD kept updated of key developments and any risks are highlighted in advance

Regular ongoing support was provided to BTAUs in order ensure that each national unit were able to achieve their objectives. Email updates were provided to EBRD and EIB and interim updates were provided by email and face-to-face with the EC to highlight progress.

1.2 Assist in the development and initial delivery of financial instruments in pilot countries

Financial instruments launched and operational in three countries (depending on the receptivity of partner banks and other financial institutions)

Support was provided to each BTAU to maximise the possibilities of getting a financial instrument in place. Where the national circumstances prevented this from happening, guidance was given on how each BTAU should maximise its effectiveness by concentrating on other mechanisms which would enable the market to be developed.

1.3 Liaise with steering committee on project developments

EC/EBRD/EIB kept up to date with developments

The EC, EBRD and EIB were kept up to date throughout the year and in particular through steering committee meetings.

1.4 Communicate the project to key internal EC audiences, and internally

Project communicated to priority audiences as agreed with the steering committee

It was decided too early to communicate (Final Report and Project Handbook) to key EC audiences during 2009 and instead that information could be disseminated to key audiences at the end of the project.

1.5 Provide support from other RSPB departments, such as Economics

RSPB additional expertise provided to project as needs dictate

Both Economics and policy departments have provided support to the project by providing guidance, information and advice.

1.6 Work with OTOP to support the Polish Government to prepare the Athens biodiversity conference presentation and provide briefing at the event

Support provided to OTOP. Government briefed sufficiently to enable presentation in Athens.

A great deal of support was provided to OTOP through the course of the year in terms of drafting key documents, assisting in writing presentations, attending meetings in Poland, and liaising with EBRD.

1.7 Support the implementation of the EC Business and Biodiversity Initiative (BBI) by cooperating fully with the implementing contractor (s)



1.8 Examination of the outputs of LOT2 of the Technical Assistance tender (Natura 2000 Preparatory Actions) No. ENV.B.2/SER/2007/0076 to assess the relevance to the BTAU project

RSPB examines the relevant outcomes of the Natura 2000 LOT2 project and builds on them if applicable. Depending on the nature of outcomes, the Final Report either contains a separate Chapter or an Annex dedicated to the issue.



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2. Project reporting and strategic direction

2.1 Organise and run two project steering committee meetings

Steering committee meetings held in July (in Bulgaria) and November (in Brussels).

A project steering committee was organised in Dospat, Bessaparski Hills, Bulgaria, 9th July and Brussels, Belgium, 20th April 2010 (the later date of the final steering committee meeting was due to the project being extended until 23rd April, 2010).

2.2 Produce a final report for the entire project which summarises the achievements of the project

Final report for the entire project delivered in December 2009 (Draft Final Report submitted to the EC minimum 2 weeks prior to the last SC meeting; Final Report submitted and adopted by 21 December, 2009)

A Final Report in draft form was produced for the project on April 6th 2010 and submitted in its final form at the end of April 2010 (the later date of the final steering committee meeting was due to the project being extended until 23rd April, 2010).

3. Project development

3.1 Research into a branded certification scheme for pro-biodiversity businesses

Presentation on the proceedings of the branding scheme at the July SC meeting; Chapter on the findings of the research into a branded certification scheme for pro-biodiversity businesses in the Final report

Information on branded certification was presented in the Project Handbook and the Final Report

A draft terms of reference devised for the further work required to establish a branded certification system that will apply to pro-biodiversity SMEs within the EU. Particular emphasis on this aspect of the project will be in Bulgaria, linked to the Czech Republic regional branding project.

A draft terms of reference was presented in the Final Report.

3.2 Research into the identification of SME business opportunities within Natura 2000 management prescriptions

Chapter on the findings of research into the identification of SME business opportunities within Natura 2000 management prescriptions

Information on the identification of SME business opportunities within Natura 2000 management prescriptions was presented in the Project Handbook and the Final Report

A draft terms of reference devised for the further work required to develop a methodology for engaging the SME sector to create pro-biodiversity benefits that are economically viable in a rural development context. Particular emphasis on this aspect of the project will be in Hungary, with links to the ‘Natura 2000 Maintenance Plans’ project

A draft terms of reference was presented in the Final Report.


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4. Secure additional sources of funding

4.1 Source additional funding for the operational management of the BTAUs

Funding secured from multiple sources for ongoing development

It has not been possible to source additional funding for the operational management of the BTAUs at the time of writing.

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Appendix 3: BTAU project team and contact information

BTAU Project Coordinator

Royal Society for the Protection of Birds

The Lodge, Potton Road, Sandy, Bedfordshire. SG19 2DL

United Kingdom

Tel: +44 (0) 1767 680551

Primary contact: Jack Foxall

Email: [email protected]

Website: www.rspb.org.uk

Business & Nature Advisory Service - Coordinator in Bulgaria

Българско дружество за защита на птиците

(Bulgarian Society for the Protection of Birds- Birdlife Bulgaria)

P.O.Box 50, Yavorov complex, Block 71 entrance 4 floor 1. BG-1111, Sofia,

Bulgaria

Tel: + 35 92 979 95 00

Primary contact: Miroslava Dikova


Website: www.bspb.org

Georgicon – Coordinator in Hungary

Magyar Madártani és Természetvédelmi Egyesület

(Hungarian Ornithological and Nature Conservation Society- Birdlife Hungary)

