First Minister's Environmental Council minutes: June 2023

Attendees and apologies

Ministers

• Mairi Gougeon, Cabinet Secretary for Rural Affairs, Land Reform and Islands
• Neil Gray, Cabinet Secretary for Wellbeing Economy, Fair Work and Energy
• Lorna Slater, Minister for Green Skills, Circular Economy and Biodiversity

Council members

• Professor Sir Ian Boyd (FMEC Co-Chair)
• Jocelyn Blériot, Executive Officer of Ellen MacArthur Foundation
• Revati Campbell, Member of the First Minister's National Advisory Council on Women and Girls, RSA Young People’s Economic Security Advisory Group and University of Glasgow
• Susan Davies FRSB, Chief Executive, Scottish Seabird Centre
• Professor Sandra Diaz, National University of Cordoba, Argentina
• Erin Fowler, University of Glasgow
• Peter Haugan, Director of the Geophysical Institute, University of Bergen
• Professor Yadvinder Malhi, University of Oxford
• Ece Özdemiroğlu, founding director of eftec (economics for the environment consultancy)
• Dr Dilys Roe, Chair, IUCN Sustainable Use and Livelihoods Specialist Group (SULi), International Institute for Environment and Development (IIED)
• Professor Pete Smith FRS, Professor of Soils and Global Change, University of Aberdeen

Apologies

• Professor Ian Bateman OBE, Director of Land, Environment, Economics and Policy Institute, University of Exeter Business School
• Gordon Buchanan MBE, award-winning wildlife camera-man and presenter
• Dame Julia Slingo FRS, Chief Scientist of the UK Met Office (2009 -2016)

Officials/observers

• Professor Mathew Williams, Chief Scientific Adviser for Environment, Natural Resources and Agriculture
• George Burgess, Director Agriculture and Rural Economy
• Dave Signorini, Director of Environment and Forestry
• Kate Dowen, Head of Sustainable Nature Finance, Future Environment Division
• Ross Johnston, Head of Natural Capital Policy and Valuation, Natural Capital and Community Land Unit
• Graham Sharp, Sustainable Nature Finance Policy Lead, Future Environment Division
• Peter Phillips, Head of Natural Capital Land Management Policy, Natural Capital and Community Land Unit
• Katherine Pollard, Green Finance Policy Lead, Future Environment Division
• Simon Fuller, Deputy Director RESAS
• Sallie Bailey, deputy Chief Scientific Adviser for Environment, Natural Resources and Agriculture, RESAS
• Anna O’Connor, FMEC Secretariat, RESAS
• Mia Kett, FMEC Secretariat, RESAS

Items and actions

Welcome and introductions

The co-chair Professor Boyd opened the meeting and welcomed members to the sixth meeting of the First Minister’s Environmental Council. Professor Boyd noted apologies from Gordon Buchanan, Ian Bateman, Julia Slingo and Erin Fowler.

Overview of new policy prospectus ‘New leadership - A fresh start’

Simon Fuller, deputy director RESAS, gave a presentation on the recent changes to the Scottish Cabinet and ministerial responsibilities following the appointment of the new First Minister.

Mr Fuller summarised the recently published document Equality, opportunity and community - new leadership - a fresh start which sets out the sets out the priorities and key aims that the government intends to achieve in each cabinet portfolio by 2026. He noted that the Bute House Agreement was still in place. 

Mr Fuller highlighted a number of changes to the Ministerial team, which FMEC noted. Changes included:

• Ms McAllan, now Cabinet Secretary for Transport, Net Zero and Just Transition, will co-chair FMEC when the First Minister is not in attendance
• Ms Gougeon, Cabinet Secretary for Rural Affairs, Land Reform and Islands had taken on a number of new portfolio responsibilities including land use and land reform and forestry
• appointment of Gillian Martin as Minister for Energy and Environment, with responsibility for several subjects within Ms Gougeon’s portfolio including peatland and natural resources

A council member asked about continued engagement with the First Minister. The secretariat reported that FM has agreed to co-chair the council and it was hoped that the new First Minister would be able to attend the autumn council meeting.

Marine planning

Lewis Hurley, Head of Marine Planning and Policy, provided a high level overview of the current policy position and proposals for marine planning.

Professor Boyed passed to Susan Davies, who had participated in a FMEC subgroup considering policy issues around marine policy. Ms Davies summarised key points from the sub-group’s discussion and asked FMEC members for international examples of good practise in national marine planning. 

Professor Boyd opened the discussion and invited comments from council members: 

• it was noted that there was an immense amount of commonality between land and marine spheres and they should therefore should not be siloed. Council members suggested there should be consideration given to a joint land and marine use framework
• members pointed to positive examples of marine planning in South Africa, Seychelles and Chile, in particular relating to natural capital accounts
• the National marine plan should be made with natural capital thinking in mind, with a focus on looking after marine natural capital so that different users can be sustained
• Chile has recent examples of fishing protected areas and suggested that this was a management example could be looked at in more detail

action: It was agreed that there would be a further FMEC discussion on national marine planning with ministers at a future council meeting.

