Standard Life Investments Property Income buys nearly 1,500 hectares in Scotland’s Cairngorm National Park in a bold carbon offset transaction.

Standard Life Investments Property Income is backing moves to reforest part of Scotland’s Cairngorms National Park in a bid to reach net-zero emissions.

In a marked departure from its normal holdings in industrial properties, offices and warehouses, the generalist UK real estate investment trust has spent £7.5m on 1,447 hectares of upland rough grazing and moorland in the heart of the Scottish Highlands.

The plan is to reforest 956 hectares of the site with 1.5 million broadleaf trees, with around 115 hectares set aside for peatland restoration and the remainder left as open land to support a range of wild plants and animals.

This is expected to remove 195,630 tonnes of carbon up until 2060, equivalent to nearly three-quarters of the company’s residual and operational emissions.

SLI stressed it was not investing in commercial forestry – in the way that a new trust launch from Foresight Group is trying to do – but was buying a gold-standard carbon offset to help it offset carbon emissions from its £350m real estate portfolio.

Fund manager Jason Baggaley said being an early mover would give the trust an advantage in avoiding the future escalation in costs of decarbonisation as the UK moves to net-zero emissions by 2050. It would also enhance its ESG credentials with sustainability-minded investors.

In addition, shareholders could benefit from the rise in the value of the land as more companies rush to fulfil their sustainability obligations, said Baggaley, who recently sold some properties that did not meet ESG criteria.

‘We anticipate making a couple of further acquisitions, on a smaller scale, to complete this element of the carbon strategy,’ he said.

‘Although the focus is on carbon offsetting the opportunities for wider ecological and net biodiversity gain are also being explored, which is important given changing legislation around development in the UK.’

Analysts at Numis Securities welcomed the initiative and said other property funds could follow suit.

(Republished from City Wire)