Ecosystem Restoration Code (ERC): A Competent Model for private investment in nature restoration in Scotland

4. Project design and governance

ERC projects shall have an effective governance structure to ensure the sustainable management of projects and delivery of durable benefits. This shall involve stakeholders and communities, include robust systems for risk management and monitoring and provide transparent communication about the project and its benefits.

4.1 Commitments to be made by the landowner / tenant

4.1.1 Requirement

The landowner (or, where the land is tenanted, both landowner and tenant), shall commit to:

• Conformance with this standard (the ERC)
• Permanent land use change if required

NOTE 1 Some objectives and management activities undertaken as part of an ERC project may require a permanent land use change (e.g. woodland creation)

• Manage land as per the initial management plan for the ERC project’s establishment phase (years 0-5) and as per longer-term management intentions for the full project duration and beyond (see section 4.2)
• Comply with the law and any relevant industry standards or codes of practice (see section 3.4)
• Ensuring the resources required to deliver the project are in place for the full project duration
• Reinstating any newly created or restored habitat features delivered as part of the ERC project that are lost or damaged due to unforeseen circumstances

NOTE 2 Newly created or restored habitat features could include, for example, woodlands, hedgerows, interventions to restore peatland degradation features (haggs, bare peat etc), land engineering works to restore watercourses

NOTE 3 Unforeseen circumstances could include, but are not limited to, damage / loss due to wind, fires, pests and diseases, impacts from unmanaged / unpermitted developments etc

• Inform future landowner(s) and, where tenanted, future tenant(s) of the commitment to the ERC
• Monitor the project and undertake adaptive management practices in line with the ERC Project Standards (see sections 4.2 and 4.5)
• Maintain verification for the full project duration as per relevant ERC requirements (see section 4.5)
• Ensure that the project and any sales or retirement of verified ERC credits is accurately represented and up to date in the ERC approved registry (see section 4.6)
• Make only true and accurate statements about ERC project ecosystem condition / biodiversity gains, as per relevant ERC requirements (section 4.7)
• In the case of an ERC multi-landholding project, maintaining any cross-ownership boundary agreement entered into (see section 3.3)

4.1.2 Means of validation

• Signed commitment or contracts between the relevant parties confirming their commitment to the ERC as per the requirements at section 4.1.1 above
• A cross-ownership boundary agreement for an ERC multi-landholding project where applicable

4.2 Management plan

4.2.1 Requirement

Projects shall have management planning documentation prepared in line with the ERC Project Standards. This shall initially focus on the ERC project’s establishment phase (years 0-5) but also covering the longer-term management intentions for the full project duration and beyond.

NOTE 1 Management plans should be kept current throughout the full duration of the project. As a minimum, an updated management plan should be available at each verification event. This should include any changes to the longer-term management intentions for the project

Management planning documentation shall contain:

• A description of the vision, long-term goals and management objectives of the ERC project, including how the project is embedding an ecosystem approach in line with the ERC Project Standards

NOTE 2 Management objectives should be articulated for the project as a whole and for specific habitat types, species populations etc as required

• An overview of the longer-term management intentions for the ERC project, for the full project duration and beyond
• An outline of the necessary inputs and resources including a financial analysis detailing all capex and opex for the full project duration
• A summary of operational techniques to be used and a chronological plan for the initiation of all key ecological land management activities

NOTE 3 ERC projects may be broad in scope and cut across various habitats and land system contexts (e.g. peatlands, woodlands, regenerative agriculture, productive forestry). The description of operational techniques and ecological land management activities should cover the full scope and explain which part(s) of the supply area(s) they relate to. This could be indicated on a map (see section 4.2.2)

NOTE 4 Where relevant (e.g. dependent on the spatial scale of the project as per section 3.2), the description of ecological land management activities should explain how activities in different parts of the supply area(s) are expected to interact (e.g. the establishment of ecological networks across the supply area(s), any catchment scale effects etc). This could be indicated on a map (see section 4.2.2)

• An overview of the plans and processes anticipated for adaptive management of the ERC project (see section 4.1 and 4.5)

NOTE 5 Adaptive management is required for ERC projects to help ensure sustained delivery of durable ecosystem condition / biodiversity gains (see section 4.3). Adaptive management links objective setting, awareness of reference conditions and anticipated timescales for habitat creation and / or restoration, management planning, delivery of management activity and monitoring to track project progress and adjust management plans and activity (e.g. in light of unexpected changes or outcomes, new external pressures / constraints)

NOTE 6 Plans for adaptive management should consider the anticipated ecosystem condition or biodiversity gains from the ERC project identified in project forecasting (see section 5.3) and how these relate to the reference condition(s) established for the project (see section 5.1)

