Biodiversity and Nature on the agenda: a new government, a new approach?
Nature – Biodiversity – UK – Global
Soon after the dominant showing on 4 July 2024, the Department for Environment, Food & Rural Affairs (DEFRA) revealed its five main policy priorities for change under the new Labour Government, including protecting Britain’s nature, food system, and communities from the impacts of climate change1. The new Secretary of State for the DEFRA, the Rt Hon Steve Reed OBE MP, took to social media to unveil these core priorities for his department:
- Clean up rivers, lakes, and seas (since followed by the new Water Special Measures Bill);
- Create a roadmap to move Britain to a zero-waste economy;
- Boost food security;
- Ensure nature’s recovery; and
- Protect communities from the dangers of flooding.
These are timely measures; Natural England, the government’s natural environment adviser, has said that the UK is one of the most nature-depleted countries in the world2, reportedly with nearly one in six (just over 16%) species threatened with extinction. In England, the Environment Act 20213 set legally binding biodiversity targets, which will contribute to meeting international obligations, such as achieving the goals set out in the various international conventions and frameworks on biodiversity outlined further in this article. The priorities under that statute include biodiversity, as well as air quality, water, resource efficiency, and waste reduction with the following targets4:
- To halt the decline in species populations by 2030, and then reduce the risk of species going extinct in 2042, compared with 2022;
- To create or restore 500,000 hectares of wildlife-rich habitats by 2042, compared to 2022 levels; and
- To ensure overall species abundance is increasing rather than decreasing by 2030, and increases by 10% by 2042, compared with 2030.
The Labour government's 2024 Manifesto pledge confirmed that it would deliver for nature, take action to meet the Environment Act targets, and work in partnership with society, communities, and business to restore and protect the natural world. We are monitoring how such targets evolve under the new Labour government as its new bills progress through Parliament.
These targets are supplemented by the International Convention on Biological Diversity5 (CBD) “30 by 30” targets. The CBD is a global agreement covering all aspects of biodiversity. The UK formally made a commitment to protect and conserve a minimum of 30% of land and sea for biodiversity by 2030, known as 30x30. This target will be a key driver in reversing the decline of nature in the UK, by expanding and improving our protected areas and creating new areas for wildlife, allowing nature to spill over into the wider landscape.
As nature conservation is a devolved policy area, Scotland, Wales, and Northern Ireland have their own regulations and biodiversity targets and strategies. The four UK administrations published a joint UK Biodiversity Framework6 in May 2024, which aims to coordinate efforts to meet the UK’s international obligations (discussed later in this article). As previously indicated, the new Labour government has set nature recovery as a key priority. Similar messaging around commitments to halting biodiversity loss and taking action also appeared from our former government and G7 countries back in May 2024. The framework also stated its intent to honour international agreements on biodiversity7 and that updating the current Environment Improvement Plan (including following its annual progress report on 30 July 20248) will be a priority. New government, new appetite for Biodiversity Net Gain?
In England, the Biodiversity Net Gain (BNG) policy was outlined in the Environment Act 2021; it requires developments within the scope of the policy to demonstrate they will achieve a minimum 10% increase in biodiversity units from pre-development before construction can begin on site. This means that a project should introduce more and/or better-quality natural habitats than those that existed prior to development commencing.
The policy was introduced in phases, first becoming mandatory on 12 February 2024 for the vast majority of new major developments falling under the Town and Country Planning Act (1990) (i.e., almost all residential, commercial, and mining-related construction), and is anticipated to come into force for Nationally Significant Infrastructure Projects (NSIPs) before the end of 2025. Given the scope of developments for which BNG is already mandatory, and the NSIPs to which it will soon apply, the policy is likely to influence significant decision making on the value and use of land for those undertaking regulated developments, as well as those interested in providing biodiversity units in England.
The recent budget announced by Chancellor Rachel Reeves has provided some insight into government commitments to the environment and nature restoration. It is understood that £400 million has been allocated to fund peatland restoration and tree-planting across 2024–25 and 2025–26. The new government will also invest £2.4 billion over two years for flood resilience efforts and this may include nature-based solutions to provide flood attenuation benefits. The Chartered Institute for Ecology and Environmental Management9 (CIEEM) also reports that DEFRA has had its budget increased to £7.5 billion in 2025–26, representing a 2.7% increase. However, the CIEEM notes that the majority of this funding will be going towards supporting the transition to more productive and sustainable farming (£5 billion) and flood protection (£2.4 billion).
