The impact of the Environment Act

Biodiversity net gain, nature recovery strategies and conservation covenants have all become part of our vocabulary in urban development, but what do they mean in practice?

In this episode of Sustainability Breakthroughs, our new podcast series with the Aldersgate Group, our panel discuss the impact of the Environment Act, including how forward-thinking businesses are approaching sustainable developments and the dangers of failing to act quickly enough.

They discuss:

• How the new statutory requirements will work in practice

• How the panellists are approaching this, from strategic vision to pilot projects

• Innovative approaches to delivering biodiversity net gain

• The need for a holistic approach, including net zero, environmental net gain and social value

• The challenges for local authorities and their role in achieving the best outcomes

• The need to think ahead, be proactive and act quickly

Speakers:

• Nick Molho, executive director, Aldersgate Group (chair)

• Katherine Evans, head of planning and environment at TLT

• Julia Barrett, chief sustainability officer at Willmott Dixon and edie’s sustainability leader of the year 2021

• David Symons, future ready innovation leader at WSP and SocEnv's environmental professional of the year 2020

Follow the rest of our series on environmental sustainability in business on the TLT website, or subscribe to Sustainability Breakthroughs on your podcast app. 

Transcript

Nick Molho:

Hello and welcome to this Aldersgate Group and TLT podcast on sustainable developments and the Environment Act. I'm Nick Molho, the executive director of the Aldersgate Group, and I'll be chairing this podcast today. Just for your background, the Aldersgate Group is a cross-economy business organisation and we're very much focused on policy solutions to tackle some of today's biggest environmental challenges – and working very closely with our business members to come up with solutions that are practical, but can also deliver an economic upside – and TLT is a proud member of the Aldersgate Group.

Now, today we're going to be focusing on all of the recent policy and legislative developments that have an impact on sustainable development. Some of our listeners will be familiar with the 25-year Environment Plan, which was published a few years ago, and which really cemented the government's overall ambition to overturn the decline in nature within a generation.

But since then, the policy and legal landscape has become a lot more specific. In November 2021, we saw the Environment Act receive royal assent. Now, one of the many reasons why this act is significant is that it introduces a commitment on behalf of the government to introduce long-term and legally binding nature restoration targets. And within the next few months, we expect to see legally binding targets on air quality, on water quality, on resource efficiency, and biodiversity net gain, with many more areas and environmental issues potentially becoming the subject of these long-term targets in the future.

And in addition to these long-term targets, the Environment Act also requires the government to publish every five years an Environmental Improvement Plan, which has to set out the government's near-term target on nature restoration – as well as the range of policies and the range of legislation and regulations which the government will introduce to meet its interim targets.

Now, the next Environmental Improvement Plan has to be finalised and introduced and presented to parliament by January 2023. Now, today we will explore all of these issues and try to really understand how they will impact the world of real estate. Now, we have a great panel to discuss those issues with us today. So I'd like to welcome Katherine Evans, who's the head of planning and environmental law at TLT. We have Julia Barrett, who is the chief sustainability officer at Willmott Dixon. And David Symons, who is the Future Ready innovation leader at WSP.

I'd like to start with you, Katherine. Can you give us a sense of what are the big challenges that are standing out for you at the moment?

Katherine Evans:

So, I think that the topic that is at the forefront of most people in the development industry's minds is biodiversity net gain, and how that is going to impact on developments that they're bringing forward at the moment. My clients tend to be right at the front end of development, so it's about getting planning permission.

So, although biodiversity net gain is already a concept in the NPPF, the Environment Act elevates this to a statutory requirement, and it's anticipated that there'll be a deemed condition included on planning permissions where you won't be able to commence your development until a biodiversity net gain plan has been approved by the local planning authority. And that's effectively going to set out how the biodiversity gain objective is met.

And that objective is anticipated to be a post-development biodiversity value that exceeds the pre-development biodiversity value by at least 10%. We don't know whether it's going to be 10%, it might be more than that, we're waiting to see. But 10% seems to be probably the bottom line here and it's going to be with us fairly soon. We think it'll be enforced in 2023.

Nick Molho:

That's really interesting. So we're really talking about near-term development scale. And David, I mean as an engineering consultancy that advises on a wide range of different infrastructure projects, how are these new requirements going to impact you?

