Future private investment in Scotland’s natural capital – such as peatlands and woodlands – will be subject to a 'set of principles' to help deliver social, environmental and economic benefit within the areas involved.

The move comes in reaction to fears that city money is being used to buy up agricultural and hill land for carbon credits, distorting the land market and stripping rural industries of an asset that should be used to balance their carbon books, rather than those of distant multinational companies.

During COP26 the Scottish Government committed to develop a '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.

The intention is that these interim principles will help inform and develop market rules, including options for enforcement mechanisms for the market, such as regulation.

Under these 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;

• Be of high environmental integrity.

Minister for Environment and Land Reform Mairi McAllan 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.”

The Scottish Land Commission’s chief executive Hamish Trench added: “Natural capital investment in Scotland’s land has potential to bring significant change to Scotland’s environment and drive a just transition to a net zero economy. It is not only attracting new buyers to the land market, it is also becoming a significant influence on the decisions of existing land owners and managers.

“These interim principles will help support all parties involved in Scotland’s land market to embed fair and responsible approaches. The Land Rights and Responsibilities framework can help deliver a values-led, high-integrity market for responsible investment in natural capital and ensure the long-term benefits are fairly shared by us all. We are looking forward to working with land owners, land managers investors and communities to implement the interim principles."