Putting nature at the heart of real estate

Research from the International Union for Conservation of Nature’s Red List of Threatened Species states that “infrastructure and the built environment” is one of three socio-economic systems responsible for endangering 79% of the threatened or near-threatened species worldwide. If continued, this reduction in biodiversity, and subsequently nature, will have a knock-on negative effect on the built environment. Biodiversity loss can lead to reduced ecosystem productivity, creating resource scarcity, disrupting building supply chains, delaying project timelines and increasing project costs. The World Economic Forum estimates that “over half of the global GDP, $44tn, is potentially threatened by nature loss”.

The impact of the built environment on the loss of biodiversity is also profoundly interlinked with the climate crisis. The lifecycle of building materials (growing, extracting, manufacturing and transporting) does not only affect biodiversity, it can pollute our air and water, and release naturally stored carbon – for example, by disturbing soils, peatlands and forests. Understanding the embodied impact of construction resources, sourcing environmentally friendly building materials and adopting green construction practices is an important part of the built environment’s decarbonisation journey.

From a social perspective, we are alienating ourselves from nature and neglecting our ecological consciousness in an increasingly urban lifestyle – the WEF states that “every week until 2030, around 1.5m people will be added to cities”. Connecting people with nature through building design is essential to our wellbeing and sense of place. Therefore, the integration of nature into the urban landscape is not a luxury but a necessity. Nature is key to supporting health and wellbeing, achieving net-zero carbon and ensuring business continuation and, more importantly, the survival of mankind.

Legislation on biodiversity

Momentum is growing in the policy landscape where, in the UK specifically, there has been a notable shift from “measurable” net gains in biodiversity within the National Planning Policy Framework 2021 to a mandated 10% biodiversity net gain as a planning condition in the Environment Act 2021.

Natural England describes the delayed biodiversity net gain legislation as an approach to development that leaves biodiversity in a measurably better state than before the development took place. The Act requires BNG to be calculated using a tool developed by government that takes into consideration the habitat’s ecological importance, how well it is functioning and its strategic significance. The tool then determines the biodiversity units pre-development and compares them to the post-development scenario to determine whether 10% BNG is achieved.

The identification of land where the 10% BNG can be feasibly achieved will become a priority for real estate developers, bringing habitat conservation and nature enhancement to the forefront of land acquisition and planning decisions. Delivery of BNG can include on-site habitat creation via green infrastructure, off-site creation through habitat banks or landowners, and the purchase of statutory credits. It is critical that BNG delivery is part of a strategic approach aligned with local nature recovery strategies, other key Environment Act policies and global COP15 targets and priorities.

Opportunity knocks

Incorporating nature and biodiversity more holistically through sustainability, ESG and climate strategies provides a wealth of opportunities for real estate: 

• Future-proofing and protecting liquidity
  The inclusion of nature-based solutions such as green space, rooftop gardens, living walls and sustainable urban drainage and landscaping can enhance the overall value of properties, fulfilling the demands of more ESG-savvy investors, green finance and eco-conscious occupiers who seek a genuine connection with nature. JLL’s recent research on the new determinants of real estate value states that “42% of occupiers believe that their employees will increasingly demand green and healthy spaces”.

• Enhancing the long-term value and resilience of a real estate portfolio
  Not only can nature provide resilience to the changing expectations of investors and occupiers, but also to the increasingly extreme weather that climate change is causing. The extreme heat we have experienced will become more common, and buildings that haven’t adapted to this will become unusable and illiquid. Nature-based solutions can provide natural shade, urban cooling and insulation, increasing the resilience of urban spaces to our changing climate.

• Supporting the net zero transition
  WWF’s 2023 paper Nature in Transition Plans: Why and How? states that natural capital solutions can provide one-third of the climate mitigation to reach a 1.5- or 2-degree pathway by 2030. In cities specifically, researchers of a new study published in the journal Nature Climate Change found that prioritising different types of nature-based solutions could reduce human-produced carbon emissions by an average 17.4%. Nature is therefore a crucial part of the sector’s efforts to decarbonise, be it through on-site landscaping or larger off-site habitat restoration.

• Improving health and wellbeing
  There is extensive research on the association between exposure to nature and better physical and mental wellbeing. Proximity to parks and green spaces encourages outdoor activities, reduces stress and promotes healthier lifestyles, which can in turn be valuable to landlords and occupiers with social priorities.

• Community building and social cohesion
  The integration of natural spaces can promote social interaction and foster a sense of community that is often missing in conventional urban environments, equally addressing the loneliness epidemic in cities.

Nature is a new area for many real estate market players, and measuring progress will be an essential part of setting meaningful goals. To this extent, industry frameworks like the Taskforce on Nature-related Financial Disclosures are becoming a key tool, setting out how the sector can best protect and maximise the value of the natural environment.

By placing nature at the heart of the built environment, the real estate industry can embody a commitment to environmental stewardship as part of its corporate responsibility. Collaborating as an industry will mean shaping cities that are not only more beautiful, but also more valuable, resilient and conducive to the wellbeing of their people.

Danelle Veldsman is an associate at JLL

Originally featured in EG