‘The £1bn challenge’: Natural capital investment project launched in Scotland

The scheme will fund large-scale conservation and restoration activities across Scotland's forests

Called the Scottish Conservation Finance project, the initiative aims to build the business case for investment into projects which conserve natural resources and habitats, thus attracting new forms of funding to drive the nation’s environmental ambitions forward.

Organisations from across the private, public and non-profit sectors have been invited to take part in the scheme, with a view that they will collaboratively develop and launch new investment and funding models for large-scale conservation activities.

Projects set to be funded under the scheme include large-scale reforestation projects for native woodlands, restoration drives for oyster reefs and developments creating green spaces in urban areas. Each of the funded projects will endeavour to protect Scotland’s natural capital – the monetary value which can be assigned to planetary resources such as forests, oceans and clean air.

“Globally, investment in nature needs to increase substantially to meet the growing challenges posed by climate change and biodiversity loss,” the Scottish Wildlife Trust’s chief executive Jonny Hughes said.

“The aim of this new initiative is to provide a practical opportunity to come together, exchange ideas and collectively achieve a lasting impact. Ultimately we want to begin to drive billions of pounds of investment into Scottish conservation in the coming years.”

The launch of the Scottish Conservation Finance Project was announced at the Natural Capital Investment Conference at the Royal Society in London on Thursday (28 February). The project has already received backing from the likes of Virgin Money, S&P Global, the Highlands and Islands Enterprise and the Confederation of Forest Industries.

A new kind of accounting

The world’s total natural capital was valued at £53trn by the United Nations Environment Programme in 2010, with numerous reports having emerged since then presenting the potential benefits of adopting a natural capital approach.

A recent study by the UK’s Natural Capital Finance Alliance (NCFA) found that corporates across the globe are likely to miss a $1.6trn opportunity if they do not undertake natural capital accounting, such an approach integrates ecosystem-oriented management with economic decision-making and development by placing a financial value on natural resources.

Luxury fashion company Kering, Dow Chemical Company and home improvement retailer Kingfisher are among the handful of companies to have invested in natural capital systems to date. Kering, for example, uses a biodiversity metric, developed as part of a partnership with companies including Mars and Asda, to help translate the less tangible benefits of biodiversity impact to its internal decision-makers and external investors.

Similarly, Stella McCartney publishes environmental profit and loss (EP&L) accounts, which place a monetary value on the environmental costs and benefits that the company has generated by its direct operations and across its entire supply chain, covering sourcing, manufacturing and selling practices.

Wider progress on natural capital to date, however, has been slow. A joint report from Credit Suisse AG and the McKinsey Centre for Business and Environment recently found that an estimated $300bn-$400bn of investment per year is needed globally to preserve healthy ecosystems. Current annual investment in nature conservation is believed to stand at $52bn, with most coming from public or charity funding.

Moreover, some experts have suggested that natural capital accounting can be a “disaster” for sustainability professionals and an ineffective way of engaging the finance community with environmental issues.

Sarah George

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