Client Update - 24th October 2025

Now, a break from the norm, as it is all getting a bit depressing. If you wish for further depression, I will revert to the budget and economy later in this email.

As the world looks for ways to curb biodiversity loss, new financial tools are being developed to fund the preservation and restoration of ecosystems. I imagine my compliance department would ask me to point out here that this is a news article and not financial advice for a new investment!

The latest example is in South Africa, where some of the world’s leading conservation non-profit organisations are exploring a bond (debt instrument) where the return to investors is tied to the rate of clearing invasive vegetation to protect more of the country’s wild areas.

The instrument would work in a similar way to the rhino bond sold by the World Bank in 2022, which pays out if the population of black rhinos increases in two South African parks. Let me explain.

The world’s first Wildlife Conservation Bond – also known as ‘the Rhino Bond’ – was issued by the World Bank to help increase the population of the endangered Black Rhino species in South Africa. $150m was raised from institutional investors, which will go to sustainable programmes run by the International Bank for Reconstruction and Development (IBRD) around the world. This will generate a return, and instead of a traditional coupon (debt interest payment) going directly to the investors, $10m will be paid to conservation programmes in South Africa that aim to increase the number of Black Rhinos. Investors’ returns will be determined directly by the Rhino population growth over the next five years.

Black rhinoceroses are a critically endangered species and extremely vulnerable to extinction in the wild, mainly due to poaching and habitat loss. In 1970, there were 65,000 black rhinos in the wild. As poaching has intensified and pressures on their habitat increased, today only 6,487 remain. Rhinos are also an umbrella species, playing a crucial role in shaping ecosystems on which countless other species depend. These ecosystems also support jobs and critical industries like tourism.

However, combatting rhino poaching and protecting rhino habitats involves constant monitoring that requires significant, long-term funding, which is not always available from conservation donors. Private investment in this area is clearly needed, but until recently, there has been no mechanism to funnel private capital into rhino conservation, or a rigorous means of measuring the outcome.

The foundations of this project stretch back to 2019, when the Zoological Society of London (ZSL) started the Rhino Impact Investment Project, to eventually develop the world’s first ‘rhino bond’ that ties the return on the up-front investment directly to the rhino population growth it is supporting. This work was undertaken through United for Wildlife, a partnership with six other wildlife charities and The Royal Foundation of the Duke and Duchess of Cambridge. Not an investment for us, but a wonderful effort, nonetheless.

OK, back to the day job. Some good news? We shall see. Rachel Reeves could be given a Budget boost worth billions of pounds as good news on inflation prompted sharp new falls in government borrowing costs, with the yield on a two-year government debt (Gilt) falling to its lowest level for more than a year. A softer than expected September inflation reading on Wednesday helped bring down government borrowing costs, alleviating some of the pressure on the public finances.

UK government bonds rallied on Wednesday after official figures unexpectedly showed consumer prices inflation holding steady at 3.8% — defying predictions from the Bank of England (BoE) for an acceleration to 4%. This could influence crucial forecasts prepared by the independent Office for Budget Responsibility (OBR) depending on the time window the agency uses for its projections. I have read today some analysts speaking of potential savings of between £2bn and £3bn or more from moves over recent days.

The OBR has the ability to change its observation window in the case of dramatic changes closer to the Budget. A spokesperson for the OBR pointed as an example to the forecast close to the time of the Russian invasion of Ukraine in 2022, when it reopened its observation window to take account of market movements. The inflation numbers immediately prompted market traders to price in rising chances of an interest rate cut by the BoE before the end of the year, after the central bank held rates at 4 per cent in its September meeting. As a reminder, yields move in the opposite direction to prices.

Moving back to budget gossip, which I really should not get involved in, this week we saw lawyers and accountants under the cosh with plans being considered by Rachel Reeves to make partnerships (their ownership structure) pay more tax through national insurance contributions. The Centre for the Analysis of Taxation (CenTax) think-tank has estimated this change would affect some 200,000 people and raise £1.9bn a year. Most big law and accountancy firms in the UK operate as limited liability partnerships, which allows a national insurance contribution exemption for such partnerships. Their tax rate was already high and would move higher – this would increase the marginal tax rate for partners from about 47 per cent to 54 per cent, according to Tax Policy Associates. A further attack on growth drivers in the UK one could argue.

If you made it this far, well done. There is a certain monotony to the news flow currently and whilst it is our role to comment on it, I will endeavour to find subjects to whisk us away from the state of the UK economy and our tax bills, if only for a moment. Come on the rhino’s! Do have a good weekend.