21. Költő utca (street), Budapest 1121, Hungary.

Tel: +36 (1) 275 6247

Primary contact: Attila Králl

E-mail: [email protected]

Website: www.mme.hu

BTAU - Coordinator in Poland

Ogólnopolskie Towarzystwo Ochrony Ptaków

(Polish Society for the Protection of Birds- Birdlife Poland)

Ul. Odrowąża 24, 05-270 Marki, n/b Warszawa. Poland

Tel: +48 (0) 22 761 82 05

Primary contact: Zenon Tederko


Website: www.otop.org.pl

BTAU project partner:

European Centre for Nature Conservation

Reitseplein 3, 5037 AA Tilburg, The Netherlands

Tel: +31 (0)13 5944 944

Primary contact: Lawrence Jones-Walters


Website: www.ecnc.org

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Appendix 4: Bulgaria: letter from United Bank of Bulgaria confirming their

position in relation to the project and current or future potential for

a financial instrument (in Bulgarian)

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Appendix 5: Bulgaria: letter from United Bank of Bulgaria confirming their

position in relation to the project and current or future potential for

a financial instrument (English translation)

United Bulgarian Bank

A member of NBG Group

To Mrs Miroslava Dikova

Bulgarian Society for the Protection of

Birds

Dear Mrs Dikova,

We have followed with interest the development of the BTAU project implemented by the

Bulgarian Society for the Protection of Birds (BSPB), thus discussing with your team ideas

for applying suitable financial instrument for the SMEs as potential beneficiaries.

Regrettably, the economic situation in Bulgaria has challenged the Bulgarian business and

has significantly limited the possibilities for successful realisation of similar innovative

business projects.

Nevertheless, I would like to assure you that the United Bulgarian Bank is interested in

business projects in the filed of biodiversity conservation in Bulgaria. In any event, we

would be interested to be informed about any future developments in this direction.

Sincerely yours,

Stilian Vatev

Chief Executive Officer of the UBB

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Appendix 6: Hungary: letter from Savings Cooperative confirming interest in

project and future potential for a financial instrument (in

Hungarian)

157

158

Appendix 7: Hungary: letter from Savings Cooperative confirming interest

in project and future potential for a financial instrument

(English translation)

159

160

Appendix 8: Hungary: letter from Hungarian Enterprise development

network confirming interest in project and in future

cooperation (in Hungarian).

161

162

Appendix 9: Hungary: letter from Hungarian Enterprise development

network confirming interest in project and in future

cooperation (in English).

163

164

Appendix 10: Poland: letter from Ministry of Environment confirming

interest in project concept, the future potential for a financial

instrument (in Polish)

165

166

Appendix 11: Poland: letter from Ministry of Environment confirming

interest in project concept, the future potential for a financial

instrument (English translation)

Unauthorised translation

Warsaw. Date … Under Secretary of State in the Ministry of Environment General Conservator of Nature Janusz Zalski To:

Nature and Biodiversity Unit DG Environment EC With pleasure we inform that in 2009 representatives of the Ministry of Environment, representatives of the organisations implementing the EC Project BTAU (namely OTOP and RSPB) as well as the EBRD in London, organised a series of meetings, resulting in the acceptance by Poland of the aims of the Project. The representatives of EBRD and the Ministry of Environment also met in the course of the European Conferences to discuss the issues of the functioning of SMEs in valuable nature areas and the influence of the Natura 2000 network on their activities. Having in mind the number of Natura 2000 sites in Poland, it was agreed that research on the take-up by SMEs of dedicated credit lines would be carried out in two pilot areas – Bialowieza Forest and Warta Mouth. Despite the fact that, in accordance with regulations, the Ministry cannot guarantee co-financing this research, it remains interested in receiving the results of the studies and input on the ways that the financial mechanisms supporting PBBs can be integrated into spatial planning so as to support environmental-economic development in the two selected pilot areas. The aims of the market research ought to be:

• to assess if this type of financial mechanism is needed and realistic;

• to confirm what information is required by the EBRD in its design of the specific financial instrument;

• to confirm what information is required by the Ministry of Environment in order to take the decision on the funding requirement for the technical help to assist in the implementation of the financial mechanism or/and the financing requirement for encouraging uptake of the financial mechanism;

• to define the scale of the financial mechanism and the scale of the co-financing in the form of a grant.

The Ministry of Environment underlines the need for the implementation of follow-up activities in this sphere, the aims of which ought to be:

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• describing and analysing the problems of micro, small and medium enterprises working in the Natura 2000 areas;

• creating a mechanism for SME that will support projects that have a positive impact on realising that aims of the Natura 2000 network;

• defining the impact of de-population processes and the disappearance of viable economic activities from rural natural valued areas;

• providing help to SMEs through the implementation of the obligations arising from the EU Strategy for Sustainable Development;

• Ensuring input to the implementation of EU aim for biodiversity after 2010 Signed Copy to OTOP

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Appendix 12: European Bank for Reconstruction & Development: draft

terms of reference for market demand study for a pilot

financing facility in support of companies operating in Natura

2000 sites.

