'Groundbreaking' Scots investment bond to help unlock £1bn to protect rare species and environment

Interested investors can put in as little as £5 in and will be used to create and enhance green spaces and sustain urban drainage systems in the first instance which would help benefit at-risk species and help combat climate change.

Some specialist investment funds are already available on the stock market, but the new green bond scheme would be open to all savers.

The bond acts like a loan, and the investor would get paid back in full on a set date - yet to be established - with interest.

It comes as the latest Nature of Scotland report identified that one in nine species in Scotland is at risk of extinction.

The Herald revealed in November, 2018 that at-risk animal species such as the red squirrel, some birds of prey and sea mammals are in jeopardy because of lack of action in ensuring vital environmental protections are provide in Scotland after the UK quits Europe.

Habitat loss, disease and competition from non-native greys have taken a huge toll on red squirrel and Scotland in 2018 retained 120,000 of the 138,000 reds thought to remain in the UK.

Among the concerns of the Scottish Environment LINK (SEL) union of conservation groups was that there was no mechanism to replace the European Commission's LIFE-Nature Fund which has given £25 million over 25 years to Scotland to help with more than 25 vital conservation projects protecting the country's at-risk wildlife and landscape.

They said all were are at risk if no alternative funding is found through matching contributions from government or elsewhere if there is no way of continuing access to the fund through the Brexit negotiations.

The bond forms part of a series of funding initiatives fronted by the Scottish Wildlife Trust and the Scottish Environment Protection Agency (SEPA) aimed at attracting money to support our precious wildlife, landscape and environment.

Francesca Osowska, chief executive of Scottish Natural Heritage, said: “Having played our part to develop the route map, we are looking forward to delivering this important initiative. These plans are critical to bring conservation and business together to combat the climate emergency and reverse biodiversity loss.

"We look forward to helping make these connections and strengthening both Scotland’s biodiversity and economy. Nature-based solutions are going to be a vital part of green recovery after Covid-19 – and a green recovery is the only way to build a strong, resilient, inclusive, nature-rich and low-carbon economy for our future.”

The group say that the return to investors from the new green bond would come from long-term savings made from environmental interventions such as the installation of sustainable urban drainage systems and measures that create income, such as the subsidies from renewable energy.

A Scottish Wildlife Trust spokesman said: "The bond would appeal to investors who are looking to achieve positive outcomes for biodiversity and the climate crisis, as well as a receive a financial return over an agreed period."

Initially the plan, developed collaboration with a broad coalition of groups and experts over a period of two years are recommending the establishment of a Scottish Conservation Finance Fund to help accelerate private investment in preserving our environment.

Crowdfunding investment platform Abundance Investment is working with City of Edinburgh Council to develop the bond scheme.

According to a proposal document: "With resources already stretched and many ‘easy wins’ in a climate context already delivered, the challenge to reach Net Zero is one of the biggest facing local authorities. This model provides a cost-effective opportunity to tackle the climate emergency hand in hand with the biodiversity crisis, creating lasting benefits for local communities.

"By bringing together the traditional green bond model with a chance for citizens and residents to invest in their future, we can help achieve transformative change. The Nature-Climate Bond would be a first of its kind, tackling climate change and biodiversity loss together.”

Scottish Wildlife Trust chief executive Jo Pike said: "The groundbreaking aspect of the Nature-Climate Bond is the focus on biodiversity as well as climate change. By looking holistically at the benefits of better and more connected green space, combined with interventions designed to reduce CO2, this bond will tackle these two interconnected challenges together, rather than simply delaying action on biodiversity loss until it is too late (and even more costly to rectify).

"Some of the interventions - for example creating Sustainable Urban Drainage systems - will lead to avoided costs, while others will generate income -for example ground source heat pumps underneath high quality green space that also provides habitat for wildlife. Both of these help to create the cash flows to repay investors over time.

"By bundling the nature and climate benefits it is also possible for some of the interventions to cross-subsidise others, thereby increasing the nature-climate impact and helping to meet growing demand from investors looking to finance implementation of Sustainable Development Goals."

It forms part of a combination of Route Map investment plans put forward in the new blueprint, a combination of initiatives using levies, loans, innovative payments and blended finance opportunities aimed at raising funding for conservation schemes.

Studies have calculated the cost to the Scottish economy from invasive non-native species through impacts such as damage to forestry, crops and infrastructure is as much £200 million per year.

According to Scottish Natural Heritage four invasive plants cause the most damage, rhododendron, Japanese knotweed, giant hogweed and Himalayan balsam.

The Route Map plan would provide Invasive Non-Native Species Loans to organisations looking to put in place biosecurity measures to prevent the arrival or spread of INNS, and to help eradicate them in Scotland. These could potentially be paid back from future savings on the costs of management, say the groups.

"As a problem, INNS are recognised as one of the five principal drivers of biodiversity loss globally. Removing the problem at source would therefore relieve one of the main pressures on biodiversity in both terrestrial and aquatic environments. As the benefits of prevention become fully recognised, biosecurity approaches are likely to become increasingly important," says the proposal document.

A Journey Marine Fund would be financed by contributions from industries that rely on our seas and rivers and a Vacant and Derelict Land Fund aims to attract investors to restore degraded sites to be transformed into profitable business opportunities that deliver environmental benefits.

The groups have identified 168 publicly owned sites that have been vacant and derelict for at least 20 years which could undergo such a makeover.

EU funding through LIFE has also helped preserve some of Scotland's treasured landscape because of their European importance.

Receiving support was the restoration of the Flow Country peatlands in Caithness, one of the last great wildernesses in the UK and the preservation of primeval Celtic rainforest, the native Caledonian pinewoods and Scotland's coastal meadows, called machair.

Louise Wilson, co-founder and joint managing director of Abundance Investment said: “This initiative couldn’t come at a more important time. The finance industry is finally waking up to the need to think about how money is invested and the impact it has on the future of society. But, it is not yet thinking about how to solve the challenge of directing capital to the nature-based solutions we so desperately need for a more resilient future when the economic returns are often indirect.

“This report provides inspiration on what can be done when we think about the problem holistically and work collaboratively between the finance and conservation sectors.”

The Scottish government has set itself a legally-binding target to cut greenhouse gas emissions to net zero by 2045, five years ahead of the date set for the UK as a whole.

It February it announced plans to "phase out the need" for new petrol and diesel cars and vans by 2032 back in 2017.

The Committee on Climate Change has written to the Prime Minster and First Ministers in Scotland, Wales and Northern Ireland said immediate steps were needed in the midst of the cornavirus crisis top support reskilling, retraining and research and to build a stronger, cleaner and more resilient economy.

They included the use of climate investments to support economic recovery and jobs and strengthen incentives to reduce emissions when considering tax changes.