David Symons:

This is going to impact most of all if organisations are not prepared for it. Right now, we have organisations at large infrastructure level that are land banking in anticipation of biodiversity net gain. And so they are getting ahead of the requirements, they're doing that right now, they're going to be okay. If you're not thinking proactively on that, then that is a challenge for organisations that are building things.

But I also think just to think in wider context as well as part of the wider Future Ready programme that I lead, Katherine is quite right to talk that biodiversity is really important, but so also is net zero. There are enormous direct things set out in the decarbonisation strategy: that you won't be able to lease a commercial building in 2030 if it's not EPC B. Every building that we build from 2025 and design will have to be both zero carbon and climate ready. These are big, big changes for the commercial property industry, and I would just say that sometimes if we talk about the next thing, net zero is also massively important and is something our clients are talking to us a lot about as well.

Nick Molho:

Thanks, David. I think it's really good to show how those are both two sides of the same coin and you really need to tackle both agendas together. Julia, great to get your perspective about construction sector viewpoint.

Julia Barrett:

We're a contracting and interior fit out group at Willmott Dixon. So, whereas David talked about large infrastructure projects and some of his customers are land banking, we may not know what we're going to be building for whom in a year or two's time.

So, we're already trialling how it's going to work for us, particularly on a constrained site. You can imagine if we're building in London, the footprint of the building is literally the footprint of the site we have to operate. So, we're having to be very innovative, work out the rules of the game in terms of how the regs are going to apply and what's going to be permissible and how that 10%’s going to be calculated. And if you can't do it on a site, as we've said, you'll have to go offsite. So for a particularly small, where you're dealing with a small site, that's going to be hard. If you're dealing with a university or a hospital or something that's got a large associated land holding, it'd be a lot easier.

Nick Molho:

Thank you, Julia. So about meeting the regulations and the upcoming legal requirements; Katherine, I was hoping we could turn to you for you to give us a bit of a sense of what you see as the key next legal milestones in all of this.

Katherine Evans:

Well, the usual scenario with legislation in the UK is that the actual act is a bit short on detail, and so we expect and have seen a consultation already on how biodiversity net gain might work, and we're expecting a new metric from Natural England to see how it's actually going to be calculated.

I think there's been a lot of commentary on the existing metric and how suitable that is for certain types of development. Julia mentioned small sites; I think small sites it's a particular issue for because you can meet your requirements by either providing onsite mitigation, offsite mitigation, or potentially buy credits. And so credits is a bit of an unknown at the moment; obviously there isn't a system of credits, although there are a lot of people looking at credits, and the consultation has suggested that credits are going to be the last resort. But there will be some sites where it simply isn't possible to do anything other than buy a credit.

So, there's a lot of work to be done yet. We're by no means there, and I think there's going to be a lot of regulation. Credits worry me slightly because it's a bit like the Emperor's new clothes – you can't really see what it is that you're paying your money for – but I'm sure it can be done, but we're at the very early stages of working it out.

Nick Molho:

Julia, I'm going to be interested to go back to you now because I'd like to get a sense of how ready you feel to take on those new steps and how ready you think your supply chain is. But also, do you see…I mean there's two ways of looking at this: you could be looking at this as a regulatory burden – as a bunch of new legal requirements that you're going to have to do your best to cope with – or you could potentially see this as an opportunity or a mixture of both. So it'd be great to get your sense on that.

Julia Barrett:

So, I think as we've exited from Europe and we're developing our own regulations, there has been a massive opportunity for business, for industry to step up and feedback and shape the emerging regulation and calculations. Too often, we hear politicians talking about regulatory burden and bonfires of red tape. And people that have heard me speak before will know that my view is regulation is often the minimum standard that you want to attain, and actually our view is we'd want to exceed that in terms of maximising value and seizing opportunities.

And my experience working, like David work across the industry with peers, we're collaborative, we're good at sharing best practice. We know that the more we put in, the better the outcome we can get out. So really important I think that we use groups like Aldersgate and other industry for a like UKGBC to really make sure that our voice is heard so that we don't settle for a poor minimum standard, but we're actually driving.

To the first bit of your question, the helpful thing about biodiversity net gain is that it has been well signposted. So, we've been piloting our approach – albeit using the existing Defra metric – working out what we can do, what we can't do, working out the low-hanging fruit if you like, and we're getting great insight and lessons learnt out of that.

