The importance of sustainable real assets has become increasingly evident through the positive impact they can have on returns for investors/owners as well as future proofing the value of the investment. Issues such as energy efficiency are often an initial target, in part due to the ease with which improvement can be measured. More recently, wider ranging issues such as climate change resilience, lifecycle considerations and health and wellbeing have received greater attention. Health and wellbeing is an important consideration given the amount of time spent in buildings, with various pieces of research highlighting the benefits to staff productivity of a healthy office, thus making them more attractive to prospective tenants.
It’s not just the asset itself that needs to be sustainable. Asset owners are becoming increasingly aware of the third ‘arm’ of sustainability: their social responsibility and the need to consider impacts of their asset on the wider surroundings. As part of this, this article considers in greater detail two issues that are expected to receive increased attention during 2019: social value and biodiversity net gains.
Social value aims to ensure that an asset brings about the maximum social benefit to local people, businesses and communities. It has become clear that a focus on social value can lead to a number of positive impacts, including healthier lifestyles, creating a sense of community and employment opportunities. It is also a way of encouraging stakeholders to work collaboratively, as well as ensure that assets are futureproofed by considering that local communities will evolve over time and thus, developments need to respond to this.
It is evident that social value is becoming a key part of the development process with awareness growing across the industry. Developers are incorporating it into their businesses and projects as well as asset owners understanding that it is important to consider the needs and wants of the building users. Furthermore, there is an understanding among stakeholders that considering the social value of a development will be of benefit to them as well as the wider community.
The rise of social value has generated discussions about the challenge of measuring, monitoring and quantifying it, and there is confusion over who is responsible for capturing the data. As a result, it is hard to achieve consistency across the industry with measuring social value. Despite these challenges, recent trends towards the development of build to rent within the residential market has led to long term community benefit becoming an important part of the development process. This has subsequently resulted in an ability to capture social value data through being long term custodians of, and recipients of returns from assets they construct. Understanding how occupiers feel about the buildings in which they live or work allows for adjustments to be made to ensure a high quality product over the greatest timeframe.
Over the coming year, making reporting more consistent will be vital to ensure that data is comparable, particularly as stakeholders request greater transparency on social value. We are expecting to see asset owners and developers becoming bolder in setting out exactly what social value means to them, how they intend to measure success and reporting on true, additionality as a result of their actions.
Biodiversity net gains
From a biodiversity perspective in 2019, the phrase on everyone’s lips will be Biodiversity Net Gain (BNG). As a concept this has gained traction over recent years, having been widely accepted by industry leaders, with some having already embedded the requirement within internal policy. A handful of planning authorities, including London and Warwickshire, have also been leading the way with progressive policy requirements. Many areas, however, are still failing with respect to their protection and improvement of biodiversity under the status quo. Government accordingly launched a consultation in late 2018 outlining their proposed mandate for BNG within planning. The consultation will close on the 10th February 2019 and we expect BNG to become mainstream in some form over the next year or two.
The proposed mandate would roll out the need to deliver measurable gains for biodiversity on all new development schemes that require planning (excluding nationally significant infrastructure projects and house extensions). This would utilise an amended version of the existing Defra Biodiversity Metric, which would aim to sit comfortably within the existing survey, design and decision-making process, avoiding undue cost or added complexity for developers.
In all, it appears to be a positive action to redress our impact upon nature, whilst providing a clear framework for developers. It stands to aid decision-making, public relations and the design process, as well as improving the resilience, functionality and quality of real estate.
Specifically, having the mechanism to quantify biodiversity value should remove any ambiguity with respect to the appropriate scale and nature of mitigation, compensation and enhancement design interventions; the approach will allow for clarity on area and habitat type to be protected or recreated, creating a level playing field for all scales of development. There will be a focus on the provision of habitats amongst new development, ensuring that we embed nature where we need it most, rather than keeping it in designated areas away from where we live and work. The health, wellbeing and ecosystem service benefits as a consequence of this therefore stand to be significant, reflecting wider industry trends relating to quality placemaking designed with occupant’s wellbeing in mind.
In practice, the primary change in the first instance will be the need for ecologists to include a measure of baseline biodiversity units at a site during their baseline assessments. This will then be able to help inform site layout and design, identifying the predicted loss of units as a result of proposals as they evolve. Differing scenarios can then be drawn up to enable an overall gain in units, preferably achieved on-site. This approach will not change the existing approach to protected species or the mitigation hierarchy (where schemes must first avoid and then if not possible, minimise, remediate or finally compensate for impacts) but will more clearly identify risk, area need or cost for delivering a scheme from the outset.
It is clear that developers and asset owners are considering an increasingly wide range of issues, both as a result of legislation and industry direction. Social value and biodiversity net gain are two such issues that, as a result of the development of metrics to quantify and monitor them, developers will increasingly consider in order to maximise the sustainability of their assets whilst creating better value.
Graduate Consultant at Greengage Environmental Ltd.