Elizabeth Godo - May 24 2023
Partnership with NatureScot is "an example of responsible private investment"

Source: Borders Forest Trust

Scotland is home to seven of the 10 largest forests in the UK and several National Parks and Protected Areas. Commercial timber plantations have expanded since the first World War, but native woods remain small and isolated – making nature restoration in Scotland crucial to the fight against climate change.

Efforts are already underway, but the majority of woodland in Scotland is privately owned, and those land managers need investment and the right incentives to use their land sustainably.

“We’ve found a way to address this,” says Palladium’s Andrew Sutherland, “creating jobs, benefiting the local economy, restoring biodiversity, and sequestering carbon from the atmosphere at the same time.”

Private Investment is Needed

Sutherland is talking about a recently announced partnership between Palladium, Scottish agency NatureScot, Scottish private bank Hampden & Co., and Lombard Odier.

“The scale of the climate challenge makes leveraging private finance into UK nature restoration critical,” he continues. “Public funds alone will not go anywhere near the amounts required to either address biodiversity loss or reduce CO2 emissions.”

Brendan Turvey, Low Carbon Project Manager at NatureScot, agrees. “At the moment, most new woodlands in Scotland are paid for by the taxpayer. In this new model, we’ll use an increasing amount of responsible private investment to pay for new woodland, reducing the burden on public finances and increasing the amount of woodland that can be created,” he explains.

“We simply don’t have time to wait.”

Respect for Landowners and Communities

The partnership’s goal is to tackle the parallel crises of climate change and nature biodiversity loss by restoring habitats in a way that benefits both local people and the planet. In the coming years, the team will focus on creating two pilot projects – one to be located on Scotland’s West Coast and the other in the Scottish Borders region.

“We will work with the existing landowners – whether private land managers, communities or NGOs – to help diversify the local economy while benefiting nature,” Sutherland explains.

This respect for landowners as stewards of their own land is a big part of what differentiates the approach.

“We have the opportunity to radically shift the way woodland is created and maintained in Scotland, but it’s not about acquiring land or changing ownership.”

To illustrate, the first project involves the Borders Forest Trust, a locally governed charity that’s well-placed to benefit from a significant multimillion-pound investment through this initiative. According to Turvey, Borders Forest Trust is at the heart of the team designing the investment to make it work for them and their neighbours.

“Everyone involved in the project is committed to providing genuine and long-lasting benefits to communities,” he says. “We are keen to provide an example of responsible private investment that others can follow.”

What’s In It for The Banks

For investors, their return will come from sharing in the revenue generated when the projects sell carbon credits.

Carbon offsetting has recently been the subject of significant debate – and rightfully so, says Palladium’s Sutherland.

“I’m glad to see this,” he asserts. “We need standards. We need scrutiny. We need integrity. Companies can’t be offsetting before they’ve done everything in their power to reduce their emissions. That’s the only way this can work.”

To maintain this level of integrity, the carbon credits from this project can only be sold to companies with credible carbon reduction pathways in place. Carbon credits generated through the UK Woodland Carbon Code can only be ‘retired’ (i.e., used to offset their emissions) by UK based companies, and all carbon credits are tracked on the UK carbon market register.

Palladium and the other partners involved have all signed up to the Scottish Government’s Interim Principles on Responsible Natural Capital Investment and seek advice from Scottish Land Commission and other governmental actors to ensure that a high standard of integrity is preserved across the projects.

“We’re hopeful that these projects are only the beginning of investing the estimated £20 billion needed to restore Scotland’s natural capital in line with its Net Zero timetable,” says Sutherland.

The Hard Reality

For Palladium Managing Director Jose Maria Ortiz, it’s been a privilege to bring the type of work Palladium has done globally to the UK – including through Revere, a partnership with UK National Parks, and now with NatureScot.
“Palladium works globally to restore nature with private finance in a way that leaves no-one behind,” Ortiz says. “The hard reality is that climate change threatens our way of life, and urgent action is needed now. That’s why I’m so proud of the innovative way our teams are building the collaborative projects needed to make nature restoration a success, and with it, responsible and effective approaches to carbon offsetting, private investment, and social impact overall.

“No one organisation or government has all the answers. The old ways of thinking and doing just aren’t an option anymore.”

Contact info@thepalladiumgroup.com to learn more.