1. Background

In many regions of Europe the depletion of biodiversity and natural resources poses a major threat to the state of nature and the environment. While economic activity is one of the major drivers of biodiversity loss, at the same time many business activities depend on biodiversity. Business relies on the services that biodiversity provides, including healthy functioning soils, clean fresh water, and availability of pollinators for agricultural crops. In principle, all business has a direct or indirect impact on biodiversity, either through the raw materials they use through their supply chain, processing, packaging and delivery methods, or through the investments they make. In all EU member states, the major public policy tools for the protection of biodiversity are largely in place (particularly the Habitats Directive and Birds Directives and the Natura 2000 (N2000) network). N2000 is the EU system for the designation of protected areas throughout the EU. This network of nature protection areas was established under the Habitats Directive and Birds Directive with the aim of assuring the long-term survival of Europe's most valuable and threatened species and habitats. N2000 is not a system of strict nature reserves where all human activities are excluded. Whereas the network certainly includes nature reserves, most of the land is likely to continue to be privately owned and appropriate economic activities, typically undertaken by micro, small and medium sized enterprises (SMEs) will be permitted to continue. Promoting jobs and growth through SMEs is central to EU policy and there is an emphasis on a more pragmatic, comprehensive and inclusive EU policy in favour of SMEs. The European Commission (EC) is working to make SMEs more competitive, by streamlining community policy instruments, by improving synergies between policy areas and on forging a genuine partnership between the EU and Member States’ actions. Rural development is also of key importance to the EU, based on the recognition that rural areas face significant challenges. Average income per head is typically significantly lower in rural regions than in towns and cities, the skills base is narrower and the service sector is less developed. As over half of the population in the 27 Member States of the European Union live in rural areas, which cover 90% of the territory, rural development is a vitally important policy area. Farming and forestry remain crucial components of land use and the management of natural resources in the EU’s rural areas, and as a platform for economic diversification in rural communities. Not surprisingly, most Natura 2000 sites are in rural areas, and the majority of SMEs operating within N2000 are often dominated by those in primary production and natural resource utilisation sectors. The key concern for those SMEs is that after the designation of N2000 sites, the associated management plans and prescriptions that are obligatory requirements for the Member States to maintain the biodiversity value of the site will place significant limitations on their activities. Many SMEs feel that they are not being provided with adequate information or support to adjust to the implications of these changes, and therefore that the N2000 designation will inevitably have a negative impact on their ability to operate.

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Those SMEs potentially have three roles to play – extending existing positive impacts, modifying behaviour to prevent the continuation of existing negative impacts, and avoiding potential future negative impacts or damage being done to N2000 sites. Government funds to support such SMEs are not unlimited, but there may be opportunities to engage these SMEs in activities that are compatible with the protection of N2000 sites through some targeted private sector financing instrument supported by government funding. Through the provision of this funding a Member State’s government would be: - Addressing the concerns and meeting the needs of SMEs operating in N2000 sites; - Leveraging private sector support that will the positively benefit the management of N2000 sites; - Helping to retain people and job opportunities in rural areas; - Fulfilling their national policy commitments to the EU; - Assisting the EU in achieving its commitment to halt biodiversity loss. The European Bank for Reconstruction & Development (EBRD or "the Bank") has been involved for a number of years in discussions as to how it might provide funding in support of biodiversity protection. Key questions that have arisen during these discussions include:

• How does the private sector benefit from biodiversity?

• How does the private sector impact upon biodiversity?

• How can lending or investment instruments be used to assist the private sector in reducing its impact upon biodiversity?

• Could public (grant) funds be utilised to assist, or compensate, the private sector for doing so?

• Can such compensation be varied depending upon the "value" of the biodiversity being protected? Many of these discussions have been held in the context of various initiatives in which the Bank is involved, including the EC-DG ENV funded Biodiversity Technical Assistance Units ("BTAU") project operating in Poland, Hungary and Bulgaria, and the EC-TACIS funded steppe restoration project covering Moldova, Ukraine, southern Russia and Kazakhstan. Under the auspices of the BTAU project the Bank and the Government of Poland (GoP), have met on a number of occasions to discuss the issues of SMEs operating in areas of high biodiversity value (i.e. N2000 sites), and how the imposition of the N2000 system may impact positively or negatively on their operations. The Bank, in partnership with the GoP, would now like to investigate further the need and demand for such a financing facility through the undertaking of a market demand study. Given the size of the Polish N2000 system it has been agreed that this study will focus on two N2000 pilot areas - the Białowieża Primaeval Forest and the Warta River Mouth (together referred to as "the pilot sites"). The Białowieża Primaeval Forest N2000 site

The Białowieża Primaeval Forest Natura 2000 site comprises a total 62,942 hectares, dominated by ancient forest. The overall ancient forest straddles the border between Belarus and Poland, located 70 km north of Brest. It is one of the last and largest remaining parts of the immense primeval forest which once spread across the European Plain. This UNESCO World Heritage Site and Biosphere Reserve lies in parts of the Brest Voblast (Kamianiec and Pruzhany districts) and Hrodna Voblast (Svislach district) in Belarus, and in Poland near the town of Białowieża in the Podlaskie Voivodeship 62 km south-east of Białystok and 190 km north-east of Warsaw. The Białowieża Primaeval Forest Natura 2000 site lies only on the Polish side, and part of the Białowieża Forest is protected as the Białowieski Park Narodowy (Białowieża National Park - BNP) that occupies over 100 km2. The border between the two countries runs through the forest but is closed for large animals and tourists at present. The forest is home to 800 European Bison, one of Europe’s most endangered native mammals.