Ministers joined the meeting. 

Natural Capital policy session

Professor Boyed welcomed the Cabinet Secretaries and ministers to the session. Professor Boyd commented that natural capital is central to how we think about/mange the environment, and consideration needs to be given to how the concepts are operationalised. 

Professor Boyd thanked policy colleagues for the briefing paper and introduced Kate Dowen, Head of Sustainable Nature Finance, to present on the current policy priorities on responsible private investment in natural capital.

Policy colleagues posed two questions to FMEC members for consideration:

• what is the role of government in the development of natural capital markets, so that they are profitable, deliver high-integrity environmental outcomes, and provide benefits for Scotland’s communities and economy
• what are the council’s views on how the Scottish Government can best communicate the role of responsible private investment, considering the divergent stakeholder interests

Professor Boyd opened the meeting to discussion inviting questions from ministers and guidance and reflections from council members.  

Ministers posed additional questions to the council:

• what can Scotland learn from international practises on natural capital, in particular
• whether any natural capital initiatives in the EU could be replicated in Scotland
• whether SG should take a UK-wide approach to natural capital or could do something separate suited to its needs
• fmec was asked what the role of companies developing infrastructure for the renewable energy sector can and should be in nature regeneration
• fmec was asked if SG can do things faster – through setting interim principals Government might future proof itself

Professor Boyd opened up the discussion for input from the full council and the following points were made:

• natural capital markets is a wide term and covers many areas, not just carbon or biodiversity offsets
• there are good examples of taking a natural capital approach internationally, but little standardisation of rules across countries
• the public sector is best placed to lead the development of natural capital markets, given it has experience of policy appraisal, can gauge and assess wider impacts and has access to information and data that can assist market development. Private sector actors are not in this position

• members summarised three roles for government in leading the way on natural capital:
  • set clear, consistently communicated messages about what Scottish Government expect. The interim principles for responsible private investment are a good start at this
  • enable private money. The private sector is interested in how they can earn money, and Government should influence how this happens, by putting the Dasgupta review into practise and put clear methods in place. Investors want markets to be well regulated, so there is no harm about requesting evidence to improve outcomes – it makes markets and investments high-integrity and supports investors to avoid greenwashing
  • manage how markets develop, taking a holistic view. Markets traditionally develop around products and services at the expense of everything else. Government needs to attract investment that looks after all natural assets, avoiding the risk of mitigation of carbon at the expense of nature. Returns should be distributed between investors, communities and some non-investors

• don’t just focus on environmental, social, and corporate governance (ESG) investment. It is fundamental change that is needed to crowd in much larger sums of private investment
• energy companies have net zero and offsetting requirements, so there is a big opportunity for engagement with this sector
• private sector is expecting differences in guidance geographically, though consistency with the UK approach is key. Scotland has the opportunity to move quicker than the UK
• taxonomy and terminology used when considering natural capital needs to be clearly set and communicated
• natural capital is what we are trying to build, maintain and regenerate to support our society in the environment. It is important to link actions to outcomes, and challenge current business models of a linear economy (including greenwashing)
• there are many natural capital investment projects that could get off the ground quickly, with reference to saltmarshes and oyster farms, but it was important to ensure that the investment is available at the appropriate scale, ideally at national level
• members summarised that Scotland would need to adhere to developing natural capital approaches in line with international standards but could develop a Scottish specific approach. While it is a fast moving area, Scotland’s stock of desirable natural assets means it could move ahead at pace

Professor Boyd invited any concluding comments from ministers, and suggested that FMEC take this away for further discussion and provide advice. Cabinet Secretaries and ministers made the following concluding remarks:

• Ms Slater suggested an approach where a pipeline of projects that adhere to the correct standards meets a pipeline of accredited investors, and considerations of how these are brought together, e.g. finance instruments. Ms Slater asked where in this structure government needs to get involved. FMEC agreed this was a useful model/structure for their considerations
• Ms Martin asked for FMEC to consider the role of government within the powers we have. She highlighted the issue of fuel poverty – could natural capital support investment in housing, particularly in the Highlands to support building of sustainable/affordable houses keeping young people in the Highlands and providing homes that were less costly to heat? 
• Ms Gougeon agreed that FMEC should look in more detail at this area – particularly if there were any international examples that Scotland could learn from.

Conclusion - Professor Boyd noted that they had had an excellent wide ranging discussion, with some emerging themes for further discussion. Key to ensure we bring in the social inclusion angle.

• action: FMEC secretariat to provide summary for First Minister and Ms McAllan on the natural capital discussion, given their apologies
• action: FMEC to take forward work on responsible private investment in natural capital and provide further advice to ministers

Ministers left the meeting.

FMEC scenarios 

The secretariat gave an update on the scenarios work. FMEC agreed to review again in 12 months.

Any other business

Professor Boyd provided a summary of next steps and concluding remarks.

Next meeting will take place in the autumn. Secretariat working with ministerial offices to confirm a suitable date.