More than 140 business leaders and experts have warned the government that rumoured plans to scrap biodiversity net gain (BNG) for small sites will have "severe" and "negative" impacts on investment and nature preservation.

In an open letter to government ministers co-ordinated by the Green Construction Board, the businesses express concern over reports that the Treasury is set to remove BNG requirements for sites under 1ha (2.47 acres) in an announcement due tomorrow (16 December).

The letter has been signed by businesses and groups from across multiple sectors including Wates Group, Triodos Bank, Aldersgate Group and the Association for Consultancy and Engineering.

It also stresses the finding of the recently published Environmental Audit Committee report, which challenges the “lazy narrative” that nature is a blocker or an inconvenience to the delivery of new housing.

Citing the report, the letter recommends “practical alternatives” to the exemption, such as a 0.1ha exemption threshold. It argues this would offer a more “balanced and workable solution” and would simplify requirements for more than 50,000 small developments each year.

Signatories also warn the exemption risks undermining nature recovery at scale, as well as hurting businesses that have already invested in meeting BNG requirements and weaken confidence in the emerging nature markets.

“We have heard that the government is considering removing BNG requirements for small sites,” the letter states. “Such changes risk severe negative implications for private investment in nature, the burgeoning nature markets, businesses striving and succeeding in the creation of sustainable, healthy and resilient places and most of all the people that live in these places.”

The BNG Federation has also written a separate open letter to chancellor Rachel Reeves and environment secretary Emma Reynolds – signed by members from organisations such as the Environment Bank, Wild Capital and Green Earth Developments – condemning the rumoured rollback.

In this letter, Jonathan Halford, chair of the Environment Bank, writes: “The BNG market has now reached a significant level of maturity.

“Any decision that broadens exemptions risks undermining both investor certainty and the long-term capacity of private providers to deliver the habitat creation targets needed to support the 2030 nature goals and would have a disproportionate impact on employment within the wider ecology sector.”

According to Martina Girvan, chair of the Green Construction Board’s biodiversity and environmental net gain group, small sites are often where the “loss of green space is felt most acutely, particularly in urban areas”.

“Even modest areas of green infrastructure can deliver significant social and environmental benefits, from cooling and flood mitigation to improved health and wellbeing.

“Removing BNG from these sites risks embedding poorer outcomes for communities and missed opportunities to enhance the quality of places where people, risking a negative long-term legacy that neither residents or businesses want.”