Robert Spencer, Global Lead, ESG Advisory at AECOM shares his thoughts on how nature-based solutions can be used to strengthen climate resilience.

 

EA: Based on the experiences of your organisation and working with clients and other stakeholders, how has the field of nature-based solutions advanced in the past year or so? What are the stand-out developments from your perspective? 

RS: The Kunming-Montreal Framework agreement in December 2022 was a milestone for business reflection and action planning on nature, indeed many stakeholders are motivated and really inspired by the 30 by 30 vision of protecting 30% of land and sea by 2030. Of course, that requires a huge amount of cooperation between government legislators and agencies, NGOs and private business and we are starting to see that happening with large scale endeavours like the Amazon One initiative in South America. The next biodiversity COP, this time in Columbia, looks set to drive the agenda much further. Moreover, the release of the Taskforce on Nature-related Financial Disclosures guidance at New York Climate Week last September provided industry with much-needed handrails for how to think about nature in business terms and integrate impacts and dependencies on nature into business decision-making. TNFD v1.0 has succeeded in getting mainstream business thinking about where their nature risks and opportunities lie. A first.

Many will also have followed the integration of sustainability reporting standards like SASB into the International Financial Reporting Standards. This integration of key sustainability issues into mainstream financial reporting has drawn in the Taskforce on Climate-related Financial Disclosures and it’s likely to rapidly subsume the TNFD too. Indeed, many clients have gone through the TCFD process and as the TNFD has mirrored that framework to a large degree (with some notable exceptions like LEAP), it has been helpful to see potential for efficiencies in a management and reporting context.

The Corporate Sustainability Reporting Directive, which will ultimately net some 50,000+ businesses domiciled or active in the EU, has important implications for biodiversity disclosure as well.

So, around and because of the stimulus provided by these global agreements and disclosure initiatives, we have seen science, business, third sector and government respond with a new quantum of information, guidance, research etc on nature: conferences are focused on it, industry and science institutions are publishing guidance and white papers, raising understanding and profile. Our own work is representative of this: we published the Nature Positive Playbook for Infrastructure design with WWF and FIDIC last September and we are currently working on a Nature Risk tool with the Sustainable Markets Initiative. Next month, we will publish a Nature Guide for the UK market with the Environmental Industries Commission (EIC).

I think it’s also clear that while there is a global shift towards nature positive thinking and action, there have been important developments in some jurisdictions that are real pathfinders for other governments around the world – I’m thinking chiefly of the UK and Australia policy developments, which are driving business integration of nature and biodiversity into built environment planning and design.

Under the UK Environment Act 2021, all planning permissions granted in England (with a few exemptions) except for small sites will have to deliver at least 10% biodiversity net gain from 12 February 2024. The Commonwealth Nature Repair Act, 2023 in Australia has been passed with the intention to stimulate the nature repair market. It’s part of a suite of reforms brought to pass by the Commonwealth government as part of their Nature Positive Strategy.

You also have the Accounting for Nature standards in Australia for habitat condition assessment. This is recognised as providing a scientifically robust and transparent approach and they have just independently verified Credit Nature’s method in the UK. More on that in the question on credits!

 

EA: What are your tips for making the business case for nature integration – whether at the pre-project level or the organisational or asset portfolio level – and linking to climate adaptation and resilience solutions/initiatives?  And what are the challenges in doing so?

RS: Wherever a business case is required then financial data is a prerequisite, so how do you convert complex nature and biodiversity data into financial data, which in turn can manifest in a business case for a nature-based solution over a typical hard or grey infrastructure solution?

You got it, you need a natural capital accounting process and you need good quality nature data to feed it, so that you can build a digital twin of the natural asset and it’s expected performance and functionality, which could then feed into a stormwater flood plan or an air quality plan or whatever the natural system function is expected to solve for.

The Natural Capital Coalition, now Capitals Coalition foresaw the need for investment grade nature data and accounts and published the Natural Capital Protocol to support this thinking way back in ancient history, OK, 2016. 

Natural Capital Assessments and Accounts are the essential first step for a nature-based solution as they provide the foundational building blocks for defining the natural stocks and flows that your required solution will enhance or facilitate.

Gathering nature data and processing it in the form of ecosystem services that business and infrastructure operators can use requires skill and, increasingly a big dollop of data science together with the latest assessment technology – usually a combination of remotely sensed geospatial layers and eDNA. This gives you a strong baseline of the condition and extent of your pre-existing natural assets to work off of.

However, unless it is already specified very clearly in the client’s brief that a nature-based solution is required then very early engagement is absolutely fundamental to allow biodiversity to influence a design. This helps the project team to be aware of the constraints, limitations and opportunities and the NBS design to be developed as part of that co-working process.

It is still hard, at project-level, to get NBS considered over grey infrastructure but this is slowly changing. This is in part due to the inflow of the right skills mix: alongside your civil and structural engineers, you need strong environmental economics and field ecology expertise working together as a team, sometimes with a social expert alongside. This is vital to quantify the multiple benefits from NBS (including those that are historically more difficult to quantify, such as the social or health-related). In addition to quantifying those benefits, it'll be important to i) demonstrate attribution (i.e. linking them clearly to the NBS type implemented), and; ii) demonstrate return (i.e. some of those benefits must actually go back to those who invest in the first place).

Unfortunately, at the moment there is a paucity of good, useful and wide-ranging open-source datasets on biodiversity and nature that can help this process. This means more baselining is required to ensure successful NBS creation. Biodiversity surveys can be extensive and thus expensive. Better open-source data will enable a more streamlined process that allows targeting performance measurement.