The Global Context
As ecosystems worldwide reach a tipping point, COP 16 in Cali, Colombia, recently convened delegates from around the globe to address biodiversity loss and halt environmental degradation. Building on the 2022 Kunming-Montreal Global Biodiversity Framework (GBF), countries sought to advance commitments to halt the destruction of nature. Prior to this, at COP 15 (held on 20 December 2022), almost 200 member states reached an agreement on a new GBF. This document replaces the previous Aichi Biodiversity Targets previously agreed in 2010. A core theme of the 2022 conference was that halting biodiversity declines is critical in terms of responding to the climate emergency. Many consider this document to be the nature equivalent to the Paris Agreement climate treaty. The Kunming-Montreal Global Biodiversity Framework, agreed in 2022, saw nations agree to reverse nature loss by protecting 30% of the planet by 2030. The GBF is driven by long-term goals related to the 2050 vision for biodiversity.
Fundamentally, these goals all relate to the protection and restoration of ecosystems to ensure the “integrity, connectivity and resilience of all ecosystems are maintained, enhanced, or restored, substantially increasing the area of natural ecosystems by 2050” (Goal A - Protect and Restore)10. However, the GBF also describes investment opportunities around biodiversity that will be required to close “the biodiversity finance gap of $700 billion per year” between now and 2030 to halt and reverse nature loss (Goal D – Invest and Collaborate).
To close the gap, the GBF calls for repurposing of $500 billion per year in “harmful subsidies” (Target 18). The remaining $200 billion a year will have to be mobilized from all sources (i.e., public, private, domestic, and international) and the private sector will have to play a substantial role (Target 19). In addition to the focus on investment and mobilizing private investment in nature, the GBF also requires corporate reporting on risks, dependencies, and impacts on biodiversity (Target 15). Target 15 requires parties to take “legal, administrative or policy measures to encourage and enable business, and, in particular, large and transnational companies and financial institutions” to regularly monitor, assess, and transparently disclose their risks, dependencies, and impacts on biodiversity; provide information to consumers to promote sustainable consumption; and to report on compliance with various matters relating to the impacts on biodiversity and sustainable patterns of production. This target is not framed in a way that makes disclosure mandatory. However, it is likely that these measures will feed into the corporate environmental monitoring and reporting aspects of Environmental, Social, and Governance in the future. The supporting guidance notes make clear that all businesses are dependent in some way on biodiversity and that understanding the relationship link to activities and operations (including with supply chains) can help businesses to assess, disclose, and take steps to address these impacts and risks.
Our neighbours in the EU are already becoming well versed in reporting on nature-related risks and dependencies. Under the EU Directive on Corporate Sustainability Reporting (2022/2464) which came into force on 5 January 2023, the requirements of the previous EU Non-Financial Reporting Directive (2014/95/EU) will be expanded in relation to the social and environmental information that companies will have to report. The rules will apply between 2024 and 2028. These obligations will affect a diverse set of larger companies, as well as small and medium enterprises, which will now be required to report on sustainability (including biodiversity and ecosystems).
Further, Article 3 of the EU Corporate Sustainability Due Diligence Directive (CSDDD) entered into force on 25 July 2024. This contains EU requirements regarding sustainability-related due diligence on a phased basis for large EU companies and non-EU companies with significant EU activity, and touches upon biodiversity as part of the applicable definitions used in the CSDDD. The Taskforce on Nature-related Financial Disclosures (TNFD) is a global, science-backed, and government-endorsed initiative, launched in June 2021, to provide businesses with a methodology for quantifying and disclosing nature-related financial risks or opportunities. Certain mandatory environmental reporting for UK companies currently includes some non-financial nature-related disclosures, depending on the type and size of the company. However, the scope of the TFND recommended disclosures made back in September 2023 were viewed as an important development. The TNFD plans to work to increase the voluntary adoption of the recommendations and work with organizations to create standards or a baseline for sustainability reporting. It will also liaise with regulators and government policy makers following commitments to implement nature-related corporate reporting under Target 15 of the UN Kunming-Montreal Global Biodiversity Framework.
Environmental activism from a biodiversity lens
Public and press focus on the environment has certainly increased over time. There have been a number of cases considering the climate and environment within the UK; however, many of these are not necessarily biodiversity related. Focus on the UK, however, has largely been around the approach to greenhouse gas emissions and climate change policy challenges.
