Green Finance for Nature Restoration
Guidance for projects within the National Park
The National Park Authority has committed to deliver large-scale nature restoration, but a lack of substantial, long-term funding remains a key barrier to achieving this goal.
To support the large-scale environmental restoration needed to reverse the decline in nature by 2030 and deliver widespread restoration within the National Park by 2040, a blend of private investment in natural capital, alongside public finance, will likely be essential to deliver the scale of impact required.
We have no statutory role in the regulation of green finance, but we do have a clear role as a convener and facilitator for the National Park and for nature restoration within it. We therefore believe exploring responsible, values-driven, high-integrity green finance may be one option which could offer considerable opportunities both to nature restoration and to delivering local jobs as part of a just transition to a greener economy within the National Park.
While we cannot provide financial advice, we can work with landowners, developers and communities to increase awareness of potential opportunities and risks of green finance options.
Our team is available to advise and guide on how those projects are designed, helping to accelerate the expansion of nature restoration efforts.
What is Green Finance?
Green finance, also known as Natural Capital Finance, refers to financial activities aimed at achieving positive environmental outcomes. Types of green finance include investment, the purchase of ecosystem services and philanthropy.
In this guidance document, we are focusing on land use change projects using a mix of private and public funding – which includes income from the creation and sale of credits based on ‘ecosystem services’ such as the amount of carbon sequestered, or biodiversity enhanced.
Carbon credits are currently the most common and well-established form of environmental credits in green finance but as the market evolves, other types of environmental credits are emerging.
These include:
- Water quality credits for actions such as restoring wetlands
- Biodiversity credits for habitat restoration
- Species conservation and soil heath credits for practices that improve soil quality and sequester carbon in agricultural land.
Who is this guidance for?
This guidance is intended for developers, land managers and communities who are considering how green finance may support projects in the National Park to deliver nature restoration at scale, whilst supporting local communities.
It provides a checklist which works as a self-assessment so that they can consider how best to deliver ethical green finance projects in the National Park.
This includes:
- Considering the scale and scope of their project
- Who is likely to be involved and impacted
- Ensuring ethical investment
- Biodiversity benefit
- Community benefit
The guidance aims to play a part in encouraging land managers, developers and communities to consider risks and navigate the potential benefits that green finance projects may eventually deliver including biodiversity, climate resilience, food supply, water management, and community engagement. It promotes an integrated, proportionate approach, ensuring projects not only address carbon sequestration but also deliver tangible benefits to local ecosystems and communities.
Applying these guidelines will depend on the purpose and scale of each project and is entirely at the discretion of the developer or land manager leading the project. Careful consideration and transparent sharing of a proportionate approach with key stakeholders are essential to delivering projects that maximise benefits in line with the National Park Partnership Plan.
When considering a project, it is strongly recommended that independent financial advice is sought, as this is not a consideration covered by the guidance. The National Park Authority cannot advise on any projected financial return that a particular investment may bring.
Frequently Asked Questions
Green Finance, also known as Natural Capital Finance, is a broad term for any structured financial activity created to ensure a better environmental outcome. Green finance types include investment, the purchase of ecosystem services and philanthropy. In our Guidance, we are focusing on land use change projects using a mix of private and public funding – which includes income from the creation and sale of credits based on ‘ecosystem services’ such as the amount of carbon sequestered, or biodiversity enhanced.
We acknowledge the concerns about carbon credits and in developing the Guidance we have worked to address those concerns by recommending the voluntary use of government-backed schemes such as the Woodland Carbon Code or Peatland Code to prevent greenwashing, ensuring long-term sustainability and that all investments are made with genuine environmental integrity and credibility.
Our aim is to play a part in ensuring green finance opportunities are developed in a way that allows both new and existing landowners to participate in nature restoration projects without requiring a change in land ownership. This helps to ensure that green finance projects can be undertaken without disrupting existing community dynamics. Whether the project is carried out by new landowners or current ones, it is important that they consider the following:
As a National Park Authority, we are acutely aware of the need to ensure any work we undertake is both ethical and transparent. We have no statutory role in the regulation of green finance, we take the risk of greenwashing very seriously and as such, have embedded robust factors in an effort to mitigate against such accusations including, recommending the use of Government-backed accreditation schemes like the Woodland Carbon Code (WPP) and Peatland Code (PC) for carbon claims. Encouraging projects to work only with investors who have credible net-zero plans and align with ethical principles and promoting community engagement and benefit-sharing to help ensure projects deliver genuine environmental and social value. We also encourage all green finance project to embed Scotland’s six principles for responsible investment as set out in Scotland’s Natural Capital Framework including integrated land use, engagement and collaboration, community benefit, and high environmental integrity. These principles are designed to ensure that investments in natural capital markets meet the highest standards, delivering measurable environmental and social outcomes.
The Guidance is designed to be inclusive, supporting projects of various scales – from small community initiatives to larger developments. We’re committed to ensuring that our green finance guidance is accessible to all, offering our advice and guidance to a diverse range of projects that can contribute to our nature restoration goals. That said, it’s important to acknowledge that, currently, the economics of small projects can be challenging. Aggregating smaller projects into larger, viable opportunities is a complex task, and our guidance, in its current form, cannot directly address this challenge. We recognise that this is a barrier for many communities and smaller landholdings. However, we are actively working to explore how aggregated models could help make green finance more accessible to these smaller projects. These models could help overcome the scalability issues and provide more opportunities for smaller landowners and community groups. The guidance has been developed with a flexible and proportionate approach to suit projects of varying sizes. It promotes a checklist-based approach, developed through The Facility for Investment Ready Nature in Scotland (FIRNS) project, which helps communities and land managers design responsible projects while encouraging transparent communication with stakeholders. This approach helps to ensure smaller projects and community initiatives are not excluded from the potential benefits of green finance. The pilot checklist also seeks to empower early adopters to test new approaches in this rapidly evolving sector, ensuring a broad range of access and opportunity. While larger landowners may lead the way initially, the guidance works to maintain equitable opportunities for all in the long term, regardless of the scale of the project.
Green finance is an emerging market and as such, there are many companies developing a wide range of new products and services within. As a National Park Authority, we are not entering into exclusive relationships with any single company, we are here to act as a convener to try to raise awareness amongst developers, communities and land managers on how green finance projects can deliver on the wider environmental, community and climate aims of our National Park Partnership Plan. The National Park Authority is unable to advise on the financial aspects of green finance projects and we play no statutory role in the regulation of green finance. We can provide advice for anyone who wants to deliver positive outcomes for nature and for our local communities and explore how we can provide further training and support. Helping landowners understand the potential opportunities and risks of green finance options that may be available and working to influence how that finance is delivered is one way in which the National Park Authority can support and facilitate the expansion of nature restoration activities.
The National Park Authority is not establishing itself as a green finance broker, nor are we recommending any specific investment firms or organisations. We have no statutory role in the regulation of green finance, but we do have a clear role as a convener and facilitator for the National Park and for nature restoration within it. We therefore believe exploring responsible, values-driven, high-integrity green finance may be one option which could offer considerable opportunities both to nature restoration and to delivering local jobs as part of a just transition to a greener economy within the National Park. While we cannot provide green financial advice, we can work with landowners, developers and communities to increase awareness of potential opportunities and risks of green finance options and guide how those projects are designed, as one way the expansion of nature restoration can be accelerated.