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It should be noted that on 19 June 2009, the Minister of Environment - Maciej Nowicki - announced the beginning of consultations on the Białowieża Development Programme (BDP). The intention of the Ministry is the implementation of a pilot programme linking the protection of the Białowieża a Forest with the economic and social development of the region. This programme will include a number of projects, which will improve the competitiveness of the region inside and around the Białowieża Forest and enhance the quality of life of the inhabitants of the Podlaskie region. The programme is accompanied by a proposal to significantly increase the size of the Białowieża National Park. Currently the BNP area is 10,501 ha (approximately 16.5% of the N2000 site) and the proposal aims at increasing the area of the National Park threefold by up to 33,031 hectares, which would embrace some 40% of the entire Białowieża Forest.

The Warta Mouth N2000 site

The Warta Mouth N2000 site covers 33,297 hectares, and is located where the Warta River meets the Odra River, near the north-west border of the Lubuskie Region of Poland. The core nature area has been under protection since 1977 as the Słońsk Nature Reserve (also in accordance with The Ramsar Convention as an internationally important wetland). After 1977, the protected area was enlarged and established as the Warta Mouth Landscape Park. As of 1 July 2001, the region was designated as Warta Mouth National Park and now covers approximately 8,000 hectares, approximately 24% of N2000 site area. The Park, situated in the Warta’s marginal stream valley, is dominated by open wet grasslands, pasture lands cut across by many channels and an old river bed. The Warta River flows through the middle of the Park and the N2000 site, separating it into the northern polder and the southern Słońsk protected area. 2. Objectives

The key aim of this study is to investigate the need and demand for a new financing facility ("the facility") aimed specifically at SMEs operating within the two Pilot N2000 Sites of the Białowieża Primaeval Forest and Warta Mouth. The facility envisaged may comprise a number of elements potentially including EBRD loan financing provided through local financial intermediaries (FIs), and grant funding from the GoP to provide technical assistance and support to SMEs, and/or financial incentives for FIs and SMEs. To that end, the Bank would like to retain consultants to prepare a focused market demand study (MDS) for these two regions. The objective of this assignment is to: a) Help the EBRD and GoP decide whether such a facility is required and feasible; b) Assist the EBRD in formulating an appropriate facility structure to support SMEs in the two

regions; c) Enable the EBRD and the GoP to decide how much loan financing may be required; d) Help the EBRD and the GoP to decide whether grant funding from the GoP is required either for

supporting technical assistance and/or to add any incentive elements into the facility itself (for both participating FIs and potential sub-borrowers).

3. Scope of work

For each Pilot Site the Consultant will perform a dedicated analysis. Wherever possible the Consultant should favour the presentation of findings and results of the analysis through tables and graphs over text format, clearly indicating assumptions made and mentioning the sources of information. The report should provide information and support conclusions on the following: (i) The Białowieża and Warta Mouth Natura 2000 sites, in terms of size, key habitats, key flora and

fauna and the main issues affecting biodiversity in those sites.

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(ii) The Polish regulatory framework applied to the creation and management of N2000 sites. (iii) The composition of SMEs within the two pilot sites in terms of number, sector and size. Utilising

information held by, for example, Chambers of Commerce or other such bodies, or any other personal contacts, the Consultant should present a picture of the companies operating both within the pilot sites, including within the area to be covered by the proposed expansion of the Białowieża National Park.

(iv) The key issues affecting SMEs within the pilot sites and within the area earmarked for expansion

of the Białowieża National Park. In particular, theConsultant will investigate the potential impact of N2000 management plans, or any other instruments, which may limit or change the nature of the SMEs' operations.

The Consultant should take into account the work already performed on the above 4 bullet points

within the framework of the BTAU project. The Consultant should contact and consult with the Royal

Society for the Protection of Birds (RSPB) and the Polish Birdlife partner OTOP to obtain this

information.

(v) The number and nature of FIs in the local area and the types of products that are being offered

to SMEs. (vi) The financing needs that may arise as SMEs adjust to any such management plans or

prescriptions and other instruments governing the management of the pilot sites. The Consultant should gain an understanding of whether or not SMEs would want to borrow funds to undertake any such projects or whether they would envisage obtaining funding through other means. The Consultant should attempt to provide an overall figure for financing demand within the two pilot sites.

(vii) Suggestions for an appropriate structure for a proposed financing facility, including grant

components if needed, how and at what level such grant components might be provided to the financial institutions and sub-borrowers, and the types of technical assistance needed to support the facility, including estimated costs. As the scale of the facility is yet to be determined, estimates on grant costs can be presented per EUR 5 million of investments. In a similar manner, the Bank has undertaken a number of projects providing commercial funding through local financial intermediaries and supported by grant funds in the areas of energy efficiency and water pollution reduction. Grant funds to SMEs have typically been provided as project completion fees to SMEs and to cover the additional administrative costs of the FIs. However, the Bank might also consider other ways of using grant funds, such as providing a first loss guarantee to partner financial institutions with SMEs benefiting only from the consequent reduced costs of borrowing and technical assistance provided to help in the preparation and execution of the project. Taking into account, for example, the nature of borrowing SMEs, their ability to access commercial funds, and the nature and cost of loans typically offered by local FIs, the Consultant should provide suggestions as to the best structure for the proposed facility.

