The adage ‘if you can’t measure it, you can’t manage it’ still rings true: assessing the financial performance of farms and estates has been straightforward for many years, through annual accounts and benchmarking. More recently, as our understanding of the importance of social and environmental attributes has grown, so has the need to measure and report on them.

In order to do this we have developed a suite of complementary benchmarking tools that focus on natural and social capital as well as financial benchmarking, and also incorporate farm carbon and built carbon audits. These new Rural Performance Reports quantify the land-based assets owned by private and institutional landowners on either a single estate or portfolio level.

This represents the next step in our 20 years’ experience of providing financial benchmarking to a wide range of estate-owning clients. The reports give land-based performance scores and core KPIs that look at non-rental derived values attributed to ecosystem services.

The full suite of reports comprises:

• Natural capital
• Social contribution
• Carbon audit
• Financial performance

However, the process is fully flexible and each can be reported on separately.

The system uses GIS data taken from an estate boundary alongside survey information. It assesses existing ecosystem services and identifies opportunities for future strategic land use decisions. In simple terms, this means information about environmental and social characteristics can be evaluated at a high level and comparisons can be made with local and national averages.

For example, a natural and social capital report breaks down an estate to show the following attributes:

• Habitat provision
• Social factors such as amenities, public access and homes provided
• Land in designations such as national parks and SSSIs, and under environmental management schemes
• Environmental impact areas such as flood risk and water quality
• Land use breakdown to show the split of types of land use across the estate

Crucial to any form of audit is understanding the ‘so what?’ Identifying and quantifying the natural and social value of rural assets is increasingly important, not just for institutional clients looking to ensure they are addressing the growing prominence of environmental and social governance, but also for private landowners looking to connect with their communities; especially if they want to develop direct-to-consumer revenue streams for food, tourism and local initiatives.

From tree planting, habitat expansion and rewilding to job creation, recognising opportunities to increase natural capital assets, aid the carbon journey and improve social engagement have never been more timely for landowners.

Over the past 12 months we have assessed 93,000 hectares of land within 57 discrete land boundaries. Of this area, 8,573 hectares were in private ownership and 84,497 hectares were within institutional portfolios.

Our first performance averages highlight some notable differences in ownership objectives between private client types: institutional investors assessed had a much higher proportion of grade 1 and 2 agricultural land, and a much lower percentage of woodland cover. As ownership motivations change for institutional investors in particular, with a much greater focus on natural and social accountability as well as returns from agriculture, we expect these performance figures to change over time.

Further information

Contact Katie Stein or Patricia Singleton

Savills Rural