SPR Seminar: Biodiversity
Grosvenor, 70 Grosvenor Street, London W1, 23 April 2024

Real estate can make a difference
The four speakers at this SPR seminar agreed that real estate can have a positive impact on the biodiversity crisis now facing the planet.

Emily Hamilton, Head of ESG at Savills IM suggested that real estate investors were just starting to become aware of the importance of biodiversity, as their ESG focus has primarily been on the climate and carbon emissions up to now.  This is not just a question of making buildings greener (literally) on the outside but also an awareness of the impact of construction supply chains and raw material extraction.  Progress will come with education – which means, for instance, using precise language to distinguish between nature in general and biodiversity in particular – and with greater honesty and transparency, given that investors are increasingly homing in on the issue.

Leading a consultancy that promotes the restoration of natural habitats in the UK in collaboration with landowners, Richard Marshall of Great Yellow agreed that while the situation has become critical, there is much that the real estate industry can still do to help preserve the biodiversity that remains.  A big challenge at present is building an understanding of the issue, which is much more complex than climate in terms of its ultimate potential effects. While his organisation is focused primarily on habitats in agricultural land, he stressed that there is much the business can do more widely.  Part of the problem thus far has been that corporate finance hasn’t been had to focus on the issue, but this should change with regulations that encourage greater transparency, for example IFRS in Europe.

Drew Davey, Sustainability Insights Manager at Grosvenor, the organisation who kindly hosted this event, proposed that there will be big opportunities for real estate in this area over the next three years or so, as biodiversity is sure to gain further traction among investors, in part due to growing regulation.  But people are also becoming more aware of the potential impact on the planet’s ecosystem, with the implications that could have for global food production.  Making effective changes will mean a long-term commitment way beyond the investment horizon of most involved in real estate, he stressed.

Developers are also increasingly looking for potential value in this area, noted Martyn Jarvis, Senior Associate for Planning and Environment at Herbert Smith Freehills.  This is not just due to the biodiversity net gain requirement that has just come into effect in UK planning regulation – requiring a net gain of at least 10% to wildlife habitats affected by the development – as many companies have already accepted these principles in their approach to land use.  But he noted that the required net gains are likely to be difficult for infrastructure projects to achieve when the regulation applies to them later this year, given their generally broad environmental impact.

During the audience Q&A at the end of the seminar, which was led by Alex Dunn of Cromwell Property Group, who also chaired the event, all four panellists recognised the importance of property owners and other stakeholders collaborating to preserve biodiversity, particularly in an urban environment.  Hamilton stressed the important role of local authorities in the UK for building resilience at a city level, a view that was echoed by Davey, who cited the Wild West End initiative in London as a positive example.  Marshall also noted how the interconnections between ecosystems in different locations need to be understood if they are to be preserved.

Lifting the subject of biodiversity higher in the public consciousness will require more impactful stories to be told, in a similar way as has already happened for climate change, the panel agreed.  Jarvis said that it is still difficult to get investors to see this as a financial issue, as the links appear quite tenuous and long-term.  Nevertheless, Marshall proposed that giving specific examples of species loss could be helpful. Meanwhile, Hamilton noted that yet another species would have been lost to the planet during the course of this seminar.

Tim Horsey