Biodiversity Net Gain: celebrating one year of the landmark environmental policy for new developments in England

12 February 2024 saw the introduction of the landmark mandatory Biodiversity Net Gain (BNG) policy for developers in England, which situates improving biodiversity at the forefront of new developments. We recognise its first anniversary by looking back at the policy’s inception, the main questions which have arisen and what we consider our clients should have in mind in the coming months.

The framework for BNG

Legal background

Following enactment of the Environment Act 2021, all planning permission granted in England on applications for major developments submitted after 12 February 2024, and applications for small site developments submitted after 2 April 2024, automatically incorporates new BNG requirements[1]. The requirements will shortly become mandatory for developers on nationally significant infrastructure projects (on applications submitted from late November 2025).

The BNG requirements stipulate that developers in England must achieve at least a 10% biodiversity net gain (some local authorities are requiring higher gains) following completion of a development and maintain it for 30-years. The BNG is measured against the site’s condition at the ‘base date’, being the date the relevant planning application was submitted. The crux of this measure is that developers must assess the ecology of the site they are developing and provide an improved ecology at the site post-development, or alternatively produce the same net positive impact elsewhere.

There are three routes to achieve the requisite BNG:

1. Create additional biodiversity on the site of the development in question, i.e. within the red line boundary of the development. This aims to avoid loss of habitats during construction and delivers value enhancement to the onsite ecology.
2. If the requisite BNG cannot be achieved on-site, biodiversity gains can also be made on the developer’s land outside of the development site, or the developer may buy off-site “biodiversity units” on the market.
3. If the developer cannot achieve the requisite BNG via the above methods, they must purchase statutory biodiversity credits from the government. However, this must be used as a last resort. The government will use revenue from such purchases to invest in habitat creation elsewhere.

This article will not consider planning law or the purchasing of credits. Instead, we will address the achievement of requisite BNG by ecological improvement onsite or on developers’ own land, as this is the emphasis of the underpinning legislation.

Measuring net gain

To enable measurement of biodiversity for the purposes of BNG, the legislation[2] includes the ‘biodiversity metric’. The biodiversity metric measures the biodiversity value of habitats, in terms of units. The units are determined by reference to the size, condition, strategic significance and type of habitat in the area. There is also consideration for created or enhanced habitats, in terms of difficulty of creation/enhancement, how much time it takes to achieve target condition and distance from habitat loss.

A statutory biodiversity metric tool has been created to calculate the number of units onsite, albeit developers are required to appoint ecologists who are appropriately specialised and qualified to use the tool.

The biodiversity metric tool is to be used to calculate biodiversity units on the development site as at the base date, and to then establish an appropriate plan for achieving the required BNG, either onsite or offsite, at completion of the development and for 30-years post-completion.

Enforcement of BNG

Local Planning Authorities (LPAs) are responsible for enforcing the mandatory rules of the BNG policy. They will be implemented through conditions and measures during the planning process from the application stage and through construction. LPAs will then be responsible for monitoring the net effect on biodiversity following completion of the development.

Where LPAs have concerns over compliance with the 10% BNG requirement, they may impose Section 106 measures to oblige further action.

What have we seen in the first year?

While we are one year in, as the BNG policy was first applicable from submission of applications on 12 February 2024, there has been limited ‘trickle down’ from developers to our contractor and consultant clients. Our primary involvement with the BNG policy in its first year, therefore, has been to answer initial questions and clarify certain areas of the legislation. We set out below some of the FAQs which have arisen.

I am not a developer, so how might the BNG policy impact upon me as a contractor/consultant?

The BNG requirements are primarily binding on developers, as the requirements attach to the planning permission process. However, developers may naturally seek to pass on their obligations to their supply chain where possible.

At first instance, ecologist expertise will be required to carry out the initial biodiversity assessment, and thereafter provide a plan to manage the local ecology during design and construction. This will need to be coordinated with, and adopted by, the wider supply chain. For example, designers might need to provide their layout/designs to the development in a way which facilitates the BNG plan established by the developer’s ecologist.

Furthermore, as with any regulatory stipulation, developers will be required to document a paper trail to evidence the steps they have taken to comply with their BNG requirements at all stages of the development’s lifecycle. We therefore expect contractors and consultants to be tasked with producing the necessary paper trail to evidence the processes undertaken by the developer to achieve compliance. The paper trail will be provided to the relevant LPA and may be considered during any sale/purchase due diligence.

Is the 30-year requirement similar to a limitation period?

The 30-year period for BNG requirements is not a limitation period for the purposes of bringing legal action. The BNG requirements on developers, to achieve the necessary 10% (or higher) BNG, runs from completion of the development and for a subsequent 30-year period. While enforcement action might be commenced within that timeframe, it is conceivable that if the BNG requirements have not been achieved within the 30-year period, enforcement action could still be taken following expiry of the 30-year period. Similarly, it is conceivable that enforcement measures may last beyond the 30-year period if in the interim the 10% has not been achieved. This is in contrast to a limitation period, such as those provided in the Limitation Act 1980 or as agreed between the parties to a contract, whereby no claim may ordinarily be brought following expiration of the limitation period.

