Overview

The Flow Country Green Finance Initiative (FCGFI) is a locally led, landscape-scale restoration programme focused on the Flow Country – a 400,000-hectare expanse of peatland across Caithness and Sutherland. As Europe’s largest blanket bog and the world’s first and only peatland World Heritage Site, the Flow Country represents a globally significant natural asset.

The FCGFI seeks to mobilise funding to restore peatlands at scale by blending public and private finance. It supports community development, creates high-quality local jobs, enables carbon investment, delivers vital ecosystem services, and promotes circular business models.

By restoring degraded peatlands, the FCGFI contributes directly to Scotland’s twin climate goals: reducing greenhouse gas emissions and increasing carbon sequestration – a critical part of achieving Net Zero.

The initiative operates through a blended finance model, combining public funding (such as from Peatland ACTION) with private finance via the Peatland Code. Revenues generated from carbon credits or other ecosystem services, will be reinvested into local communities and future restoration efforts.

Gap the project addresses

While healthy peatlands act as vital carbon sinks and havens for biodiversity, large parts of the Flow Country, despite being one of the world’s finest examples of blanket bog, have been degraded by drainage, afforestation, and erosion.

These damaged areas function less effectively as ecosystems and offer reduced protection for local communities against natural hazards such as flooding and wildfires.

Restoring our peatlands is one of the most impactful actions we can take in the fight against climate change.

Ownership model

The Flow Country Partnership is registered as a Scottish Charitable Incorporated Organisation (SCIO) charity number: SC053100, with a wholly owned trading subsidiary, Flow Country Restoration Ltd, company number: SC800917.

Policy and funding

To date, the project has been funded by NatureScot and The National Lottery Heritage Fund through the Investment Ready Nature in Scotland (IRNS) programme, and more recently, the Facility for Investment Ready Nature in Scotland (FIRNS).

For the current financial year, funding has been secured through the Peatland ACTION Project Developer Support Scheme. Individual restoration projects have been supported by Peatland ACTION, with bridging loans provided by Highland Opportunity Investment Limited (HOIL) and Social Investment Scotland (SIS).

The public funding has been in 2 phases: –

• IRNS (Investment Ready Nature Scotland) scheme
• FIRNS (The Facility for Investment Ready Nature in Scotland)

Both grants came with extensive conditions including key deliverables, expected outcomes and reporting protocols.  In brief summary:- IRNS provided funding that enabled exploration of potential options on how to attract private finance to invest in nature-based solutions and to narrow these down to a preferred approach.  FIRNS then supported the establishment of the organisation to undertake the first restorations, create a business model, and bring the organisation to investment readiness.   FIRNS funding only became available towards the end of the IRNS grant period and the application for FIRNS was essentially conditional on the success of the IRNS project.

For FIRNS, the specific project activities and their expected outputs are: –

• Recruitment of Project Manager and Peatland Restoration Officer – Creating two 0.8 Full-Time Equivalent (FTE) positions from October 2023 to March 2025.
• Administration tasks following the set-up of the SCIO [Scottish Charitable Incorporated Organisation]– Establishing administrative systems for the organisation.
• Developing a detailed finance model, set up a Special Purpose Vehicle, draft and formalise the legal agreements – Memoranda of Understanding signed with three pilot sites, Special Purpose Vehicle/s established under FCGFI to deliver three pilot restoration projects, development agreement signed between pilots and SPV, Land Court test case on common grazings in relation to carbon finance, template legal agreements to allow scaling and replication by others
• Securing investment – Obtaining private finance as part of a blended finance model and securing a price premium for Flow Country carbon.
• Planning peatland restoration – Completing surveys, securing consents, and preparing for restoration at three pilot sites.
• Implementing peatland restoration – Undertaking restoration work using Peatland Action funding, private investment, and the sale of Peatland Code-validated carbon units.
• Establishing a community benefit mechanism – Developing criteria, securing a host organisation, and identifying a pilot community benefit project.
• Community consultation and stakeholder engagement – Delivering a communications and engagement programme and hosting multi-stakeholder platform meetings.
• Testing the monitoring and evaluation (M&E) framework – Establishing a baseline using the 4R Framework for pilot sites.
• Public and sectoral communications – Conducting a virtual knowledge-sharing event, launching a social media campaign, and publishing a lessons-learned report.