There have been some cases globally to protect biodiversity, although the number of cases may not be as high as expected. These include cases based on the right to a healthy environment; other universal human rights claims; cases involving the rights of Indigenous peoples; and those focused on the rights of nature as a stakeholder. Some examples include:
- Plans to protect Brazil from illegal deforestation and illegal cattle farming;
- A case to protect the Green Peacock (an endangered species) from having its habitat destroyed by a hydroelectric dam project in China;
- An order into the scientific investigation into pesticides that harm bees and other endangered species in Costa Rica;
- Challenges to potential fossil fuel development in biodiversity-rich areas such as Norway, South Africa, and East Africa; and
- The sentencing of a criminal organization responsible for trading protected bird species in Europe (and wider action to prevent this globally).
In a wider sense, there have been greenwashing claims aimed at the marketing and publicity of projects, products, and information. In the UK, there has been guidance emanating from the UK Advertising Standards Agency and the Financial Conduct Authority.
Practical points to note
There are a range of ways or opportunities to make environmental and biodiverse changes on projects, including as part of the BNG regime. Developers must factor in all BNG requirements into the project scope, budget, and programme at the outset. These points will likely form part of early discussions with funders and local authorities too.
The legal and commercial position will need to be carefully reviewed, understood, and negotiated by parties on a case-by-case basis, usually in line with the wider planning law requirements. We may see provisions being introduced from funding requirements or planning approvals and conditions into construction contracts and professional appointments, as well as clear requirements or metrics linked to the calculation of BNG for a site and its management or maintenance. The specific BNG works or actions will need to be clearly identified in legal agreements in line with the applicable regulations. This may be preferable to specifying anticipated outcomes, to aid with measurement, and particularly if factors outside of the parties’ control could potentially result in a breach of the contract.
Other potential issues on projects could include the consequences for failing to comply with or meet the BNG requirements; associated delays; and/or a breach of statutory obligations. The parties will also need to properly understand the insurance position under such appointments and the potential impacts of such claims against the relevant policies.
We may see employers seeking to flow down their obligations on new developments to the supply chain. For example, this may include express provisions on consultants/sub-contractors requiring them not to place the developer or contractor in breach of third-party agreements, such as the planning condition or conservation condition, funding requirements, or associated environmental indemnities.
Some of the industry standard contracts have introduced amendments aimed at addressing environmental matters (i.e., the JCT 2024 Edition and NEC4 PSC, Optional X29). While such clauses represent a positive step in helping the industry to consider and take action to tackle climate change and biodiversity goals, parties should carefully consider how precedent wording should be incorporated and whether amends are required to balance commercial needs or to reflect project-specific standards or risks.
The payment provisions will require careful consideration in light of requirements and timing, including whether the use of milestone payments will be appropriate.
Finally, the impact of the 30-year period for maintaining and monitoring the BNG will be important, especially in the context of the changing environmental landscape and legislation or scientific technology.
Given the changes, compliance with the BNG regulations will likely need to be considered and confirmed by brokers, insurance underwriters, or claims handlers in terms of the scope of the risk being underwritten and specifically when considering the possible ramifications for any failure to comply with policy terms.
In summary
The political agenda here in the UK is likely to promote increased investment in nature and biodiversity through mechanisms such as BNG. This creates opportunities for landowners that manage areas of lower biodiversity or indeed habitats where restoration of ecosystems could be viable with the right level of investment and management. The global reach of the GBF, specifically focusing on Target 19, will encourage entities to “substantially and progressively increase” the provision of financial resources (especially from the private sector) to implement national biodiversity strategies and action plans. This investment will likely be sourced from private finance, blended finance (comprised of public and private sector investment), and from implementing strategies to raise resources and incentivize the private sector to invest in biodiversity. Will we see products and services being accredited as “nature positive” in the future? Will investments in biodiversity credits allow businesses with large impact footprints to claim these nature positive credentials? Quite possibly, and this would go some way to addressing the biodiversity finance gap required to halt and reverse nature loss. What we can be certain of is that the topic is fast moving, the legal and regulatory landscape is evolving, and potential opportunities are becoming more tangible.
It is strongly recommended that you take appropriate independent legal advice, as well as any financial or professional advice, prior to entering into agreements and/or consider carbon offsetting and credits.
If you are interested in learning more about these topics, please contact Freddy Brookes (freddy.brookes@hatch.com).
For more information on construction or environmental law, please visit Beale & Co’s website, or reach out directly to Michael Salau (m.salau@beale-law.com) or Kevin Henderson (k.henderson@beale-law.com).