Nature-related risks and the Australian real estate sector – one step forward, two steps back?

Abstract

Abstract

For companies in the Australian real estate sector engaged in land and housing development, biodiversity loss and decline pose financial risks, particularly transition risks associated with policy responses introduced to address these problems. In line with recent international developments, there has been an uptick in regulatory activity in Australia to pressure companies to identify, disclose and manage nature-related financial risks – including through voluntary nature reporting standards, investor engagement and stakeholder advocacy. There has also been increased policy attention paid to the biodiversity crisis globally and in Australia, with comprehensive nature law reforms on the table or well underway at national and subnational scales. In this exploratory study, we analyse how large Australian companies in the real estate sector are responding to these shifting regulatory pressures. Our findings evidence low levels of engagement and nascent, tentative nature risk reporting and management practices. This suggests that without mandatory sustainability reporting standards that apply to nature, without increased investor engagement and advocacy, and without further progress on policy reform to address biodiversity loss, Australian companies are unlikely to take significant steps to address their nature-related risks and impacts.