As will be discussed below, we expect that developers may try to introduce new extended contractual limitation periods or indemnities into relevant supply chain contracts, enabling them to pass on any BNG associated liability which arises beyond the usual contractual liability periods.

What projects does BNG apply to?

The BNG requirements apply to the following developments in England:

• Major developments where the planning application was submitted on or after 12 February 2024. A major development is one which provides 10 or more dwellings or includes 1,000 m2 or more of non-residential floorspace;
• Small site developments where the planning application was submitted on or after 2 April 2024. A small site development is one which provides one-nine dwellings or any site less than 0.5 hectares; and
• Nationally significant infrastructure projects where the planning application is submitted after late November 2025 (the date is yet to be confirmed). These projects are large scale works for energy, transport, water or waste infrastructure e.g. wind farms and other renewable energy projects, power stations, rail lines, road projects and airports.

There are however certain exemptions, where BNG requirements will not apply which include as follows:

• Developments below the necessary threshold i.e. where the development does not impact a priority habitat and impacts less than 25 square meters of on-site habitat or five metres of onsite linear habitats such as hedgerows;
• Applications which are made by householders, as defined by article 2(1) of the Town and Country Planning (Development Management Procedure) (England) Order 2015 – e.g. home extensions, conservatories or loft conversions;
• Self-build/custom build applications – where the development consists of no more than nine dwellings, the site has an area no larger than 0.5 hectares and consists exclusively of dwellings that are self-build/custom housebuilding as defined in section 1(A1) of the Self-build and Custom Housebuilding Act 2015;
• Developments undertaken mainly for the purpose of achieving the BNG planning requirements on another development;
• Developments which are part of or ancillary to the high-speed rail network.

As can be seen above, the scope of projects caught by the BNG policy is wide ranging.

Looking to the future…

Managing BNG-associated liability under contracts (e.g. limitation periods and exclusions of liability)

BNG requirements introduce new parameters of liability, which contractors and consultants must be aware of and manage carefully when negotiating their terms of engagement.

Costs to developers of rectifying non-compliance with BNG requirements are potentially significant, and they may seek to pass these on to their supply chain. It is therefore important that associated risk is contemplated and managed in contracts where possible, for instance through mechanisms such as exclusions of liability, liability caps and net contributions clauses.

Similarly, the 30-year post-completion requirement period has important implications on contractual liability periods. It is usual for a construction contract or professional appointment to impose a liability period of 6 or 12 years from completion (depending on whether the agreement is signed as a simple contract or a deed). Recently, following enactment of the Building Safety Act 2022 and the enhanced limitation periods for fire-safety claims, liability periods have increasingly been caveated to allow for longer periods related to fire-safety claims. Similarly, we may start to see developers seeking to impose indemnities or further caveats to extend limitation periods in terms of BNG requirements. It is important such clauses are worded carefully to avoid unnecessary extension of liability which is unrelated to BNG requirements. Our Contracts and Project Advisory team regularly negotiate these clauses and will be able to advise on appropriate wording in such circumstances.

Scopes of engagement

As mentioned above, we envisage contractors and consultants will be expected to coordinate with project ecologists when carrying out their obligations, and be given responsibility for producing certain deliverables to evidence compliance with BNG requirements. These considerations and tasks will therefore increasingly be adopted into contractual agreements, most likely via the scope of engagement.

When negotiating contracts, it will be important to ensure that requirements relating to BNG are clearly described under the relevant contractual scopes and understood by contractors and consultants alike. It is fundamental to avoid taking on duties which are unduly onerous or indefinite, or outside of one’s area of expertise. Such duties must therefore be carefully worded (e.g. to limit duties to provision of certain deliverables/documents/information rather than taking responsibility for achieving BNG itself), and we are able to advise on how to appropriately define relevant duties so as to caveat, limit or exclude unacceptable risk.

Staying ahead of the curve

There is a growing expectation for our contractor and consultant clients to be knowledgeable and qualified to advise on environmental and BNG matters and be capable of working alongside environmental consultants to achieve BNG requirements.

Environmental consultants, particularly ecologists, will more commonly become part of the ‘project team’ (as defined by the underlying construction contracts), and contractors and consultants will either be expected to hold the requisite skills/capabilities or be required to coordinate with the developer’s consultant when carrying out their wider design and/or construction obligations.

Conclusion

As BNG continues to unfold, we wait to see what the true implications are for the construction industry. Hopefully the policy will reap innumerable benefits to England’s wildlife. In the meantime, we expect contractors and consultants will start to see BNG specific requirements appear in their contracts in the coming months. As discussed above, it is important to understand and manage the risks associated with new BNG-associated contractual arrangements. We would be happy to assist in reviewing and advising on any provisions or negotiating agreements, so please get in touch if this would be helpful.

[1] See statutory provisions at Schedule 7A to the Town and Country Planning Act 1990

[2] See paragraphs 3 & 4 of Schedule 7A to the Town and Country Planning Act 1990