(viii) The potential eligibility criteria that could be used to decide whether or not an SME is eligible to

take a loan and receive any grant funding under the facility. The aim of the Bank is to keep any such eligibility criteria as broad as possible in order not to limit the potential portfolio of SMEs that might benefit from the facility. However, it is clear that SMEs funded through this facility must meet some minimum basic criteria that either demonstrate that a) the loan is having a measurable, well defined, positive impact upon biodiversity or b) permanently removing a measurable, well defined, negative impact on biodiversity that if not addressed would make the business’ operations incompatible under N2000 management plans or prescriptions;

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(ix) The Consultant should consider how the eligibility criteria might be used to adjust any grant paid

to SMEs. The Bank would like to understand if and how SMEs undertaking more "valuable" operations in particular habitats, or SMEs going out of their way to provide additional biodiversity benefits, might be better rewarded for such services.

In addition to desk-based research, the Consultant will perform the following tasks in order to inform and support the conclusions contained in the report: (i) SME questionnaire

• Design an appropriate questionnaire for SMEs in the pilot sites and select a targeted sample of companies to receive it. The questionnaire should be designed to gather information on the types of SMEs, their activities, the types of modifications they may need to make to their activities and the potential financing needs.

• Distribute the questionnaire to the selected SMEs with instructions as to its purpose, how to complete it and where to return it.

• Co-ordinate the follow-up for receipt of completed questionnaires and subsequently analyse the completed questionnaires.

The Consultant should be prepared to follow up with telephone or even site visits to clarify any issues with the selected SMEs. The Consultant should be careful not to raise any expectations during this process, as the creation of any such financing facility is not guaranteed. The sample of SMEs should be representative of the Pilot Site and give sufficient information and confidence for the Consultant to extrapolate an estimated total demand for each Pilot Site. (ii) Commercial stakeholder interviews Prepare a detailed questionnaire and conduct interviews with stakeholder commercial organisations, to gather structured feedback on market conditions and specific drivers for investment and barriers in each of the pilot sites. 4. Sources of information

• Publicly available sources and discussions with ministries, chambers of commerce and industry, local municipalities, other institutions and entities;

• professional consultancy expertise;

• local financial institutions, mainly those already participating in EBRD’s existing credit lines, but also other FIs (to be agreed with EBRD);

• local relevant technical experts;

• interviews with prospective sub-borrowers. 5. Reporting and deliverables

The Consultant will report to Mark Hughes, EBRD’s Operation Leader, and will keep him informed of the progress of the assignment. All data gathered will be organised in table format for easy review and analysis and presented in annexes to the reports. As a final output the Consultant will produce a single report split into various chapters covering generic issues for each of the two pilot sites, and issues related to the financing facility as a whole. The report should include an Executive Summary, providing a clear and concise summary of the key findings of the study, which can be publicly distributed to potential participants and other stakeholders. In preparing the final report the Consultant will bear in mind that the Bank and the GoP will use this study for the detailed design of the facility, including the relative amounts of financing, technical assistance and

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grant funding. The Consultant will propose a base scenario for the structure of the facility with a number of feasible variations for the Bank to consider. The final report should be submitted in English and Polish and presented in both paper and electronic format using Word for Windows. All spreadsheets should be in Excel for Windows.

Task Deliverable Period Delivery dates

All modules Final report 12 weeks To be agreed with the EBRD in advance

Presentation of the results of the market demand study at EBRD's HQ

Annex 1 – Entrance eligibility criteria Eligible SMEs must be majority private-sector owned, registered and located in the pilot regions and must comply with the EU definition of SME as per Commission Recommendation of 6 May 2003 (OJ L 124, 20 May 2003, p. 36). The term SME includes the individual entrepreneur-sole proprietor. All SMEs operating in the industrial and industrial-related service sectors shall be eligible to participate in the Facility. Eligible SMEs must not conduct business in the following activities: gambling, real estate, banking, insurance or financial intermediation, production and/or sale of tobacco, production and/or sale of hard liquor, the manufacture, supply or trade in arms and all other activities listed on the EBRD’s Environmental Exclusion List that will be provided upon request. The following investments are specifically excluded:

- working capital, except to the extent that such working capital requirement is an integral part of the investment cost of the sub-project

- speculation in property - financing of land purchase, except when a small but integral part of the investment cost of the

sub-project - speculation in shares, bonds and any other type of financial instruments, derivatives or

securities - re-financing (or other displacement) of any existing loan or credit operation to the relevant

SME borrower.

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Appendix 13: Business plan 2010+: Bulgaria

A clear and systematic approach to creating a national organisation in Bulgaria that is capable of

supporting itself through its services both to the banking and the nature conservation communities

which includes: the history of the BTAU, goals and risks identified, the target market, products and

services offered, marketing and PR needs, the operational plan, internal management structure and

financial analysis and forecasts.

See separate attachment.

