News: What could ‘nature positive’ mean for UK real estate?
By Toby Radcliffe - The concept of Net zero carbon (NZC) is changing the UK real estate industry. The regulatory environment, customer pressure and the weight of green money are all pushing the industry towards lower carbon emissions. This is changing the way we invest in, construct and occupy real estate.
As the UN biodiversity conference (COP 15) amplifies calls for binding targets to protect biodiversity and builds momentum for greater disclosure and regulation, the concept of 'nature positive' will also start to affect real estate.
'Nature positive' has been defined as halting and reversing nature loss measured from a 2020 baseline, so that nature is measurably on the path of recovery by 2030, with full recovery by 2050. Here, nature represents both biodiversity and ecosystem services like the provision of clean air or the prevention of floods. Whether 2020 is an ambitious enough baseline, and exactly what recovery means and how it should be measured are important questions that we hope to see answered at COP 15.
Nature positive is essentially the idea that limiting damage to biodiversity does not go far enough. To secure the essential resources that support our economy and well-being, such as food and clean water, it is argued that there must be an increasing focus on the restoration of damaged ecosystems. Ecosystem restoration is also seen as a critical step towards achieving NZC.
But why does nature positive matter to UK real estate?
Consider the body of regulation, frameworks and certifications which have appeared alongside NZC and which have changed how we occupy, own and manage real estate.
Similar frameworks are emerging for nature positive, and they have a similar character to existing emission reduction initiatives. They represent focused and measurable actions to protect nature which over time may become mandatory, just as occurred for certain emissions reduction initiatives.
Taskforce on Nature-related Financial Disclosures (TNFD)
For example, TNFD is a proposed risk management and disclosure framework aimed at helping organisations report and act on nature-related risks and opportunities, and support capital allocation towards companies that have nature-positive outcomes. TNFD is in development and would be voluntary when finalised. The similar Taskforce on Climate-related Financial Disclosures (TCFD), which also started as a voluntary framework, is now mandatory for some UK companies. It is not implausible that TNFD will follow the same course, especially given that the UK Government (among others) is funding its development.
Science Based Targets Network (SBTN)
SBTN provides a framework for organisations to set measurable, actionable and time-bound science-based objectives for nature. SBTN is in development and would also be voluntary when finalised. The similar Science Based Targets initiative (SBTi), which focuses on cutting emissions, has become the gold standard for judging the quality of corporate climate commitments and has over 3,000 businesses signed up globally.
Biodiversity net gain
In the UK, Biodiversity net gain regulations represent an opportunity for real estate to make a tangible and measurable contribution to being nature positive. It is mandatory for new developments but can also be used voluntarily to measure baseline biodiversity across existing portfolios and set out actions to measurably improve biodiversity. It could represent a practical mechanism to report biodiversity action to frameworks like TNFD or SBTN.
Aligning real estate decisions with these frameworks as they develop will build resilience against future regulation. It will also attract capital flows increasingly concerned with ESG credentials. In the UK, incorporating biodiversity net gain appears to be a particularly useful tool to build this type of resilience.
There is growing momentum in disclosure and regulation of impact on nature. Real estate has a big impact on land use, so any new company level disclosures on nature - whether mandatory or voluntary - are likely to affect UK real estate decisions.