Mairi McAllan

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; and
• be of high environmental integrity.

Mairi McAllan, minister for environment and land reform, 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.”

Ivan McKee, minister for business, trade, tourism and enterprise, added: “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.”