• A clear project map showing: (i) the location of management activities including all proposals for habitat creation, restoration and management; (ii) the scale of the map; (iii) base mapping suitable at the scale of the map; (iv) the landholding boundary; (v) the location and geometry of the supply area(s) if different to the landholding boundary; (vi) a six digit British National Grid Reference for the approximate centre of the landholding; and (vii) north arrow

NOTE 7 Maps should also be provided for multi-landholding ERC projects (section 3.3) and to illustrate the use of permitted stacking and bundling options (section 3.8)

• Consideration of species selection and habitat establishment, restoration and management techniques to ensure resilience to future climate changes

The land manager(s) shall have the management capacity and resources necessary to carry out the planned management activities for the full project duration.

The above management planning information and documentation shall be provided for multi-landholding ERC projects (see section 3.3).

NOTE 8 This should also include a description of how spatial and ecological coherence is being achieved at the scale of the multi-landholding project, in line with the ERC Project Standards. This should describe the project’s anticipated benefits over and above what would be possible by the individual landholdings working by themselves only (e.g. any positive cumulative and synergistic effects that are anticipated)

4.2.2 Means of validation

• Management planning documentation addressing all requirements at section 4.2.1 above
• PDD which clearly defines how roles in the project will be fulfilled
• Project team lists which identify key technical skills across the team
• Project map(s) addressing all requirements at section 4.2.1 above

4.3 Management of risks and durability

4.3.1 Requirement

The landowner (or, where the land is tenanted, both landowner and tenant), shall demonstrate their commitment to ensuring the durability of ecosystem condition or biodiversity gains from the ERC project by:

• Committing to an ERC project with a clearly defined project duration of at least 25 years (see section 3.1)

NOTE 1 The project duration is also the crediting period for the project – i.e. the period over which the project accounts for ecosystem condition / biodiversity gains and may issue verified ERC credits

• Ensuring that the additional ecosystem condition / biodiversity gains represented by verified ERC credits last for at least the credit’s lifetime

NOTE 2 The lifetime of all ERC credits shall be at least 25 years

• Identifying significant delivery risks and appropriate mitigation strategies as set out in the project risk assessment
• Reinstating any newly created or restored habitat features delivered as part of the ERC project that are lost or damaged due to unforeseen circumstances (see section 4.1)
• Managing the ERC project as per the longer-term management intentions for the full project duration and beyond (see section 4.2)

NOTE 3 All ERC projects shall be managed for the longer-term (25 years+). Landowners / managers should ensure that there is a clear vision for the full project duration and beyond (e.g. continued maintenance of the biodiversity gain achieved by the project end date, development of outline plans for further restoration)

• Inform future landowner(s) and, where tenanted, future tenant(s) of the commitment to the ERC
• Maintaining an appropriate risk buffer for ERC credits

NOTE 4 For smaller ERC projects delivering creation or restoration of distinct patches of single habitat (e.g. upland oakwood, hedgerows, coastal saltmarsh), projects shall contribute 20% of credits to the ERC risk buffer. For these smaller and less complex projects, progress towards the achievement of project outcomes is expected to be more linear (i.e. with predictable, periodic biodiversity gains). These simpler projects may also be more vulnerable to catastrophic loss (e.g. from fire) and therefore risk management via a conventional risk buffer is considered appropriate

NOTE 5 For larger ERC projects delivering complex, integrated programmes of multi-habitat creation / restoration and wider ecological land management (e.g. adding / removing barriers, conservation grazing), projects shall hold back an agreed percentage of credits at each verification event for sale after the project end date only. For these larger and more complex projects, some variance in biodiversity gain is expected across the lifetime of the project with the achievement of project outcomes less certain / linear than for smaller discrete projects (NOTE 4). The percentage of credits held back at each verification shall be agreed with the third party VVB, based on an assessment of project risk and deliverability

• Only selling ERC credits ex-post (i.e. after ecosystem condition or biodiversity gains have been verified)
• Putting in place robust systems and procedures for adaptive management, as per the ERC Project Standards (see sections 4.1, 4.2 and 4.5)
• Defining outcomes and associated timebound goals / targets for specific aspects of the ERC project as required (e.g. creation or restoration of habitats, recovery of species) and linking these to the project’s systems and procedures for adaptive management

NOTE 6 Setting timebound goals / targets for the achievement of ERC project outcomes linked to specific aspects of biodiversity (e.g. creation or restoration of a specific habitat type) should be closely informed by an understanding of: (i) agreed reference states / conditions for the aspect of biodiversity in question; and (ii) a science-based assessment of the likely timescales for the achievement of that reference state / condition, which may be longer than the project duration