The FIRNS project has been extended to the end of September 2025, to allow final legal agreements with landowners and investors to be finalised, (Tasks C and D) so has not yet fully concluded.  Whilst a process and mechanism for community benefit has been created it is unlikely that a project will be undertaken in this phase (Task G).  Trustees have agreed that this will occur from any surpluses the charity realises from its activities. It should be noted that through other funding attracted to support a training initiative some local crofters have successfully transitioned into peatland restoration contracting which has provided direct benefit into those Individuals and their communities.

The organisation created to undertake this process (and manage the Flow Country UNESCO World Heritage Site) – the Flow Country Partnership SCIO (and its subsidiary Flow Country Restoration Ltd)  has already raised £180k in commercial short-term finance to support the completion of restorations and is considered investment ready.

Impact to date

We are currently delivering two pilot peatland restoration projects:

Armadale Farm: Phase 1 (~600 ha) was completed in November 2024, with Phase 2 (~360 ha) in development. The full project is expected to generate approximately 134,000 carbon credits.

Achentoul Estate: Approximately 400 ha were restored, with works completed in March 2025. This project is projected to generate around 66,000 carbon credits.

A third pilot project is now in development on a common grazings site (~400 ha). This will be the first common grazings to progress through the Peatland Code. Restoration is scheduled to begin in August 2026, pending a decision from the Land Court.

In addition, we have mapped approximately 129,000 hectares of potential Peatland Code-eligible farms and estates across the Flow Country, along with a further 29,000 hectares of potential common grazings areas.

Contribution to just transition

The Flow Country Green Finance Initiative (FCGFI) supports a just transition by delivering environmental restoration alongside community wealth-building in one of Scotland’s most remote rural areas. Through the Flow Country Partnership SCIO, with broad representation from crofters, communities, NGOs, and public bodies, the project ensures that local voices shape decisions and benefits.

By restoring degraded peatlands at scale, the initiative supports decarbonisation and climate resilience while creating long-term, green employment. Over 1000 hectares have been restored to date, with plans to scale significantly. Restoration work is delivered by local contractors, and training opportunities are expanding capacity in ecological surveying, site management, and carbon auditing.

Using a blended finance model, combining public and private finance, FCGFI enables restoration that is both scalable and inclusive. Revenues from carbon credits are reinvested locally, ensuring that rural communities benefit directly from the natural capital they steward.

The initiative enhances climate resilience by restoring peatlands’ natural water regulation and reducing wildfire risk. Environmental benefits include improved biodiversity, water quality, and carbon storage – The Flow Country holds around 400 Mt CO₂eq, more than all UK woodlands combined.

By aligning restoration, community empowerment, and sustainable finance, FCGFI directly contributes to multiple National Just Transition Outcomes, particularly around jobs, fair benefit-sharing, resilience, and environmental protection, making it a model for nature-based climate action in Scotland.

Local/regional industrial heritage

The Flow Country Green Finance Initiative relates to the region’s industrial heritage, particularly the large-scale land use changes of the 20th century. Government-driven afforestation schemes in the 1980s led to the drainage of vast areas of peatland to create commercial forestry plantations, transforming the landscape and leaving a legacy of ecological damage. While well-intentioned, these interventions were shaped by policies aimed at rural economic development but often overlooked the long-term impacts on the environment and traditional land practices.

Today, FCGFI addresses that history by restoring damaged peatlands and shifting the focus from exploitation to regeneration. The initiative also draws on the region’s deeper cultural connection to the land, including crofting traditions and the historical importance of peat as a source of fuel and community identity. By combining environmental repair with community benefit, the project bridges past and present, helping to heal both landscapes and the socio-economic impacts of past industrial strategies.