Describing clearly the co-benefits of an integrated climate / nature solution and recognising these in cost-benefit analysis (broadening it out) is key.  Guidance on this has recently emerged in Australia (NSW Government).

The close relationship between climate and nature is not lost on most professionals, so if they have a good understanding for climate in their business, the relationship (and associated resources and finance) can clearly be made.

Linked to the business case, is the opportunity for stacking carbon and nature (as well as valuing other ecosystem services) at a property or portfolio level to give diversity and resilience to revenue generation for landowners and farmers.

To summarise, the challenges are around a mix of those real and perceived data gaps, bringing the right skills to the job at the right time to stitch the nature and finance equation together and having enough case studies of the different types of NBS that show performance over a decent time period. Enough to convince a CFO.

Indeed, there is still, in some instances, real resistance to the idea that nature-based solutions and natural capital benefits can be easily quantified and included in an infrastructure solution. We have to overcome this soon, to expedite the scaling and replication of good quality NBS.

 

EA: What barriers exist around the measurement, monitoring and reporting/transparency for NBS and biodiversity metrics? How can smart data tools and methods help further understanding and advancement of NBS?  

RS: Being aware of the complexity, but also being clear on what it is that you need to measure is at the heart of this question. Unlike carbon with its single, relatively easy variable to measure, with nature and biodiversity you have an unknown number of variables in any given location, so where to start and what to focus on? Frameworks like TNFD help you focus in on the variables and dependencies that are most important to your business or project and therefore what you need to do the most work on.

But it’s telling that the Science Based Targets for Nature, the organisation set up to help corporates understand which metrics are most important for their business, are not set to finalise their guidance for another 12 to 18 months.

So, in the meantime do I measure species, do I measure habitats, do I measure ecosystems or the ecosystem services (the benefits to economy and society)? These are the questions vexing many a corporate sustainability leader.

Understanding the environmental baseline conditions for a proposed NBS is pretty essential in determining the feasibility of the solution in any given location and helps determine the conditions needed for a particular NBS to establish and survive long-term. Smart tools can be used to streamline data collection and lower the failure rate of NBS establishment. Such applications can outline data requirements related to, for example, hydrology, soil type/quality, historical land use change etc., allowing the user to determine what NBS might work. For example, a mangrove requires a very specific set of environmental conditions to establish and survive. Using smart data to correctly align the right NBS with the specific local conditions can provide big ecosystem service benefits, up to landscape-level.

Technologies like eDNA can be incredibly helpful in this line, as they give you a quick and ready snapshot of species diversity across your landscape, so you can see where the gaps or potential vulnerabilities are in that habitat and then develop management plans that address them. Comparability between sites is naturally difficult to achieve, because different sites will have a different current and potential species mix and habitat condition depending on where they are in the world, be that a coastal mangrove in the tropics or a dry heathland in the south of England.

So, the thing to measure is the change in biodiversity across your site or sites since you started work on it, clearly you are looking to be able to measure a positive change. And it’s that accumulation of positive change across many sites that can demonstrate a shift in the aggregate that will have a big impact for your business and the communities that you serve.

Having said that, many organisations have been outsourcing habitat surveys and data management to various consultants and not requesting consistent approaches to data collection and inferences. It’s fundamental to understanding the nature assets we have under management that we do get more consistent in measuring and monitoring over time to capture that positive change. 

The complexity of biodiversity and metrics is a potential barrier, but it’s not insurmountable and as we get more practiced and consistent in measuring and accounting for nature in the way we deliver our infrastructure then that ‘fear’ will ebb away and be replaced by deep, data-driven insights on business-nature interactions.

 

EA: What needs to be done to help close the so-called ‘nature funding gap’ between the climate and biodiversity crises and create a more enabling environment for business and finance to drive nature restoration in this UN decade of ecosystem regeneration?  What is the experience of utilising biodiversity credits and offset opportunities; and how can this be further refined going forward?

RS: As prefaced at the top, robust natural capital accounts, building off a thorough assessment is key to development of credible markets with respect to nature and we are not there yet, with robust valuation data still an issue.

My view is that this is a market maturity phenomenon and as nature practitioners and financiers speak each other’s language more and we have credible frameworks arising like ‘Accounting for Nature’ that business and government alike can trust, then fungibility can come in.

With a few exceptions already mentioned, government leadership and catalyst funding is still too low in this realm.

Notwithstanding, some notable businesses are pioneering approaches to stacking carbon and nature (as well as valuing other ecosystem services) at a property or portfolio level and this is providing much needed income diversity and resilience to revenue generation for landowners and farmers, regardless of where they are in the world.

We can’t ignore the credibility issues that have dogged the voluntary carbon markets for the past couple of years and so as nature markets come into their own, we need to have developed foundational systems that are transparent in their development and give buyers confidence to invest.

The current thinking which is developing amongst those designing voluntary bio credits is that they should facilitate businesses wanting to make a nature positive contribution, rather than compensating for natural system destruction. In that line, it is likely that offset schemes will develop at a national level, possibly linked to biodiversity credits (like with Biodiversity Net Gain (or BNG) in England) whilst voluntary bio credits look to gain investment for preservation, creation and enhancement of NBS for achieving future nature positivity.

I am all for an ‘and, and’ approach – as business tentatively seeks to understand, mitigate and then enhance their interactions with nature, our advisory and consultancy community must be at the tiller with our clients, guiding and wayfinding and setting up systems that will replenish and rejuvenate the natural systems our economy and society completely depend on.