Mobilising private investment in natural capital: report

An investment vehicle which brings together multiple projects to reduce transaction costs by aggregating multiple investments into a single portfolio, enabling investors to finance multiple projects through a single investment.

Use of catalytic capital from public or philanthropic sources to mobilise additional finance from the private sector.

An intermediary that buys and sells goods and/or assets (e.g., credits from peatland restoration projects) with the intent of reselling them at a profit.

A tradeable security that corresponds to 1 tonne of CO₂ equivalent (tCO₂e) which can be purchased on voluntary or regulated carbon markets.

A socially and/or environmentally driven investment made in order to unlock the participation of private investors that would not have otherwise participated.

A benefit sharing agreement that enables a fund to donate a portion of its returns towards conservation activities, supporting often uneconomical but highly impactful projects benefiting communities, whilst also potentially benefiting from tax relief on their donation.

A form of land tenure and traditional system of farming on a small scale particular to the Scottish Highlands.

The complex of living organisms, their physical environment, and all their interrelationships within a particular geographic area.

The benefits that are obtained from ecosystems, including provisioning, regulating, cultural and supporting services.

A government policy designed by Defra to support the rural economy though rewarding environmental land management in England. It is made of three potential schemes: Sustainable Farming Incentive, Local Nature Recovery, Landscape Recovery.

An amount of money that is invested in a company by purchasing shares of that company on a listed exchange (public equity) or the private market (private equity).

A credit enhancement provided by an investor or grant maker who agrees to hold a first-loss position in an investment.

The position of an investor which is last in the order of payment and first to bear the loss in an investment.

A threshold rate of return on an investment required by an investor.

The outcomes for nature and societies created by undertaking target activities (such as delivery of NbS). Impact can be positive (for example, mitigating climate change) or negative (for example, displacing local communities).

The implementation of nature-based solutions within an organisation's own value chain to achieve decarbonisation goals.

An organisation that invests money on behalf of clients or members, such as hedge funds, mutual funds and pension funds.

The act of providing capital in return for repayment and profit. Investment utilises repayable capital, unlike non-repayable capital typically provided by grant and philanthropic funders.

An organisation managing land and advising landowners.

A person or organisation who owns land. Landowners can be estates, community organisations, environmental Non-Governmental Organisations, corporations etc.

A financial term to characterise how quickly and easily assets can be converted into cash.

A term used for a market in which the liquidity of a traded asset is high. A liquid market enables the purchase and sale of a traded asset with minimised friction costs (such as transaction costs).

The environmental resources (e.g., plants, animals, air, water, soils) that combine to yield a flow of benefits to people.

The actions to protect, sustainably manage, and restore natural or modified ecosystems, that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits.

A state in which the greenhouse gases going into the atmosphere are balanced by removal out of the atmosphere, resulting in no net addition of emissions into the atmosphere.

The upfront fee charged by a lender to provide new finance to an investment opportunity.

The reduction of 1 tCO₂e emitted to the atmosphere through the restoration of peatland environments. Upon verification, PIUs vest into PCUs.

The 'promise to deliver' a PCU at a given point in the future.

The effect derived from investing in a range of projects or investments rather than a small number. By spreading investment, an investors risk is diversified.

The individuals, organisations, or businesses involved with designing and implementing nature-based solutions projects (e.g., peatland restoration).

The individuals, organisations, or businesses undertaking the long-term maintenance required to ensure the delivery of targeted outcomes.

The capital made available over a set period which must be repaid, often with interests in addition of the initial amount made available.

The maximum price that a buyer (e.g. Scottish Government) is willing to pay for a good or service (e.g. a PCU) through a reverse auction. This price acts as a ceiling to protect the buyer/guarantor.

The type of mechanisms through which a single buyer or provider awards pricing to/contract(s) with the most cost efficient eligible bidder(s). The auction continues until all available funding / contracts are exhausted, all bidders have been awarded, or no offers remain that comply with auction parameters including reserve pricing.

The assets (e.g. land) that are unable to earn their original economic return as they have suffered from unanticipated or premature write-downs, devaluation or conversion to liabilities.^[1]

Expenses incurred through the buying or selling a good or service.

A mechanism to determine a price for a good, service, or right. Under this mechanism participants bid their proposed price. All successful bidders are paid equally for the provision of goods.

A mechanism to determine a price for a good, service, or right. Under this mechanism participants bid their proposed price. All successful bidders are paid according to their bids.