New principles to develop a socially fairer, high-integrity market.
Future private investment in Scotland’s natural capital – such as peatlands and woodlands - will be subject to a set of principles to help ensure it delivers social, environmental and economic benefit.
During COP26 the Scottish Government committed to develop a values-led and high-integrity market for natural capital – one that restores and enhances nature, as well as supporting a just transition that involves and benefits communities.
Six interim principles have now been published setting out the government’s ambitions and expectations for responsible private investment, for communities, investors, land owners, land managers, public bodies and other market stakeholders. Their publication makes Scotland the first country in the UK to set out its ambitions for the natural capital market in this way.
These interim principles will help inform and develop market rules, including options for enforcement mechanisms for the market, such as regulation. Under these new principles, investment should:
- Support diverse and productive land ownership
- Deliver integrated land use
- Deliver public, private and community benefit
- Demonstrate engagement and collaboration
- Be ethical and values-led
- Be of high environmental integrity
Minister for Environment and Land Reform Mairi McAllan said:
“Private investment in Scotland’s natural capital will be critical to enabling the pace and scale of action required to deliver our world leading ambitions on addressing climate change and biodiversity loss.
“We are determined to ensure that this necessary private investment is socially responsible and provides wider public benefit, including for local communities. We want to work with investors who share our values so that we encourage responsible investment in our natural capital for Scotland.
“These interim principles will help us to focus investment in the right types of natural capital in the right places such as in nature-based solutions, like peatland restoration and woodland creation, which bring benefits for the environment, the economy and society as a whole.”
Minister for Business, Trade, Tourism and Enterprise Ivan McKee said:
“The Green Finance Institute has estimated the investment gap for nature restoration in Scotland at around £20 billion over the next decade. While we have already committed significant public funding, government alone cannot meet this gap.
“The market is new and dynamic – investment is already happening and this presents both risk and opportunity.
“That is why our recently published National Strategy for Economic Transformation (NSET) includes a commitment to establishing a values-led, high-integrity market for responsible private investment in natural capital, supported by a national project pipeline for nature-based solutions.
“The publication of these interim principles is an important early action to support delivery of that commitment, and will position Scotland as an innovator in developing a new socially responsible market.”
The Scottish Land Commission’s Chief Executive Hamish Trench said:
“Natural capital investment in Scotland’s land has potential to bring significant change to Scotland’s environment and drive a just transition to a net zero economy. It is not only attracting new buyers to the land market, it is also becoming a significant influence on the decisions of existing land owners and managers.
“These interim principles will help support all parties involved in Scotland’s land market to embed fair and responsible approaches. The Land Rights and Responsibilities framework can help deliver a values-led, high-integrity market for responsible investment in natural capital and ensure the long-term benefits are fairly shared by us all. We are looking forward to working with land owners, land managers investors and communities to implement the interim principles.”
NatureScot’s Director for Sustainable Growth Robbie Kernahan said:
“Greater investment in our woodlands, peatlands, wetlands and coasts is key to helping address the nature and climate crisis. These interim principles will help to ensure that any new investment will create win-win outcomes for people and nature.
“As investment in these emerging natural capital markets becomes more mainstream, we want to work with communities and with businesses to generate a nature-rich future and ensure the benefits are shared by all.”
These interim principles have been welcomed by economic and environmental bodies and will be used to underpin a wider discussion with stakeholders on developing best practice.
Following publication, the Scottish Government will engage widely with stakeholders to discuss how the interim principles apply on the ground to help us develop best practice case studies for responsible investment. This process will inform how we develop market rules, including options for enforcement mechanisms for the market, such as regulation.
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