Benefits to the local area

The Flow Country Green Finance Initiative brings wide-reaching benefits to the local area and Scotland as a whole. It supports skilled, nature-based jobs in rural communities through peatland restoration, ecological monitoring, and training. It enhances biodiversity, improves water quality, and strengthens climate resilience by restoring degraded peatlands. By generating verified carbon credits, it attracts ethical investment and creates new income streams that are reinvested locally. The project also boosts Scotland’s progress toward net zero, while reinforcing the global significance of the Flow Country as a World Heritage Site. Crucially, it ensures that environmental and economic benefits stay rooted in local communities.

Lessons learned

The project has delivered several key positive learning points so far. There is a strong interest among local communities to be actively involved in nature restoration and green finance, demonstrating that place-based initiatives can inspire meaningful engagement. Second, partner organisations have worked collaboratively and shown great flexibility in navigating new territory, which has been critical to the project’s progress. Despite the complexity of the work, we have successfully found solutions to the majority of challenges encountered. We’ve also achieved over 1,000 hectares of peatland restoration – proving that large-scale delivery is possible when partnerships and systems are well aligned. Finally, we’ve learned that the UK provides a strong foundation for nature-based projects, with clear processes and verification standards that give confidence to investors, communities, and policymakers. These positive lessons are helping us shape a model that can scale responsibly and bring long-term benefits to people and nature alike.

Constraints and challenges

The Flow Country Green Finance Initiative faces several key constraints and challenges that reflect the complexity of delivering large-scale nature-based investment in a rural context:

• Immature Carbon Market: The voluntary carbon market is still developing, with uncertain pricing, evolving tax treatment, and investor hesitation. This affects financial planning and long-term confidence.
• New Organisational Structure: As a recently established charity with a wholly owned trading subsidiary, the initiative is operating with limited core resources while building governance, operational systems, and delivery capacity from the ground up.
• Staff Recruitment: There is a shortage of specialists in key areas such as peatland restoration, carbon finance, and sustainable land management, particularly in remote locations.
• Advisory Gaps: The project requires expert guidance across multiple disciplines—policy, carbon sales, investment readiness, and landowner engagement—but suitable advisory support is not always readily available.
• Stakeholder Commitment: Aligning the priorities of diverse stakeholders—including landowners, communities, conservation bodies, and investors—requires ongoing education, communication, and trust-building.
• Attracting Investment: Market uncertainties hinder long-term investment planning. Building credibility within the investment community is essential but takes time, particularly in a pioneering project with limited track record.

Replication and scaling

Yes, the project is designed to be both replicable and scalable. As part of our FIRNS outcomes, we are committed to developing legal agreement templates and operational tools that can be shared with other landscape-scale restoration initiatives. This includes replicable structures for landowner agreements, community benefit models, and governance frameworks.

A particularly innovative and precedent-setting element of our work is taking a crofting common grazings project through the Peatland Code for the first time, using a Section 19 Scheme for Development, to be approved by the Land Court. If successful, this will provide a legal and procedural pathway for other crofting communities to follow – unlocking opportunities for restoration, carbon finance, and community benefit across Scotland’s extensive common grazings areas.

Working conditions and fair work practices

Featured organisations and initiatives were asked to supply the following information regarding working conditions:

• Alignment with Scottish Government Fair Work First criteria
• If they have gone beyond Fair Work First by incorporating broader values on fair work
• For larger organisations, whether a union recognition agreement is in place.

This did not apply to co-operatives structures and membership-based initiatives, though all projects and initiatives were given room to provide any detail on fair work practices deemed relevant.

The following information was provided:

Currently, the Flow Country Partnership does not directly employ staff; instead, team members are hosted by partner organisations. There is an intention to transfer staff to direct employment with the Partnership in the future through a TUPE process. Fair Work First policies will be developed in advance of this transition to ensure alignment with best employment practices.  Host organisations already adhere to these standards.