Mobilising private investment in natural capital: report

This report looks at how to encourage responsible private investment into peatland restoration, including how to overcome barriers to scaling voluntary carbon markets to restore peatland in Scotland.




Aggregation facility

An investment vehicle which brings together multiple projects to reduce transaction costs by aggregating multiple investments into a single portfolio, enabling investors to finance multiple projects through a single investment.

Blended finance

Use of catalytic capital from public or philanthropic sources to mobilise additional finance from the private sector.


An intermediary that buys and sells goods and/or assets (e.g., credits from peatland restoration projects) with the intent of reselling them at a profit.

Carbon credit

A tradeable security that corresponds to 1 tonne of CO2 equivalent (tCO2e) which can be purchased on voluntary or regulated carbon markets.

Catalytic capital

A socially and/or environmentally driven investment made in order to unlock the participation of private investors that would not have otherwise participated.

Conservation dividend

A benefit sharing agreement that enables a fund to donate a portion of its returns towards conservation activities, supporting often uneconomical but highly impactful projects benefiting communities, whilst also potentially benefiting from tax relief on their donation.


A form of land tenure and traditional system of farming on a small scale particular to the Scottish Highlands.


The complex of living organisms, their physical environment, and all their interrelationships within a particular geographic area.

Ecosystem services

The benefits that are obtained from ecosystems, including provisioning, regulating, cultural and supporting services.

Environmental Land Management scheme (ELMs)

A government policy designed by Defra to support the rural economy though rewarding environmental land management in England. It is made of three potential schemes: Sustainable Farming Incentive, Local Nature Recovery, Landscape Recovery.

Equity investment

An amount of money that is invested in a company by purchasing shares of that company on a listed exchange (public equity) or the private market (private equity).

First-loss capital

A credit enhancement provided by an investor or grant maker who agrees to hold a first-loss position in an investment.

First-loss position

The position of an investor which is last in the order of payment and first to bear the loss in an investment.

Hurdle rate

A threshold rate of return on an investment required by an investor.


The outcomes for nature and societies created by undertaking target activities (such as delivery of NbS). Impact can be positive (for example, mitigating climate change) or negative (for example, displacing local communities).


The implementation of nature-based solutions within an organisation's own value chain to achieve decarbonisation goals.

Institutional investor

An organisation that invests money on behalf of clients or members, such as hedge funds, mutual funds and pension funds.


The act of providing capital in return for repayment and profit. Investment utilises repayable capital, unlike non-repayable capital typically provided by grant and philanthropic funders.

Land manager

An organisation managing land and advising landowners.


A person or organisation who owns land. Landowners can be estates, community organisations, environmental Non-Governmental Organisations, corporations etc.


A financial term to characterise how quickly and easily assets can be converted into cash.

Liquid market

A term used for a market in which the liquidity of a traded asset is high. A liquid market enables the purchase and sale of a traded asset with minimised friction costs (such as transaction costs).

Natural capital

The environmental resources (e.g., plants, animals, air, water, soils) that combine to yield a flow of benefits to people.

Nature-based solution (NbS)

The actions to protect, sustainably manage, and restore natural or modified ecosystems, that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits.


A state in which the greenhouse gases going into the atmosphere are balanced by removal out of the atmosphere, resulting in no net addition of emissions into the atmosphere.

Origination costs

The upfront fee charged by a lender to provide new finance to an investment opportunity.

Peatland Carbon Unit (PCU)

The reduction of 1 tCO2e emitted to the atmosphere through the restoration of peatland environments. Upon verification, PIUs vest into PCUs.

Pending Issuance Unit (PIU)

The 'promise to deliver' a PCU at a given point in the future.

Portfolio approach

The effect derived from investing in a range of projects or investments rather than a small number. By spreading investment, an investors risk is diversified.

Project developers

The individuals, organisations, or businesses involved with designing and implementing nature-based solutions projects (e.g., peatland restoration).

Project operators

The individuals, organisations, or businesses undertaking the long-term maintenance required to ensure the delivery of targeted outcomes.

Repayable finance

The capital made available over a set period which must be repaid, often with interests in addition of the initial amount made available.

Reserve price

The maximum price that a buyer (e.g. Scottish Government) is willing to pay for a good or service (e.g. a PCU) through a reverse auction. This price acts as a ceiling to protect the buyer/guarantor.

Reverse auction

The type of mechanisms through which a single buyer or provider awards pricing to/contract(s) with the most cost efficient eligible bidder(s). The auction continues until all available funding / contracts are exhausted, all bidders have been awarded, or no offers remain that comply with auction parameters including reserve pricing.

Stranded asset

The assets (e.g. land) that are unable to earn their original economic return as they have suffered from unanticipated or premature write-downs, devaluation or conversion to liabilities.[1]

Transaction costs

Expenses incurred through the buying or selling a good or service.

Uniform Price Auction (Reverse Auction)

A mechanism to determine a price for a good, service, or right. Under this mechanism participants bid their proposed price. All successful bidders are paid equally for the provision of goods.

Pay-As-Bid Price Auction (Reverse Auction)

A mechanism to determine a price for a good, service, or right. Under this mechanism participants bid their proposed price. All successful bidders are paid according to their bids.



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