The key part of our supply chain is our ecologists and our natural environment specialists, who are advising us on particular projects as well. So it's actually they're learning as they go along as well. So I wouldn't say we're 100% confident we're going to smash it every time – we've had really good results, we've met or exceeded 10% on the pilots that we've done – but until the new metrics clear and it comes into play, you can never be a 100% confident. But we're doing as much as we can.

Nick Molho:

David, just before we move on, I'd like to get a sense of how ready do you feel to take up all these different requirements? I mean, WSP in the past has often spoken positively about the importance of clear, well-signalled, ambitious environmental regulation to guide good quality infrastructure projects. You broadly positive about the policy development in this area?

David Symons:

Yes. I'm broadly positive in an England world. I'd like to have a lot more visibility on Scotland and some of the devolved authorities that are seeming potentially wanting to reinvent their own system. It will be far easier to have one system rather than four.

I think the other thing I would also say, Nick, is let's also keep this in perspective and keep it in plain English. The requirement for biodiversity net gain is on larger developments; it's not your small domestic development.

You will have to increase the biodiversity value of your development by 10% over what is there today. And the reality is, yeah, as Julia quite rightly said, we have methodologies. Willmott Dixon has ecologists, WSP, we've got about 200, they are doing this right now. They are going out and they are measuring the biodiversity and the carbon baseline of sites. But the bit that is important to note also is, if you have an urban site that there is next to no biodiversity on it today, 10% uplift on no biodiversity uplift is no biodiversity uplift.

Nick Molho:

So that's an interesting point then, David. So, what do you make about the cost implications of this?

David Symons:

If you don't plan for this, the costs are absolutely massive for larger developments. So we're working on one or two linear developments where if we are not putting biodiversity net gain at the heart of a root selection and a scheme design, the costs are astronomical.

And that's the purpose of this is, if you've put biodiversity right up front, and other environmental issues – let's be clear as well, net zero and climate resilience as well and air quality – your costs are going to become very, very large. If you factor that in right at the start of your options appraisal, your route, your selection, etc. etc. then the costs become much more manageable.

Julia Barrett:

We've done this on a couple of our pilots, so we've delivered a super scheme for Dorset County Hospital that…you know, through COVID, gosh, if we learned nothing else, it was the value of the natural environment. And that's particularly true in a hospital environment: connecting people with nature, that health and wellbeing aspect, getting communities to engage with their natural environment and improve their wellbeing.

And that's leading us, in fact with that customer, enabled us to have a conversation about value and actually redrawing the opportunity to add biodiversity net gain. And they got very excited with us and we were able to make sure that we were complementing planting elsewhere on their site.

So, you know we can talk about it as a risk and a cost and all those negative languages, or we can see it as an opportunity to add value and deliver gain not only for biodiversity, but the environmental net gain, which benefits people as well.

Nick Molho:

And Katherine, did you want to jump into this as well?

Katherine Evans:

Well, I was only going to make two comments. Firstly, David talking about large infrastructure projects, obviously where you're obtaining a development consent order (DCO), actually it's slightly different to schemes that are done under the Town and Country Planning Act. So a biodiversity gain statement will be required on DCO applications, but that's not likely to come in quite so soon – we're looking at 2025 for that particular requirement. But obviously a DCO is a big thing to do. So, David is quite right that, actually making sure that you've factored these things in now is going to be essential for your project.

The other thing I was going to say is that, of course, the way that these biodiversity net gain benefits are secured is through what is euphemistically being called a conservation covenant. It is essentially a planning agreement. It's a section 106 agreement that we're all very used to dealing with on most schemes, large and small. But basically, it'll provide the legal framework to commit future owners – and this is the important thing, because we're looking 30 years into the future – but it will bind future owners in exactly the same way as a section 106 agreement does, committing them to conservation objectives like preventing the use of pesticides, maintaining woodland, and the conservation of places of archaeological importance. So it's all of those sorts of things, but in a legal framework.

Nick Molho:

Thank you Katherine. I think that was really a great range of comprehensive perspectives on this. And David, you've given us a really good forward look of some of the things that we need to think about in developing new projects. As a Future Ready Innovation leader, could you give us a sense of what kind of projects are currently keeping you busy?

David Symons:

Our ambition with Future Ready is that we'll see the future more clearly and then we'll inspire and challenge our 60,000 folks across the world to keep their Brunel and to integrate that future into their thinking, as well as today. So net zero becomes massively important, so also does climate change. In the UK, just coming through the hottest, driest summer that we've had in decades, but also thinking about the growth of future needs of people who use the schemes that we design as well.

