The summit in Colombia showed how real estate can contribute to biodiversity conservation and achieve ecological, social and economic benefits, says PwC’s Christiane Conrads.

The world’s largest biodiversity summit, known as COP16, took place in Colombia in October. It was the first meeting since a 2022 deal to stop the destruction of life on Earth caused by humans. The goal was to protect 30% of the planet for nature by the end of the decade, as well as reforming parts of the global financial system that damage the environment.

Christiane Conrads, partner and global real estate ESG leader at PwC, attended COP16 in Cali. Here, she discusses her impressions of the summit and its outcomes.

What are the key takeaways from COP16?

COP16 emphasised the critical importance of biodiversity as a foundation for human wellbeing and economic stability.

Despite some views that the conference was less successful due to unresolved funding issues and the lack of progress in implementing the Global Biodiversity Framework from Kunming and Montreal, significant strides were made.

Notable achievements include the establishment of a panel for Indigenous Peoples and Local Communities and the new benefit-sharing mechanism for genetic resources, the “Cali Fund”. Concrete steps to reduce deforestation and crucial agreements to better integrate nature and climate protection were also reached.

COP16 is rightly called the “People’s COP”, as it was heavily influenced by the needs and voices of the people. The wide participation of various stakeholders and the involvement of local communities underscored the relevance of the issue to society as a whole. Many impressive examples were presented, demonstrating how biodiversity and conservation can contribute to peacebuilding, such as through Peace Parks.

The people of Cali were very engaged and hospitable, creating an inspiring atmosphere in a country rich in biodiversity and home to many people living in harmony with nature.

What impact do the outcomes of COP16, especially the ongoing financing gap, have on the long-term planning and development of real estate projects and their financiers?

The real estate sector, due to its high consumption of resources and land, is a major contributor to biodiversity loss. According to the World Economic Forum in 2020, it accounts for nearly 30% of global biodiversity loss. At the same time, the construction and operation of buildings depend heavily on intact biodiversity and functioning ecosystems.

Given this interdependence, incorporating biodiversity risks into risk management is becoming increasingly important. The lack of funding for necessary biodiversity protection measures will lead to an increase in physical and transitional biodiversity risks in future. The real estate sector must take responsibility and not rely on short-term mitigation of these risks.

‘In the short term, it is essential to address and avoid negative interactions between the climate crisis and biodiversity loss.’

Christiane Conrads, PwC

The funding gap primarily affects measures in the global south, which indirectly impacts real estate projects in the global north. Insufficient funding for biodiversity protection in developing countries can exacerbate global ecological instability, which can also affect real estate markets in the north.

When planning and developing real estate projects and their financing long-term, the following should be considered:

1. Increased uncertainty and risks: Uncertainty about future regulations and potentially stricter environmental requirements can complicate the risk assessment of real estate projects. Financial institutions and investors may be hesitant to provide capital for projects that might face higher environmental standards and additional costs.

2. Higher costs: The funding gap may lead to increased costs for biodiversity protection measures. Real estate developers may need to allocate more of their own funds or use more expensive financing options to meet the required environmental standards.

3. Delays and uncertainty in project implementation: Projects may be delayed or constrained due to uncertainty, such as in procuring resources, and additional financial burdens.

4. Increased responsibility for companies: With public funding and government support programmes potentially being insufficient, companies are increasingly required to develop their own sustainability initiatives and invest in biodiversity projects. Companies must independently devise strategies to close the funding gap.

5. Promotion of innovations and new technologies: Despite the challenges, numerous opportunities arise. The need to close financial gaps and meet higher environmental standards can drive innovations and the development of new technologies, which can enable more sustainable and resilient real estate projects in harmony with nature in the long term.

6. Strengthening resilience to environmental changes: By integrating biodiversity strategies and sustainable practices into real estate projects, developers and investors can enhance their projects and resilience to environmental changes. This can lead to more stable and valuable properties in the long run.

Given the urgent need for action and the complexity of the issue, various solutions need to be pursued. The real estate sector will need to adapt to new conditions and take a holistic approach within the framework of a lifecycle assessment. In the short term, it is essential to address and avoid negative interactions between the climate crisis and biodiversity loss.

In summary, all business activities should aim to avoid or at least reduce biodiversity loss. Concurrently, measures such as creating green spaces that contribute positively to biodiversity conservation should be promoted.

Where do real estate developers and financiers in Germany stand on implementing biodiversity protection measures? Are biodiversity strategies widespread?

In Germany, many real estate experts acknowledge the significance of biodiversity, but for many stakeholders, it still plays only a minor role in daily business. More pressing issues like climate change often take precedence. Clear guidelines and incentives, with long-term orientation, are needed to advance the implementation of biodiversity strategies.

Concrete measures for biodiversity protection are not yet widely implemented, and there is a significant need for renovation, especially in older buildings with low energy efficiency. While individual measures such as green roofs or the creation of green spaces are positive, what is often missing is a holistic concept that considers risk management, value drivers (such as cost savings and increased tenant satisfaction), and growing transparency and reporting requirements.

How does the German real estate sector compare globally in the transition to being nature-positive?

Globally, the German real estate sector has made progress towards sustainability and biodiversity protection, but it still faces significant challenges. Countries like Singapore with its ‘City in a Garden’ concept and the Netherlands with its ‘nature-inclusive building’ approach are considered pioneers. Germany is still in the early stages of becoming nature-positive.

The UK’s biodiversity net gain (BNG) approach, which requires developers to ensure a positive biodiversity impact in new builds and renovations, could serve as a model. Clear guidelines and incentives are needed to accelerate the transition and enable comprehensive integration of biodiversity strategies.

It is important to highlight that existing real estate also offers great opportunities to drive this transition forward. Climate protection and circular economy strategies must be inherently linked with biodiversity concepts to achieve optimal results. Only through a holistic approach and integration of these strategies can the German real estate sector significantly contribute to the protection and promotion of biodiversity.

What are the biggest challenges and opportunities regarding nature and biodiversity protection?

The biggest challenges lie in financing, economic pressures, regulatory uncertainty and lack of binding commitments, and long-term engagement. Biodiversity is a complex issue that requires significant effort to address. A shift in awareness and culture is needed to prioritise the urgency and importance of biodiversity protection.

At the same time, numerous opportunities arise, such as market advantages and value enhancement, the promotion of innovation and new technologies, and strengthening resilience to environmental changes. A comprehensive risk analysis that considers both climate and biodiversity risks should increasingly come into focus.

There are many effective measures to promote biodiversity in real estate projects, such as reducing land sealing, decreasing the area of intensively maintained gardens, and creating natural green spaces. By integrating these measures, real estate projects can not only contribute to biodiversity conservation but also achieve ecological, social, and economic benefits. Our urban environment will become more beautiful and liveable.