4.3.2 Means of validation

• Project risk assessment in the PDD
• Signed commitment or contracts between the relevant parties confirming their commitment to the ERC as per requirements at sections 4.3.1 and 4.1.2 above
• Review and acceptance of the ERC project’s risk buffer arrangements by the VVB and approved body

4.4 Consultation and community benefit

4.4.1 Requirement

The landowner (or, where the land is tenanted, both landowner and tenant), shall engage in a transparent and proportionate manner with local communities and stakeholders by:

• Putting in place a structured, systematic approach for identifying communities of place and interest (hereafter “communities”) that are relevant to the ERC supply area(s) and proposed management activities therein

NOTE 1 Communities of place and interest should be identified in accordance with relevant Scottish Land Commission (SLC) guidance^[17]

NOTE 2 Communities of interest (e.g. archaeological and outdoor recreation groups) may not be spatially proximate to the ERC project

• Assessing and documenting potential impacts of the ERC project on stakeholders and communities
• Engaging stakeholders and communities on the ERC project, its potential impacts, proposed mitigation and any plans for community benefit(s)

NOTE 3 ERC projects should use a range of engagement approaches appropriate to the project and community context

NOTE 4 Any engagement should be undertaken on the basis of free, prior and informed consent (FPIC) of the parties engaged

NOTE 5 Engagement should be undertaken early in the development of the ERC project at a time when there are tangible opportunities for community / stakeholder input to inform the objectives, scope and design of the project. Steps should be taken to manage expectations by clearly setting out the scope for engagement to influence the project

NOTE 6 There should be clear public communication of any direct community or wider socio-economic benefits provided by the ERC project and the governance arrangements put in place to manage the equitable sharing of these benefits

• Meeting any related legal requirements for consultation / engagement on the ERC project, including full consultation where necessary
• Making provision for ongoing feedback to communities and stakeholders for the full duration of the project

NOTE 7 This should include ensuring that up-to-date contact information for the landowner and / or project developer is available

• Engaging constructively and in good faith with any appeal brought by a community group or stakeholder about any aspect of process or decision about the ERC project
• Making available to communities and stakeholders material information about the supply, trading, ownership and use of ERC credits

NOTE 8 Information relating to ERC credits does not need to be shared where it is commercially confidential, personal data, otherwise protected under data protection law or where it may lead to the persecution of a protected species

4.4.2 Means of validation

• Evidence of the engagement process (approach, results, impact / decisions made as a result) to be summarised in the PDD
• Consultation details in an Environmental Impact Assessment (EIA) or Environmental Statement / EIA Report where relevant

NOTE 9 An EIA may be required for certain types or scales of woodland creation project, for example

• Any grant applications that confirm the level and outcome of consultation
• Any other documentation that provides evidence of the approach taken to meaningful stakeholder and community consultation, along with a summary of the feedback and the actions taken

NOTE 10 This could include any publications, news releases etc confirming any direct community or wider socio-economic benefits provided by the project

4.5 Quantification methods / metrics and monitoring

4.5.1 Requirement

• ERC projects shall use an ERC approved metric for quantifying ecosystem condition and / or biodiversity gain within the supply area(s)

NOTE 1 CreditNature’s Ecosystem Condition Index (ECI) metric supported by their Nature Asset Recovery Investment Analytics (NARIA) framework has a high likelihood of being approved for use as an ERC metric^[18]. Further metrics will be developed and approved in due course as per the metric flexible approach to the ERC (section 1.6)

• ERC projects shall use an ERC approved metric that is appropriate to the spatial scale (see section 3.2) and objectives (see section 4.2) of the project

NOTE 2 Projects should select an ERC approved metric that is best aligned with the objectives and management priorities for the project. This will help ensure that the management being delivered by the project has a direct impact on the aspect(s) of ecosystem condition or biodiversity being measured by the metric

• ERC projects shall use the same quantification metric throughout the full project duration, including for the baseline and ongoing monitoring
• Monitoring plans for the ERC project shall be set out in the PDD as per the requirements of the ERC Project Standards and Field Protocol

NOTE 3 Sampling and data collection undertaken as part of the monitoring of ERC projects shall follow robust methods that are supported by a body of scientific literature. These methods are set out in the ERC Field Protocol and in some cases are quantification metric specific

NOTE 4 Monitoring plans should include: (i) a statement of the monitoring activities to be implemented over the project duration aligned to the ERC Field Protocol; (ii) an explanation of the links between monitoring, procedures for adaptive management (see section 4.2) and the risk assessment (see section 4.3) that will collectively ensure the durability of project outcomes; (iii) a chronological plan of monitoring activities; (iv) a statement of all individuals who will be involved in monitoring, their competence for the role and details of who will have overall responsibility; and (v) details of the necessary resources and inputs for monitoring

