Jason Baggaley, Investment Manager, abrdn Property Income Trust Limited
The UK commercial property sector is a significant contributor to climate change, responsible for around a quarter of all carbon emissions. Fund managers have a vital role in improving the carbon footprint of the buildings they own, by bringing energy efficiency measures, installing renewable energy sources and improving building materials, but these activities will not be enough to realise net zero on their own.
Assessing a building’s environmental, social and governance credentials has become part and parcel of abrdn Property Income Trust’s approach. Tenants increasingly use it as part of their decision-making process. We have upgraded our property assets where possible, with carbon emissions, staff welfare and biodiversity as key considerations in our refurbishments.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, we recognise the need to go further and faster. These upgrades often cannot happen fast enough to achieve our net zero ambitions. And, despite the significant improvements we have made to our assets to reduce their impact on the environment, they will always have some residual unavoidable emission. To address this, we have embarked on a pioneering nature-based removal strategy. We concluded that some measure of carbon offsetting was necessary. We wanted a UK based, high quality solution. With this in mind – and in consultation with in-house experts – we embarked on an exciting and ambitious ecological improvement project.
It took us a year to find the perfect site. We have a number of principles we apply to site selection, for example; we prefer land with no homes on it, and we do not want to acquire land that has productive food provision use. We don’t want to disrupt anyone’s way of life, or impair their livelihood. We will use local labour where possible and hope to generate community support and engagement over time. The site also had to fulfil our sustainability criteria, be suitable for planting and answer our decarbonisation needs. While we were not looking for a commercial return, we needed it to fulfil its carbon capture brief.
Far Ralia
We ultimately found the 1,400 hectare Far Ralia site in the Cairngorms. It is non-productive open moorland, having previously been used for grouse shooting and stalking. We have worked extensively with our Scottish forestry partner, Akre, to create a planting schedule for more than 1.5 million trees, one of the largest native woodland projects in Scotland. Using a combination of natural regeneration and planting native broadleaf trees and Scots Pine, the woodland has been designed to emulate a native Caledonian forest.
Akre has undertaken seed collection from the site to ensure the provenance and genetic integrity of the woodland. The trees from these seeds are being grown in the firm’s carbon-negative nursery in Fife, before returning them to the site over the next few years. Ultimately, there will be woodland across 850 hectares. As part of the project, we will also restore 150 hectares of degraded peatland. Peatlands store vast quantities of carbon, an estimated 3.2 billion tonnes in the UK alone.
We have pioneered the use of the Natural History Museum’s Biodiversity Intactness Index (BII) to inform our land use change. This tool assesses the land and gives it a score between 0 and 100, 0 being a car park and 100 being a rich and untouched habitat. The land at Far Ralia is currently sitting between 30 and 40 on the BII. The land use changes we have begun and outlined in our project roadmap will push the BII to 94 over 100 years. This more than surpasses the planetary boundary of 80 and helps us demonstrate the co-benefit to biodiversity of our design.
Starting work
After a year of careful consultation, design work and obtaining the necessary approvals, we are ready to start work. Inevitably, there will be some disruption with heavy machinery on site in the short-term, but we hope to keep this to a minimum. The work is starting with improvement to the access tracks and installing a new bridge to protect the historic one, plus a fencing project on one of the boundaries.
We recognise that the prospect of a large asset management group intervening in the natural landscape is a worry for some local residents. We are keen to reassure them that we have taken the very best advice to enhance and regenerate the landscape, while improving access to the hill for the local population. We believe business and government need to work together with local communications to deliver ecological change sensitively and want to play a role in shifting the economy from extractive to regenerative.
Change can be difficult and needs to be done with the region’s best interests at heart. This is our goal at abrdn Property Income Trust. This project should bring long-term benefits to the wider community through reforestation, improved air quality, flood mitigation and improved biodiversity. This is important for the region and for the planet.
Risk factors you should consider prior to investing:
Other important information:
Issued by abrdn Fund Managers Limited, registered in England and Wales (740118) at 280 Bishopsgate, London EC2M 4AG. abrdn Investments Limited, registered in Scotland (No. 108419), 10 Queen’s Terrace, Aberdeen AB10 1XL. Both companies are authorised and regulated by the Financial Conduct Authority in the UK.
Find out more at www.abrdnpit.co.uk or by registering for updates. You can also follow us on social media: Twitter and LinkedIn.
FCA reveals 'once in a generation' advice changes - what the reforms mean for you
Zoopla: House prices slows to 1.4% in May as rate of sales at four year high
