global perspectives

Creating opportunities for nature in real estate and infrastructure

18 May 2023 / WORDS BY Gemma Cranston and Rohit Das

The real estate and infrastructure sector contributes to a quarter of UK emissions, and therefore plays an essential role in the overarching transition to net zero.

However net zero is only part of the puzzle. Climate and nature are inextricably linked and we need to fully embrace a nature positive transition to meet the challenge of our time and deliver both economic and environmental value. But this won’t be easy.  

Harnessing the power of nature to deliver infrastructure services or Nature-based Solutions (NbS) offers opportunities to reduce capital and operating costs and build business resilience and reputation. Yet, infrastructure firms and the value chain – including architects, engineers, developers, builders and road, railway and utility construction companies – are not as advanced as other sectors in addressing energy and carbon inefficiencies alongside biodiversity loss and often face complicated trade-offs. For example, ancient woodlands are being destroyed in the quest to build new high-speed public transport infrastructure intended to reduce car-dependency and vehicular emissions. 

Indeed, nature is an integral part of the transition solution and offers significant value creation opportunities for companies and investors.  With disclosure frameworks such as TNFD soon to offer guidance for the built environment and with SBTN releasing specific targets for the sector it is going to be increasingly important for companies to determine, align with and demonstrate progress to nature objectives as well as net zero goals.   

This week Pollination led a panel at the UK Real Estate Investment & Infrastructure Forum (UKREiiF) Annual Summit which focused on how we can leverage the power of nature to propel the transition. Following this Pollination Executive Directors Gemma Cranston and Rohit Das outline their five key takeaways from the discussion.

1. Nature and climate are inextricably interlinked.

Real estate and infrastructure sector should consider both in the decision-making process throughout the value chain. From keeping our buildings cool during warm weather to managing surface water flood risks and treating effluents, nature-based solutions offer efficient infrastructure services and therefore are a key opportunity area to mitigate climate risks and create social and economic value.

2. Nature and biodiversity are material to ESG considerations.

Real estate assets are exposed to wider macroeconomic and systemic risks arising out of nature and biodiversity crises. In addition, there are indirect/supply chain related nature and biodiversity risks. These are material to ESG considerations. Investors and asset owners/managers might need to consider approaches that go above and beyond compliance.

3. Every asset has an ESG potential.

Asset managers are best positioned to identify, evaluate and recognize the ESG potential of their asset-base. Asset owners should help optimise that capacity and draw out the benefits.

4. Creating value beyond Capex.

Asset managers and owners would be encouraged to create broader social and environmental value going beyond routine CAPEX. A helpful starting point will be to assess what percentage of current business-as-usual CAPEX is dedicated to ESG related activities and recognising how that can be increased over time to improve ESG performance.

5. Perfect (data) is the enemy of good (data).

It is understood that managing nature and biodiversity risks and creating opportunities require deep understanding and extensive data. However, delaying action and investments until the perfect dataset or model has been developed does not serve the purpose. Making the best use of available datasets and triangulating with scientific evidence can help identify least/no-regrets options and approaches.

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