Standard Life Investments Property Income Trust (SLI) has acquired land that will be used to offset carbon emissions from its portfolio, in a first for the property sector.
The 1,447 hectares of upland rough grazing and open moorland in the Cairngorm national park has been purchased for £7.5m. The site supports 956 hectares for planting with natural broadleaf trees (about 1.5m trees in total) with around 115 hectares for peatland restoration, with the remainder open land to support bio diverse habitats.
The site is expected to sequester around 195,630 tonnes of carbon up until 2060, representing 73% of the company’s residual embedded and operational carbon.
The company said it believed that its strong ESG credentials will be a driver of performance, as well as an agent for good. The company is not investing in commercial forestry, but is acquiring a gold standard carbon offset at a fixed price. The purchase forms part of a wider strategy to achieve carbon net zero, based primarily on reducing operational carbon at the investment property assets with offsets for residual carbon that cannot be eliminated. It is anticipated that the costs of planting will be met through grant funding.
Jason Baggaley, fund manager, said “SLIPIT has acquired this significant opportunity for reforestation as part of its carbon strategy. We believe that being an early mover will give the company an important advantage in future costs for offsetting as society moves to net zero by 2050. We anticipate making a couple of further acquisitions, on a smaller scale, to complete this element of the carbon strategy. Although the focus is on carbon offsetting the opportunities for wider ecological and net bio diversity gain are also being explored, which is important given changing legislation around development in the UK.”
[QD view: SLI has a track record for being early movers and is once again ahead of the curve with this acquisition. As carbon emissions has risen up the agenda and consciousness of everyone, it is clear that more needs to be done to offset emissions. Property has a particular problem and we’re sure that others will have to follow.]
SLI : Standard Life Inv. Property Income Trust buys land for carbon offsetting