And one that's especially close to us is the growth of mental disability in the UK. It's twice the level that it was 10 years ago, and yet the built environment generally doesn't necessarily consider in detail how we can design for mental health.

So that's our driver: how do we see in the round all of these areas, rather than just picking off net zero and biodiversity and society and social value, but looking at it absolutely in the round. What we put today is there for decades, and so therefore, we have to design and get right for the future and doing our best for our clients.

Nick Molho:

Julia, do you want to come into that as well?

Julia Barrett:

Key for us is keep looking ahead, don't get caught out. We're starting to talk about environmental net gain and you can see that's going to gain some legal standing. So the sooner we can get clarity, I think, on what that's going to mean, what's the scope, what are the metrics, how can we trial it, where does it build on what we know, how is it different, and how can we use it to meet some of the challenges? So, we've had a very, very dry year, we've had too little water, we know it's reasonably foreseeable we're going to have too much water in places very soon. How's it all going to fit together?

Nick Molho:

And I guess specifically on that point, can you give us a sense of what do you see beyond biodiversity as being increasingly likely to be covered by this concept of environmental net gain?

Julia Barrett:

I think we're going to have to have even more regard to soil. It's a finite natural resource. The quality of soil does so much, not only for growing crops and that type of thing, but actually if we don't protect it, we're denuding our natural environment and the flora and fauna from their habitat and actually creating problems when we do have too much water with runoff. And recognise the importance of proactively managed woodland for not only production of timber, but actually green spaces and the biodiversity value that they add.

Nick Molho:

Right. And Katherine, did you want to add to that?

Katherine Evans:

I think the thing that probably I think is going to affect my area of practice is considering the circular economy and whether or not actually redevelopment is the right way forward. I'm certainly seeing more conditions that relate to the circular economy being attached to planning permissions, but equally I think we're going to have to challenge ourselves as to whether or not knocking something down and starting again is the right way forward every time.

The other thing that probably I have a slight hobby horse on is the fact that we don't do strategic planning properly any more in this country, and so we don't have a proper plan that is holistic for all of these things – including food production and what all the competing interests are on what is a relatively small island that we live on. So I think there are big challenges for us in the future.

Nick Molho:

Thanks for pointing out the circular economy, Katherine. That's, of course, something that, David, WSP's done a huge amount on. Is there anything you'd like to add on that?

David Symons:

Just reinforces to me just how you cannot look at these things in individual isolation. So Katherine is absolutely right to talk about the trend to adaptive reuse of buildings. And if I bring it back to biodiversity as well, there is just enormous overlap between biodiversity and carbon. The best solutions are when you are thinking about the two together.

If you're a local authority landowner and you think about biodiversity, then you've got the opportunities to think about managing existing land. If you're going to tree planting – and that's not a Nirvanic solution, but – if you just think about biodiversity, you plant a beach forest, if you just think about carbon, you plant a pine forest. And you know what? The right answer is to think about the two together.

That's why it's really important to think about all of these issues together in the round as part of a pragmatic, in WSP's world, Future Ready perspective. It's why it's also really critical, bringing it back to Katherine's world, around consultation on credits and the like in terms of how you monetise this. It's why it's so critical that, as government works through this credit conversation, that it doesn't just say, "That land can only be used for carbon credits” or “can only be used for biodiversity." You have to have it stacked together so that you can credit land and you can monetise land that is both locking up carbon and also creating biodiversity gain.

Nick Molho:

Thank you, David. I think that's quite nicely summarising one of our members, the Woodland Trust's favourite catchphrase, which is very much the right tree in the right place. And that's all about bringing all these agendas together.

So, I'm conscious we've spoken a lot about national policy and even EU law, but obviously when we're talking about environmental net gain or biodiversity net gain is a generally local perspective here, and local authorities are going to have a big role to play in actually delivering those projects in the ground. How do we make that happen, Katherine? Do local authorities have the powers, the resources they need to do this and the clarity they need to take us forward?

Katherine Evans:

Well, I suspect the very straightforward answer to that question is, no, they don't. So, there will be a duty on local authorities to create biodiversity plans, at least every five years, to show what they're actually doing. I strongly suspect they don't have people who have the right skills in local government. So there's going to be an issue as to whether or not they bring those people in or whether they outsource that work. I would suspect they would probably do the outsourcing.

