Practice Briefing: The increasing importance of biodiversity and nature-related issues in real estate

Purpose - The environmental, social and governance (ESG) agenda has taken on increased importance in the real estate sector in recent years. This paper assesses the increasing importance of biodiversity, nature-related issues and habitat in the ESG agenda for real estate and the impact of the introduction of the Taskforce on Nature-related Financial Disclosures (TNFD) guidelines and several European-based biodiversity initiatives that will shape biodiversity and nature-related risk management in real estate going forward. Strategies being used by the leading real estate players to deliver this important biodiversity and nature-related dimension of ESG are also identified. Design/methodology/approach - This research is based on a thorough understanding of the ESG environment in the real estate industry by the author. Best practice examples regarding biodiversity and nature in ESG and the use of the TNFD guidelines in the real estate sector are provided. Findings - Nature-related risk management is increasingly important. Biodiversity and nature-related guidelines such as TNFD are important to capture biodiversity, nature and habitat issues in the ESG agenda in the real estate sector. These biodiversity guidelines will enable real estate players to be explicit in evaluating, addressing and disclosing their nature-related risks to their stakeholders and facilitating the effective delivery of nature-related risk management procedures. Several major real estate players have already given a commitment to delivering these TNFD guidelines and are developing best practice procedures to embed these TNFD guidelines for biodiversity, nature and habitat in their real estate decision-making. These biodiversity guidelines are expected to have an increasing impact in the real estate sector going forward. Practical implications - ESG is a key element in the real estate sector today, with net zero carbon strategies and climate change risk management being key dimensions going forward. This climate-related agenda is now being extended to a nature-related agenda, as the issues of biodiversity, nature and habitat are addressed. Guidelines such as TNFD are an important development that the real estate sector will need to embrace, with several leading real estate players already committing to TNFD in their real estate reporting and decision-making. The development of best practice procedures and suitable metrics for these nature-related guidelines will be key components for the fuller assessment of biodiversity, nature and habitat in the real estate space. Originality/value - This paper is the first paper to specifically address the need for more focus on incorporating biodiversity and nature in ESG in the real estate industry, highlighted by the use of the TNFD guidelines and European-based biodiversity initiatives. Best practice examples from the real estate industry are assessed. This area of biodiversity, nature and TNFD will be a key issue for ESG in the real estate industry going forward.