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Appendix 14: Business plan 2010+: Hungary

A clear and systematic approach to creating a national organisation in Hungary that is capable of






176

Appendix 15: Business plan 2010+: Poland

A clear and systematic approach to creating a national organisation in Poland that is capable of






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Appendix 16: Research into branded certification with

applicability to Europe

Background

A certification system with its own brand is a prerequisite for successfully rolling out the development

of pro-biodiversity SMEs working in Natura 2000 sites nationally and across the EU. The phrase "Good

for business – Good for nature" was derived during this Project and should be an underlying message

in all initiatives can be intrinsically linked to high nature value protected areas (including Natura 2000

sites) or biodiversity rich landscapes anywhere. This background research sought to identify

organisations that have produced certification systems that are applied internationally, and to provide

background information on both the organisation and the development of the certification system.

Information has been collated from that available in the public domain.

Organisation

1 Soil Association

2 Marine Stewardship council

3 Forest Stewardship council

5 Fairtrade Foundation

6 GLOBAL GAP

7 UK Woodland Assurance Standard

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ORGANISATION

Soil Association WEBSITE www.soilassociation.org

UK, EU or global

UK – but extending

internationally

(HQ- Bristol)

Contact

Molly- Director communications [email protected] Clio- Senior Press Officer [email protected]

Summary of organisation Description of and development of certification system

The Soil Association (SA) was founded in 1946 by a group of farmers, scientists and nutritionists who observed a direct connection between farming practice and plant, animal, human and environmental health. The SA is the UK's leading campaigning and certification organisation for organic food and farming and certifies 80% of all organic products sold in the UK and over 4,000 organic farms and businesses. The SA’s aim is to promote the highest level of organic integrity. The Soil Association have developed a series of standards which must meet consumer expectations, reflect the best sustainability practices and become a benchmark for organic production globally. The SA is a charity, and most income is from individual members, supporters, and institutions such as charitable trusts and statutory bodies. The SA works actively at national, European and international levels with the aim of achieving consistently high organic standards across all bodies and authorities.

The SA symbol can be found on over 70% of Britain's organic produce - a guarantee that it has been grown or produced to the highest standards of organic integrity. Certification and inspection is carried out by the wholly owned subsidiary Soil Association Certification Ltd, which ensures that the standards are adhered to. The organic symbol is used to show that the standards have been met.

The standards cover anything that has grown or farmed to be eaten or drunk. They also cover the processing of food, from milling flour to baking bread and making pizzas, conservation, fish farming, textiles, health and beauty products, shops, restaurants, gardening products, timber and wood products and ethical trade. They specify in detail what can and cannot be done, and what can and cannot be used. For example, a chicken farmer will know how many birds can be kept together, what they can be fed, how they can be treated if ill and so on.

Certified organic farms to are required to apply high standards of conservation throughout the farm; carry out conservation projects; create wildlife corridors to link wildlife habitats. They will not certify any farm where the farm manager has knowingly been involved, within the last five years, in damaging any statutory recognised site, wildlife site, site of nature conservation importance, site of importance to nature for conservation or regionally important geological site. Standards are constantly reviewed and do this the SA have set up a standards board and a number of independent standards committees that report to it. The board and committees are made up of our members and licensees, researchers, advisors, other experts in their field, together with independent people and consumer representatives. The SA claim that their standards are at the forefront of the burgeoning organic market. They have helped give consumers trust in organic foods and farmers use them as a benchmark of best organic practice.

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ORGANISATION

Marine

Stewardship

Council (MSC)

WEBSITE www.msc.org

UK, EU or global

International (HQ-

London, SW1)

Contact

Fundraising [email protected] Communications [email protected]


The MSC are a global organisation working with fisheries, seafood companies, scientists, conservation groups and the public to promote the best environmental choice in seafood. The aim of the MSC is to recognise via a certification programme, well-managed fisheries and to harness consumer preference for seafood products bearing the MSC label of approval. The MSC was established by Unilever and WWF. MSC mission: “to use our ecolabel and fishery certification programme to contribute to the health of the world’s oceans by recognising and rewarding sustainable fishing practises, influencing the choices people make when buying seafood, and working with our partners to transform the seafood market to a sustainable basis” MSC activities: these do not only include setting standards but involve fisheries and commercial outreach, educating consumers, and working with developing countries to take part in the programme.

The MSC's fishery certification program and seafood eco-label recognise and reward sustainable fishing. Between 1997 and 1999, the MSC worked with individuals and organizations around the world to develop the standards that form the MSC certification program for sustainable fishing and seafood traceability. MSC’s certification and traceability standards meet FAO guidelines that require assessments to be carried out by independent, third party certifiers. Fisheries and seafood companies voluntarily seek certification against the standards, which meet the world's best practice guidelines for certification and ecolabelling.

Together, they offer fisheries a credible way to be recognised and rewarded for good management practices, and provide a traceability assurance to buyers. Because of these standards, and the methodologies that support them, you can be sure that seafood carrying the MSC label comes from a certified sustainable fishery and every company in the supply chain has passed a detailed traceability audit.

The MSC environmental standard for sustainable and well-managed fisheries uses a product label to reward environmentally responsible fishery management and practices. Consumers, concerned about over fishing and its environmental and social consequences will increasingly be able to choose seafood products that have been independently assessed against the MSC Standard and labelled to prove it. The MSC Standard is constantly reviewed by an independent group of fisheries experts. A certified fishery must complete a reassessment, equivalent to a full assessment, every 5 years if it wishes to maintain uninterrupted certification. Funding is not from company members. For those displaying the label on their products, the cost is only 2000 USD + 0.1% of sales for those companies with a turnover on MSC certified products in excess of US$0.5m.

