Critical Review of Biodiversity Criteria in Sustainable Real Estate Finance

The speed of global biodiversity loss has highlighted the urgency of directing more capital into nature-positive investments. Subsequently, green real estate finance has an important role to play in filling this finance gap. Against this backdrop, the paper employs a case study methodology to critically review the harmonies and disparities between two alternative approaches to incorporate biodiversity in the building sector: the EU Taxonomy, representing a regulatory “top-down” push for minimum standards, and the “Biodiversity Building” concept which portrays an industry-driven “bottom-up” approach aimed at ecological regenerativity. The analysis reveals some fundamental differences between the scope, content, and applicability of the biodiversity criteria between the two paradigms. In essence, the EU Taxonomy criteria are limited to reducing the impact at the building site, aligned with the “Do No Significant Harm” principle. In contrast, the Biodiversity Building strives for nature-positive outcomes by setting requirements for the entire lifecycle and value chain of the building. These findings indicate a need to harmonise the site-specific and lifecycle-oriented approaches to biodiversity to ensure that the criteria can be applied in practice without misinterpreting responsibilities and lowering standards. This is necessary for securing that green funding is directed at truly sustainable investments, making the results relevant for policymakers, practitioners and researchers alike.