NatureScot, the agency working to improve the natural environment of Scotland, announced a new initiative and partnership with Palladium and other private sector partners to raise upwards of £2 billion to invest in nature restoration projects across the country. With a Memorandum of Understanding now in place between Scottish Ministers and NatureScot to work with financial partners, a series of successful pilot projects have the potential to unlock private investment into natural capital, sequester carbon from the atmosphere, and restore biodiversity, while creating jobs in the surrounding communities.

Scotland, which is home to 7 of the 10 largest forests in the UK and several National Parks and Protected Areas, has seen an expansion of commercial timber plantations since the first World War, but native woods unfortunately remain small and isolated. The country is ripe for nature restoration and efforts are already underway, but they require significant funding from the private sector to reduce pressure on the public purse. This constraint is what the partnership aims to address.

“To deliver the aims of the Climate Change Plan we need to bring private investment to Scotland and this new partnership will allow us to test a new approach,” says Robbie Kernahan, NatureScot Director for Green Economy.

In partnership with Palladium, the Scottish-based private bank Hampden & Co, and the Swiss asset manager Lombard Odier, NatureScot aims to tackle climate change and its effects and the loss of nature by restoring habitats in a way that will benefit both local people and the planet.

“This is exactly the kind of ambitious partnership that’s needed,” adds Andrew Sutherland, Palladium Director of Nature-Based Solutions. Sutherland and the Palladium team will be creating the investment model for each project, structuring the investment vehicle which receives the finance, designing and implementing the logistical side of the projects and ensuring that the benefits of the project are distributed among all stakeholders in a fair and transparent way.

The carbon credits from the project will only be sold to UK companies and the partner organisations are hopeful that these projects are only the beginning of moving towards investing the estimated £20 billion needed to restore Scotland’s natural capital in line with its Net Zero timetable.

“Scotland is well placed to take a leading role by offering investors the opportunity to generate sustainable returns from the restoration and regeneration of our landscapes, notes Biodiversity Minister Lorna Slater. “This investment will generate multiple benefits: ending the loss of biodiversity, improving water quality, reducing the risk of flooding, regenerating local communities and creating green jobs.”

By encouraging private sector investment into the pilot projects, NatureScot will not only be restoring critical woodlands but creating new jobs and supporting rural communities across the country.

"Palladium works globally to restore nature with private finance in a way that leaves no-one behind,” explains Sutherland. “We’ve catalysed over US$1 billion over the past 7 years and impacted 4 million hectares of landscapes in need, and now we’re transferring what we’ve learned to fighting the twin crises of climate change and nature loss here in the UK.”

A critical part of NatureScot’s projects involve working closely with land managers and local partners to deliver high integrity, responsible investment in new and productive woodlands, while delivering financial benefits for local communities. The first pilot project, which will begin in the spring of 2023, is focused on the upper catchment of the River Tweed in Southern Scotland.

For more information, contact info@thepalladiumgroup.com.