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ORGANISATION

Forest Stewardship

council (FSC) WEBSITE www.fsc.org

UK, EU or global

International (UK

office Powys,

Wales, HQ- Bonn,

Germany)

Contact

info @fsc-uk.org [email protected] 01686 413 916


FSC is an independent, non-governmental, not for profit organization established to promote the responsible management of the world’s forests. FSC has offices in more than 46 countries. It provides standard setting, trademark assurance and accreditation services for companies and organizations interested in responsible forestry. Products carrying the FSC label are independently certified to assure consumers that they come from forests that are managed to meet the social, economic and ecological needs of present and future generations.

Currently about 60% of FSC (International) funds comes from the support of charitable foundations, government donors and business contributions. The other 40% are collected from fees (membership, accreditation and others) and services rendered. Over the next few years, FSC will reverse the ratio between donor funds and commercial funds to 60% income from commercial activities and fees and 40% from donations. FSC National offices are financially independent of FSC International

Concerns and large-scale public debates about the state of world’s forests escalated globally in the 1980’s and led to a gridlock between different stakeholders fighting about environmental, social and economic interests. In the late 1980’s, tropical timber boycotts proclaiming to save the last tropical forests, not only failed, but worse, caused opposite effects in many cases. In the early 1990’s for the first time, leading social, environmental and economic players from the Global South and Global North joined in an international process and founded FSC. All FSC certified forests must comply with FSC’s rules about how the forests should and should not be managed. To earn FSC certification and the right to use the FSC label, an organization must first adapt its management and operations to conform to all applicable FSC requirements. What the FSC rules prescribe is implemented in forests around the world. At the FSC International Center a team of experts facilitates the development, review and improvement of FSC rules and procedures. FSC’s standards are the highest social and environmental requirements in the forestry sector and they have proven to work across continents, forest types, sizes and ownership. The FSC standards setting process is transparent, democratic and inclusive. It is this process that has allowed FSC to become an important and recognized forum where innovative solutions have become possible with the support of all stakeholder groups interested in forestry issues. FSC is the only certification system in forestry recognized by ISEAL (formal collaboration of leading international standard-setting and conformity assessment organizations focused on social and environmental issues- Oxford based) to follow best-practice in standard setting.

FSC has national Initiatives in more than 46 countries. The FSC International Center is located in Bonn. National Initiatives promote FSC in their country by providing information about FSC and running marketing campaigns They also support the development of national or sub-national standards.

181

ORGANISATION

Fairtrade

Foundation WEBSITE www.fairtrade.org.uk

UK, EU or global UK focus (HQ-

London- EC3N) Contact [email protected]


The Fairtrade Foundation is the independent non-profit organisation that licenses use of the FAIRTRADE Mark on products in the UK in accordance with internationally agreed Fairtrade standards.

The four key activities of the Fairtrade Foundation are: 1. Providing an independent certification

of the trade chain, licensing use of the FAIRTRADE Mark as a consumer guarantee on products;

2. Facilitating the market to grow demand for Fairtrade and enable producers to sell to traders and retailers;

3. Working with partners to support producer organisations and their networks;

1. Raising public awareness of the need for Fairtrade and the importance of the FAIRTRADE Mark

From 1 September 2008, the international FAIRTRADE Mark will start to appear on Fairtrade certified products and all materials produced by the Fairtrade Foundation. The current UK Mark will still be seen on existing Fairtrade product packaging and promotional materials as the transition takes place.

Fairtrade Labelling was created in the Netherlands in the late 1980s. The Max Havelaar Foundation launched the first Fairtrade consumer guarantee label in 1988 on coffee sourced from Mexico. Here in the UK, the Fairtrade Foundation was established in 1992, with the first products to carry the FAIRTRADE Mark launched in 1994. For a product to display the FAIRTRADE Mark, it must meet international Fairtrade standards. The international certification body Fairtrade Labelling Organisations International (FLO) sets these standards. Producer organisations that supply Fairtrade products are inspected and certified by FLO. Producers receive a minimum price that covers the cost of sustainable production and an extra premium that is invested in social or economic development projects. To address issues surrounding different commodities, there are two sets of generic producer standards: small farmers (e.g. predominantly for coffee and cocoa) and workers on plantations and in factories (e.g. tea estates). The FAIRTRADE Mark or label may be put on a composite product if more than 50% of its ingredients, by dry weight, are sourced from Fairtrade certified producer organizations. In case of liquid composite products, a FAIRTRADE Mark may be put on the product if more than 50% of its volume is sourced from Fairtrade certified producer organizations. As well as certifying producer organisations, for a product to carry the FAIRTRADE Mark, all the traders in the supply chain must register with FLO-CERT, and submit reports on their purchases and sales. Internationally-based importers and exporters report directly to FLO-CERT, whose trade auditors also conduct on-site inspections. Meanwhile UK based importers and manufacturers submit quarterly reports to the Fairtrade Foundation, and on-site inspections are carried out annually by an independent professional auditing company. This checks that their stock control, purchasing and sales records are being kept properly, and reporting on Fairtrade product sales is being done accurately. The Fairtrade Foundation has an independent Certification Committee that reviews the auditors’ reports, and ensures any action points with companies are being followed up.