NOTE 5 Monitoring plans should detail any data collection to be undertaken for “cross-cutting” indicators that are not directly required for assessing the selected ERC quantification metric. For example, monitoring of activity delivery (e.g. adding / removal of fencing, trees planted, grazing management changed), monitoring of specific aspects of ecosystem condition or biodiversity that are important for the overall success of the project but not part of the quantification metric (section 4.3)

• Monitoring plans shall be checked and approved by the VVB prior to any onsite survey work taking place
• ERC projects shall be verified by the independent VVB every five years
• ERC projects shall be monitored as per the monitoring plan for the full project duration. As a minimum, monitoring shall take place at least every five years prior to the independent verification by the VVB

NOTE 6 The timescale for monitoring depends on the habitat(s) being created or restored and the management that is put in place. Some ERC projects may require more frequent monitoring at certain stages (e.g. during initial establishment phase)

NOTE 7 More frequent monitoring may also be required for data and indicators that are not directly required for assessing the selected ERC quantification metric

• Monitoring and verification shall be complete by the end of the vintage / verification due date
• Monitoring surveys shall be carried out by a suitably competent landowner / manager, project developer or independent third party

NOTE 8 Competence can be acquired through training, qualifications, membership(s) of a relevant professional body, experience or combinations of these. Competence to undertake ERC monitoring surveys means that a person has the knowledge and skills to implement the specific sampling and data collection methodologies required for the quantification metric being used, as stipulated in the ERC Field Protocol

• Where monitoring identifies risks to project delivery, timely and suitable corrective actions shall be taken by the landowner / tenant

NOTE 9 Risks could include: (i) slower progress than anticipated towards forecasted ecosystem condition or biodiversity gains; and (ii) monitoring of cross-cutting indicators shows unexpected or concerning results. Risks to project delivery may be less severe than the risks of catastrophic loss or damage due to unforeseen circumstances described at sections 4.1 and 4.3, however, they may still require remedial or corrective action as part of the required adaptive management approach

4.5.2 Means of validation

• Monitoring plans set out in the PDD
• Signed commitment from the landowner, landowner and tenant or project developer to monitor and maintain verification for the project duration (see section 4.1)

4.6 Registry and transparency

4.6.1 Requirement

• ERC projects and credits shall appear on one ERC approved registry
• All ERC projects, project documentation, ERC credits, assignment and retirement of credits shall be visible on the ERC approved registry

NOTE 1 ERC project information does not need to be shared where it is commercially confidential, personal data, otherwise protected under data protection law or where it may lead to the persecution of a protected species

• Upon validation, the baseline, forecasted gain in ecosystem condition or biodiversity and the number of ERC credits expected to be issued from the project shall be recorded on the ERC approved registry

NOTE 2 Ex-ante selling of ERC credits is not permitted (see section 5.3)

• At each verification event, the VVB may approve the verification of a number of ERC credits. Verified credits shall be listed on the ERC approved registry

NOTE 3 The number of ERC credits to be verified shall be determined by: (i) the ecosystem condition / biodiversity gain evidenced by the ERC approved metric being used (see section 4.5); (ii) the credit calculation methodology for that metric; and (iii) any credit discounting or multiplying to be applied^[19]

• Before using verified ERC credits in any reports or claims, these shall be retired from the ERC approved registry
• ERC projects shall disclose other relevant information about the project via appropriate means

NOTE 4 Other relevant project information could include: (i) the components of ecosystem condition and / or biodiversity being measured as part of the selected ERC quantification metric and any cross-cutting indicators included in the monitoring plan; (ii) aspects of the ERC Field Protocol of relevance to the ERC quantification metric being used – e.g. the sampling and data collection methods being used; (iii) the timing and number of surveys being undertaken; (iv) the baseline status of the supply area(s) and whether any part of it is protected; (v) the management actions proposed to deliver the anticipated ecosystem condition or biodiversity gain; and (vi) all aspects of the calculations, score weightings, risk factors, assumptions and results from the application of the ERC quantification metric being used

NOTE 5 Other relevant ERC project information should be disclosed as supporting information on the ERC approved registry and / or via a project website

4.6.2 Means of validation

• The landowner, tenant, or project developer has an account on the ERC approved registry
• The ERC project is recorded on the ERC approved registry
• Signed commitment from the landowner, tenant or project developer to ensure accurate representation of all ERC project details on the ERC approved registry (see section 4.1)