A Pioneering Approach to Biodiversity Net Gain

Greg Holmes, Investment Manager

As we approach a year since the UN’s Intergovernmental Panel on Climate Change report which warned of ‘code red for humanity’, the last 12 months have seen an added focus on sustainable and impact investment across the mid-market landscape.

While for many investors ESG has moved centre stage, Palatine’s commitment to sustainable investment spans some 12 years, and is firmly embedded into our approach across both our Buyout and Impact Funds.

As a private equity firm, our objective is creating value within our portfolio and delivering rewarding multiples to our investors, whilst ensuring this is in conjunction with our philosophy to do this in the right way through our positive equity approach. Creating value for us does not stop at the financials – we aim always to create sustainable businesses which do the right thing by our planet and society.

In March, we invested in a newly created environmental services group, Cura Terrae which further bolstered our commitment to investing in purpose-driven companies that drive environmental or social change, as well as generating returns with purpose.

In a short space of time, we are already seeing Cura Terrae making a strong impact, and particularly through its Ecus business which specialises in Biodiversity Net Gain compliance.

Biodiversity Net Gain (BNG) is now mandatory by law due to the Environment Act 2021, and before starting work, property developers are required to demonstrate that their project will deliver a 10% improvement in biodiversity off-site, on-site or via Biodiversity Credits.

The key to BNG is that it is measurable. It takes a standardised, quantifiable approach to habitat enhancement based on a biodiversity metric and the approval of a Biodiversity Gain Plan. As part of securing the long-term future of our environment, the BNG must also be guaranteed for at least 30 years.

Despite it only being made mandatory within the Environment Act 2021, Ecus has led the way in the BNG sector, and invested in its team, significantly before it became a legal requirement. At the beginning of 2021, for example, Ecus partnered with Natural England to launch a Biodiversity Credits Pilot (BCP) that offered insight into the potential for working with landowners to increase the biodiversity value of their sites. The BCP project gave Ecus’ multidisciplinary team the opportunity to work collaboratively to develop habitat management plans which achieve the best for biodiversity and the surrounding community.

Since Palatine invested, Ecus continues to set industry standards for BNG and more recently, Ecus worked closely with VolkerRail and Storey Contracting on a large project in the Hope Valley in Derbyshire to enhance biodiversity by implementing BNG in the surrounding area during railway upgrade works. Their arboriculture, ecology, landscape and habitat teams worked in tandem to design and implement this BNG project which included planting approximately 18,300 trees and shrubs – including 420 metres of new hedgerow – on Sickleholme Golf Course to compensate for the railway upgrade works and ensure BNG to the local environment is delivered.

Also, 150 heavy standard native trees such as Oak, Rohan and Field Maple were planted, as well as 9,000 sq m of enriched grassland by seeding with wildflower and grass mixes and this equated to BNG of 50-60%, well over the 10% requirement within the Environmental Act and delivering an excellent result for Ecus’ clients.

Promoting biodiversity across the UK is integral to the long term future of our environment. This responsibility does not just fall on environmental specialists like Ecus and, although their specialisms are clearly essential, we all have a role to play, whether as a developer, a policymaker, or an investor.

Through the Impact Fund, we are constantly looking to create and add further value to our portfolio, financially and sustainably both in terms of environment and society. This includes both surpassing the requirements of today, but also, looking to the future.

Science Based Targets for nature (SBTs) could well be the future for measuring dimensions of biodiversity reporting, preventing nature loss and helping to “re-wild” the planet.

Looking toward opportunities like SBTs is what has put pioneers like Ecus at the forefront of the sector, enabling us to deliver returns with purpose while tacking some of the biggest issues society faces.