Throughout our social housing series, we have talked about green finance in the context of climate change. We considered the challenges faced by registered providers in meeting the UK’s net zero carbon emissions target by 2050 and how they were facing huge costs associated with increasing the energy efficiency of their housing stock. We explored the benefits of both public and private sector partnerships , and looked at some of the technology available  to make developments sustainable. In this fourth and final part of the series, we discuss the financial market’s growing interest in biodiversity and the opportunities available to registered providers. 

Why does biodiversity matter?

Biodiversity is under threat, globally and at home. Habitats are being damaged or disappearing and species are declining. This is not just bad news for nature but also for our own health and wellbeing and that of future generations. Biodiversity and healthy habitats are vital for a well-functioning planet, but their value is often not taken into account in decision-making. The loss of biodiversity could be a greater threat to humanity than climate change, yet compared to climate change, the biodiversity agenda is an underdeveloped area.   

Momentum is now growing for biodiversity to be a factor in providing finance. On 25 September 2020, 26 financial institutions around the world, including AXA Group, HSBC Global Asset Management and Triodos Bank, launched the Finance for Biodiversity Pledge . The signatories (currently numbering 55) have committed to protect and restore biodiversity through their finance activities and investments. Constructing homes using green or sustainable finance not only extends to the materials used to construct those homes, but also to the wider estate and environment within which people live.   

What can registered providers do?

Well-lit communal gardens, shared allotments or greenhouses, eco-friendly playgrounds and the planting of ‘bee friendly’ plants and wild flower gardens are all examples of shared communal areas that would contribute towards an enriched environment. These considerations can often be low cost strategies for protecting ecosystems and biodiversity and yet at the same time assist a RP to meet environmental objectives. The addition of extensive recycling facilities (extended to include clothes/shoes recycling, composting and food banks), bike stores and charging ports for electric cars, will further encourage residents to be eco-friendly, both in their homes and their wider environment.  

Provision of these facilities may also make developments more attractive for finance providers, meaning RP’s need to be actively considering biodiverse features when looking at their development proposals. There is increasing appetite for private sector investment in projects that deliver environmental benefit.  The Environment Agency, Esmee Fairbairn Foundation, Defra and Triodos Bank have formed a collaboration to develop new investment approaches to involve the private sector in projects which are helping to tackle climate change and restore nature.   

Looking ahead 

Biodiversity and climate change are interlinked and yet, until recently, biodiversity has been neglected in policy making and finance. For example, despite an increasing number of organisations committing to nature conservation and restoration, most frameworks for the allocation of green funding centre around the low-carbon transition. It is a positive sign that a number of financial institutions managing trillions of pounds in assets have committed to taking action to protect biodiversity.  Publication by the UN Convention on Biological Diversity of a draft Paris-style plan to halt biodiversity loss is likely to have a significant impact on the biodiversity conversation and provide a catalyst on closing the financing gap for nature.

The Environment Bill, applicable to England, is likely to receive Royal Assent this parliamentary term. It includes a mandatory requirement for all new developments to deliver at least a 10% improvement in biodiversity of the land being developed. This is to be measured against the baseline biodiversity using Defra’s biodiversity metric and the gains are to be maintained for a period of at least 30 years. 

Developers (including RP’s) need to be thinking about these requirements now to prevent costly delays later. Many local authorities are already requesting that theses aspects are taken into account on development projects.

In addition, the next generation of home buyers are more actively factoring environmental and sustainability considerations into their buying decision. Now is the time for RPs to get ahead of the curve and incorporate biodiversity in their development plans, not only to open up a wealth of investment opportunities from funders seeking green credentials, but also to comply with future planning legislation and to satisfy eco-minded prospective buyers. 

Contributor: Rebecca Thibault

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions.

Date published

15 July 2021

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