Embedding biodiversity net gain into capital investment

Yorkshire Water has incorporated biodiversity net gain as collaboration between finance, sustainability and asset management.

The biodiversity net gain initiative, as part of the company’s decision-making framework, has the capability to inform decisions across the whole asset management portfolio so that optimal decisions to manage risk and deliver affordable services can be made.

The UK Environment Act 2021 introduced more prescriptive requirements for biodiversity net gain which impact capital delivery programmes. The requirements include: Securing a minimum ten per cent gain, calculated using a defined biodiversity metric; Protecting biodiversity net gain in a habitat for at least 30 years, by using planning obligations or conservation covenants and Delivering biodiversity net gain on-site, off-site or using the new biodiversity credits scheme.

The approach involves a three-step process: Delivering individual proof-of-concept case studies; Determining technical changes required for wider rollout and Embedding into the system and into decision making.

The company’s main challenge was how to deal with biodiversity net gain in terms of ambition and delivery. To consider this, it developed some proof-of-concept case studies as examples of projects that are helping deliver against our wider aspirations for biodiversity, including: Running biodiversity enhancement programmes and facilitating volunteering and access to our sites for our customers and colleagues; Undertaking conservation management of many of our local wildlife sites; Protecting endangered aquatic and riparian species, such as freshwater pearl mussel, white-clawed crayfish, greater water parsnip and tansy beetle and Working with catchment partners to deliver catchment-scale river habitat resilience programmes.

Yorkshire Water performed biodiversity net gain assessments for each of the case studies, with ecologists providing technical input. They started by measuring baselines and they then estimated the post-development outcomes. The company used Natural England’s Biodiversity Metric tool to help with the assessments and followed their process, considering on-site options as much as possible before looking at off-site options. The tool measures the unit value of the site before development, and the proposed value after development, with the net movement showing the biodiversity net gain.

Incorporating outputs from the net gain assessment (rather than being hidden within the ‘Land use’ category, like in the pilots) means this data can be used as a discrete metric for decision making. For example, the company can identify the option (or set of options) with the highest biodiversity units. It can also use this information to determine the total units created or lost from a set of capital solutions.

As valuing biodiversity directly is complex Yorkshire Water calculated monetised impacts indirectly from the quantitative change in the habitat area and the downstream impacts on ecosystem services. These are assessed in Enterprise Decision Analytics as part of natural capital.

Yorkshire Water offers the following tips for success:

SET YOUR AMBITION AT THE START. Biodiversity is complex and it’s not possible to measure everything. Define the key outcomes you want to achieve and use this to identify appropriate measurement tools.

COLLABORATE WITH SPECIALISTS. Measuring and valuing biodiversity and associated gain or loss is a specialist area. The skills needed can be drawn, as required, from in-house or external economists, ecologists, sustainability professionals and accountants. We also sought input from our engineering and capital delivery colleagues.

BE PROACTIVE ABOUT CULTURE CHANGE. Getting the system change right is only part of the process – gaining buy-in from stakeholders and changing culture is essential for successful implementation.

TEST YOUR IDEAS THROUGH A PILOT STAGE. Piloting your approach allows you to test your ideas, learn, iterate and adapt as you go, ensuring your approach can be applied to a variety of different circumstances.