182

ORGANISATION

GLOBAL GAP WEBSITE www.globalgap.org

UK, EU or global International (HQ,

Cologne, Germany) Contact

UK representative (Nigel

Garbutt, Chairman)


GLOBALGAP is a private sector body that sets voluntary standards for the certification of agricultural products around the globe. The GLOBAL GAP standard is primarily designed to reassure consumers about how food is produced on the farm by minimising detrimental environmental impacts of farming operations, reducing the use of chemical inputs and ensuring a responsible approach to worker health and safety as well as animal welfare.

GLOBAL GAP (formally EUREPGAP) started in 1997 as an initiative by retailers belonging to the Euro-Retailer Produce Working Group (EUREP). British retailers in conjunction with supermarkets in continental Europe were the driving forces. They reacted to growing concerns of the consumers regarding product safety, environmental and labour standards and decided to harmonise their own often very different standards.

All major producers, suppliers and retailers are members of GLOBAL GAP.

Those with contractual relations to several retailers explained that they had to undergo multiple audits against different criteria every year. With this is mind, EUREP started working on harmonised standards and procedures for the development of Good Agricultural Practices (G.A.P.) in conventional agriculture.

Over the next ten years a growing number of producers and retailers around the globe joined in with the idea as this matched the emerging pattern of globalised trading: EUREPGAP began to gain in global significance. To align EUREPGAPS’s name with the now realised proposition as the pre-eminent international G.A.P.-standard and to prevent confusion with its growing range of public sector and civil society stakeholders, the Board decided to undertake the significant step to re-brand. It was a natural path and evolution that led EUREPGAP to become GLOBALGAP. The decision was announced in September 2007 at the 8th global conference in Bangkok.

GLOBALGAP is a single integrated standard with modular applications for different product groups (e.g. fruit, vegetables, flowers, coffee, tea, cotton, livestock and fish). The standard serves as a global reference system for other existing standards and can also easily and directly be applied by all parties of the primary food sector. In other words: GLOBALGAP operates like a satellite navigation system. It equips members with a reliable tool kit, which allows each partner in the supply chain to position themselves in a global market with respect to consumer requirements.

The documentation of the system is organised into five blocks, each with a set of complementary elements. Users can select the applicable elements of each block to create a tailor-made, user-friendly manual. This selection gives direction to all relevant stages of the GLOBAL GAP certification process, including: system rules referred to as General Regulations; global G.A.P. requirements referred to as Control Points and Compliance Criteria; inspection documents referred to as Checklists; national G.A.P. requirements referred to as Approved National Interpretation Guidelines; and finally harmonisation tools referred to as Benchmarking Cross Reference Checklist.

183

ORGANISATION

UK woodland

assurance

standard

WEBSITE www.ukwas.org.uk

No logo

UK, EU or global

UK (HQ-

Edinburgh)

Contact

[email protected]


The UK Woodland Assurance Standard is an independent certification standard for verifying sustainable woodland management in the United Kingdom. The first edition of the United Kingdom Woodland Assurance Standard was developed by a multi-stakeholder partnership in 1999. In 2003, the stakeholders established an independent company to own and manage the UKWAS standard on their behalf. The company’s objective is: “to own, interpret, develop and promote a certification standard for forest management in the United Kingdom on behalf of United Kingdom forestry and environmental communities, and bodies which represent the interests of people working in woods and forests or using them for the purpose of recreation, for the general benefit of people”. The company is managed by its members on a not-for-profit basis. UKWAS members appoint a broadly based Steering Group which has responsibility for interpreting the standard and ensuring its periodic revision to take account of experience from its application and any new information that may arise. The terms UK Woodland Assurance Standard and UKWAS are protected as registered trademarks.

The UKWAS is not a certification scheme but uniquely, it is designed to provide a single common standard for use within those forest certification programmes that operate in the UK; these programmes provide a way to assure buyers and users that wood and wood products come from sustainably managed woodlands. The launch of the standard in May 1999 was a landmark event for forestry in the UK. The UK’s forestry sector and its stakeholders chose to develop and publish an independent standard as the best way to define appropriate and effective woodland management in the UK context. It was developed on a consensus basis through an inclusive multi-stakeholder process with a balanced representation of economic, environmental and social interests. The first revision of the standard was completed in 2006 with the second edition launched formally on November 1st.

The UKWAS standard is currently the central component of the forest certification programmes operated in the UK by the Forest Stewardship Council (FSC UK) and the Programme for the Endorsement of Forest Certification Programmes (PEFC UK). One measure of the success is that the UKWAS process continues to attract international interest and UKWAS frequently receive international visitors wishing to learn whether experience of UKWAS might be helpful to them in formulating their own national processes. During 2007 the Steering Group focussed on two key priorities:

• making the standard more accessible for owners and managers of small woodlands or those managed in a low intensity manner;

• formalising the working relationships between the UKWAS Steering Group and FSC-UK and PEFC UK: new Standard Setting Procedures were developed and Concordats were agreed with FSC UK and PEFC UK setting out each party's respective role.

184

Appendix 17: EBRD: conclusions and reflections on the future potential of

the BTAU concept.

185

186

Appendix 18: EIB: conclusions and reflections on the future potential of the

BTAU concept.

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