Environmental, Social and Governance (ESG) criteria are becoming increasingly important in the decision-making of organisations. ESG frameworks assist in the planning and management of a business to ensure that their impacts on society and the environment are sustainable. We caught up with some of our key professionals, to find out how ESG has impacted the advice we give our rural clients.
Our Head of Planning, Liberty Stones said: “In some respects, the planning system has always embraced ESG at its heart, well before ESG became a buzzword. Developments have always had to mitigate their impact, especially those in a rural location, whether that be through the provision of bat mitigation or contributions to create new school places and affordable housing. The introduction of the National Planning Policy Framework (NPPF) in 2012 was a clear milestone, formalising three overarching objectives to achieve sustainable development. This is achieved through the delivery of economic, social and environmental benefits at a local level through both policy in local plans and decision-making.
“For most of our projects, it is clear where these benefits lie: the delivery of a solar park to power a local hospital, the provision of affordable housing to ensure those at greatest housing need have a home in a location where they have connections, a training academy to get people into work, an eco-gym powered by its users.
“There are less obvious benefits too: the long-term protection of a historic building through the delivery of an optimum viable use, the creation of a natural burial ground on a farm, even the over-provision of open space on a new housing scheme, can have significant benefits to wellbeing and bringing communities together. The smaller additions to a scheme also make a notable difference by maximising energy efficiency and the delivery of small-scale, localised renewable energy integral to a scheme. There are also times when these benefits conflict; a fine example is the feat of creating an energy-efficient listed building. The planning system has always led on ESG and the future is a clear prioritisation of the environment, where it will be a mandatory requirement to leave the places we create better than we found them.”
Our Head of Sustainable Energy, Darren Edwards added: “The drive for net zero and increasing ESG prominence have reinvigorated the sustainable energy sector with an abundance of opportunities for rural landowners. Despite the phase-out of subsidy support for most forms of new generation, with energy prices escalating the sector remains as attractive as ever. Opportunities exist for both commercial and utility-scale projects typically undertaken by third-party developers, as well as smaller-scale projects in which farmers and landowners can invest themselves. Finance is readily available across the board with lenders and investors keen to fund ‘green’ projects. Large-scale solar farms for generating power and battery storage projects for balancing the grid are currently in high demand with attractive rents paid for land in the right location and scale.
“At the smaller end of the market, the business case for investment in Photovoltaic (PV) and other technologies is strong. Rising costs and volatility in energy markets mean returns on investment for self-generation are improved and allow businesses to take control of at least part of their energy demand. Equally many farms and rural businesses are also now examining their carbon impact driven either by their own ambition to reduce their footprint on the environment or because of supply chain ESG pressures to cut emissions. Renewables projects can cost-effectively contribute to this.
“Grid access remains a significant barrier with high costs or upgrade delays in connection stifling many projects. Roof-mounted PV projects often benefit from permitted development rights, but for onshore wind in England, national planning policy has been extremely challenging. However, the government indicated in September 2022 that some restrictions on onshore wind may soon be relaxed giving a boost to this sector. With returns on investment from behind-the-meter energy projects heavily determined by energy cost savings, a detailed analysis of business energy consumption can be a valuable exercise in assessing project feasibility. Recording accurate energy consumption data on a kWh and cost basis is something all businesses should get to grips with given ever-increasing energy costs and the growing importance of carbon reporting.”
Our Head of Rural Property Management, Rebecca Ruck-Keene added: “For many rural landowners with let property, regulation of Energy Performance Certificates (EPCs) and a proposed ban on new oil and Liquid Petroleum Gas (LPG) boilers are also concerning challenges emerging from the drive for climate change mitigation.
“The property management sector has faced significant changes in the last few years, particularly for clients owning rural land and property. The considerations that now come with rural property management are heavily impacted by ESG frameworks. Not only do property managers need to be mindful of environmental and social factors affecting their client’s property but regulation dictates specific levels of criteria that must now be met.
“The Minimum Energy Efficiency Standards (MEES) regulations provide an example of environmental regulation that has a significant impact on all residential property managers. Requiring improved quality and energy efficiency of privately rented residential properties, from 1 April 2020 it became a legal requirement under MEES that all new and existing residential tenancies meet a minimum Energy Performance Certificate rating of E or above.
Further regulations are proposed to increase the minimum EPC requirement to a C by 2027 and a B by 2030. This will have the greatest impact on our rural properties as many were built when the consideration for energy efficiency was not a priority. Alternative solutions like renewable energy will be costly and require significant infrastructure that may not be justifiable for an isolated rural dwelling. In addition, listed buildings provide a particular challenge.
“Increasing awareness of ESG criteria creates a higher level of expectation from the customer, putting pressure on property owners and managers to provide a product that considers environmental impact. Customers are well versed in the opportunities available to them, whether this is tenants expecting properties to be fully insulated or consumers assuming that rural businesses have environmentally conscious waste management strategies.
When considering alternative income streams for rural property owners, ESG has a major influence on the option chosen. If planning permission is required, local authorities often expect positive social and environmental impacts. Some rural landowners are turning to biodiversity and offsetting as alternative land uses to conventional farming.
“Understanding ESG and managing the risks and opportunities created by these changing conditions will only become more important for property managers; it is essential to remain mindful of a certain level of risk when looking to meet ESG criteria. With technology and schemes in the early stages of development, property managers must remain flexible and get informed advice from the start.”