Resource in local government is a massive issue across planning generally, so I'm not terribly confident that local authorities have either the skill or the resource to do what they're going to be required to do. So there's an awful lot of delay in the process now, and I think that whenever you're actually asking local government to do something in addition to what they already do, it only means that things will take longer. And I don't think it's good for any of us to have the system effectively grind to a halt, because we need to deal with climate change now. It's not something that we can deal with when we're all sufficiently skilled to actually deal with it.

So, I think resource is a massive, massive issue for local government.

Nick Molho:

Thanks. And Julia, you know a thing or two about local authorities. Any other angles you'd want to add to that? Or is that a fair assessment of the situation?

Julia Barrett:

I think Katherine's hit the nail right on the head. We've seen capacity denuded from local authorities for far too long, and whenever they have a new duty, they should be adequately funded as should the supporting non-departmental public bodies, be that Natural England, Environment Agency, and others.

It's absolutely key that, if we have this legislation, it is implemented correctly and that people are held to account for delivery. So, it is no good to just tick the box at the point of planning, but actually the really important part of biodiversity net gain is at the end of the project: is it going to deliver what was promised?

Nick Molho:

Thank you Julia. David?

David Symons:

Just coming at it from a slightly different perspective, also to note that local authorities are also big landowners as well. And so there is some tremendous opportunities in the land strategies and the property strategies that they have themselves that can have a huge impact on carbon and biodiversity as well. In urban areas, there's a lot of conversations about identifying brownfield sites that have great biodiversity. And actually identifying them and making them accessible and really enhancing the land from a biodiversity perspective, rather than developing it, is one area.

I think also, if you then go to rural areas, we've got some quite large local authority landowners that have big agricultural land. Managing those in a regenerative farming way. There's now plenty of studies that show that you can absolutely, you can farm for food and farm for nature. It's not mutually exclusive as sometimes is presented. And you know what? If you farm that in a regenerative way, you're also not putting huge amounts of fertiliser on your sites and that's a very low carbon approach as well.

Nick Molho:

Thanks very much, David. Before we wrap up, just a quick plug for our listeners, but you would've heard about WSP's Future Ready mission throughout this podcast, you would've heard about Willmott Dixon's Now or Never strategy, and they're both some of the most comprehensive sustainability strategies I have come across in my 15+ years in the sector. So I would strongly recommend you have a look at those and their respective websites to find out more.

But let's move to wrapping up the podcast. So, I'd like to give you a minute each – Katherine, David, and Julia, we'll go in that order – to summarise what you think are the key things that the industry needs to look out for and any tips or other helpful thoughts you'd like to share with your colleagues across the sector. So Katherine, I will start with you.

Katherine Evans:

So I suspect we might get consultation fatigue. I think there is going to be a lot of consultation out there in relation to the Environment Act and all sorts of other environmental topics. It's very important that we actually engage with that so that we understand what's proposed and we're able to influence it as much as we possibly can. So if I have one plea, to some extent, is that everyone keeps an eye on what's out there. We certainly will, but everyone needs to engage with how this regulation actually is going to manifest itself over the next couple of years.

Nick Molho:

Thanks very much, Katherine. David?

David Symons:

Our customers…we all have clients and they, in many respects, are moving faster than regulation. Our people also, this really matters to them as well. In a tight labour market, that matters. So while regulation is absolutely the backstop, leadership and growth comes from thinking faster and further ahead than the legislation, and having a plan to actually crack on and do something different than your competitors.

Nick Molho:

And Julia?

Julia Barrett:

Yeah. My advice would be, don't wait to get started in understanding biodiversity net gain and environmental net gain and what they mean for your business, your customers, and your supply chain partners. Get started, learn what works for you, and you'll find opportunities to innovate to add value that you hadn't even anticipated.

Nick Molho:

Thank you very much. Well, Katherine Evans of TLT, David Symons of WSP, and Julia Barrett for Willmott Dixon, thank you to all of you for a really constructive and very detailed session and all of the great examples that you provided and which really brought the conversation to life. So I'm sure our listeners would've enjoyed listening to this as well. So thank you to our listeners as well for taking the time to listen to the podcast. I hope you have found it as useful as I have. Thanks very much for listening.