The Climate Profit Buried in Scotland’s Bogs

On a gusty February morning in the Scottish Highlands, Thomas MacDonell padded across a terrain that looked like nature’s version of a Persian rug. The surface was a kaleidoscope of reds, whites and greens produced by overlapping tufts of grass, heather and sphagnum moss. He knelt on a moist patch of turf beside a series of dark gashes that ran a foot or two deep in nearly parallel lines.

“See all those black areas?” he asked, pointing to the craters running through the ground. “That’s an example of damaged peatland. The mossy-type cover is no longer there — and without that seal over it, the peat dries and rots, and as it rots it gives off carbon dioxide.”

Pensive, with spiky gray hair, Mr. MacDonell, 57, is a self-described “landscape detective,” reading the earth the way actual detectives read crime scenes. To him, damaged peat presents both a problem and an opportunity. The problem is that the carbon emitted when peat dries out contributes to climate change; the opportunity comes from repairing the damage, which may just be a multimillion-dollar business.

That, at least, is Mr. MacDonell’s hope, and the hope of the man who owns this estate, a Danish multibillionaire named Anders Holch Povlsen. Mr. Povlsen acquired this property — called Glenfeshie — in 2005, at the start of a buying spree that has since made him the largest private landowner in Scotland, with some 210,000 acres on 12 different estates.

Since they met 17 years ago, the two men have been collaborating on what amounts to a novel experiment in capitalism in the age of environmental crisis. Through a company called Wildland Ltd., they are trying to prove that vast tracts of land can be revived in ways that are both green and profitable.

To that end, they operate a collection of high-end lodges, catering to guests with an interest in “the restorative power of nature,” as it says on Wildland’s website — and around $520 to spend per night at a renovated farmhouse with a “Scandi-Scot” décor. If all goes as planned, hospitality income will eventually be matched by revenue earned from growing trees and restoring peatland. That effort will produce carbon credits, sold through a still-nascent market that corporations looking to offset environmentally damaging emissions will purchase.

The peat part of this operation is relatively new. Until recently, peat bogs were derided as useless swampland — ideal, perhaps, for burying bodies in a murder mystery, but not much else. Landlords in Scotland often drained peatland to plant trees, or stocked it with sheep and let them hoover up the top grass.

In the last few years, however, peatland’s cachet has soared as the world grasped that nothing on earth is more efficient at locking up carbon, potentially for thousands of years if properly maintained.

“They’re not as charismatic as rainforests, but peatlands are more important,” said Roxane Andersen, professor of peatland science at the University of the Highlands and Islands. “It’s like they have superpowers.”

Although rare in most of the world, peatlands cover about 20 percent of Scotland, giving this country of just 5.5 million people an outsize role in the campaign to slow the planet’s rising temperature. The government is alert to this responsibility, and is now underwriting the pricey and arduous process of peatland rescue. Private landholders who restore peatlands will see 80 percent of their outlays reimbursed by the government, and then keep the profits from carbon-credit sales.

In effect, Scotland has said: “Bill us for the digging, and keep all the gold you can mine.” This has spurred a land rush among investors. Those snapping up property in Scotland include life insurance companies, private equity funds and a brewery and pub chain called BrewDog. The amount of money invested in Scottish land doubled last year, climbing to $330 million; one real estate agency, Savills, said it had applicants ready to invest $2.5 billion throughout the United Kingdom in what is known as natural capital.

For the vast majority of Scots, though, the frenzy is like a party in their backyard that they can’t attend. The influx of money has tripled the price of choice rural plots in recent years, putting them beyond the financial reach of locals. This is reviving bitter memories of a time, centuries ago, when estate holders repurposed their land in a way still remembered as a historic calamity known as the Highland Clearances.

As the landowner with the most expansive ambitions, Mr. Povlsen has become a target of choice for the discontented. He made his fortune — estimated by Forbes at $13 billion — as the owner of a fast-fashion empire of more than 20 youth-oriented brands popular in Europe, making him a leader in an industry deeply reviled by environmentalists. Fashion is responsible for more annual global carbon emissions than maritime shipping and air travel combined, according to a report by the Ellen MacArthur Foundation,.

Though a giant in the fashion realm, Mr. Povlsen keeps a low public profile. During a rare, hourlong video interview from his home in Denmark, his enchantment with the Scottish landscape seemed utterly sincere. “You don’t own something like this,” he said of his property. “You’re a caretaker for a period of time.”

Now that alarms about carbon emissions are ringing in the C-suites — even ExxonMobil has a net-zero plan — Mr. Povlsen stands out as a kind of pioneer, one whose career seems, at first glance, a paradox. He is simultaneously part of the problem and, with Mr. MacDonell’s help, a small part of the solution. Depending on your perspective, he’s either the planet’s ultimate frenemy or the kind of executive that the environmental cause will never succeed without. At a minimum, he demonstrates how difficult it is to mix profits with even the greenest of intentions.

Wildland is based out of a former Victorian shooting lodge near a small town called Aviemore, about 130 miles north of Edinburgh. It overlooks the River Spey and sits on the Glenfeshie estate, a collection of greenswards, mountains and rivers. Its picturesque scenery served as a setting for the Netflix series “The Crown.”

Mr. MacDonell offered a tour of the white stucco lodge. “Places like this were usually owned by wealthy industrialists, often with slave-trade money,” he said. “They were run as hunting estates, a place to entertain your friends. We’re trying to break that mold.”

During two days of traversing Wildland estates, Mr. MacDonell came across as patient, intense and impervious to weather. For two seven-hour stretches of driving and walking in bracing cold on what looked like sub-Arctic tundra, he was hatless, gloveless and protected by only a thin down parka. He didn’t break for lunch and rarely stopped talking. When he wanted to emphasize a point, he would stop walking — if driving, he parked his VW pickup.

A former car mechanic who grew up in a nearby village, Mr. MacDonell always felt a bond with the local landscape, which deepened when he became a fence builder. He has no formal training in forestry. “I’m not necessarily the person who could ID every moss by its Latin name,” he said. “I have found that helpful. I’m not bound by any preconceived notions.”

That unorthodox background may have made him receptive to an idea from Richard Balharry, an iconoclastic Scottish conservationist. Mr. Balharry, who died in 2015, had long argued that deer suppressed biodiversity in Scotland. For centuries the population was allowed to soar, eating everything on the ground and turning huge swaths of Scotland into what looked like a neglected golf course.

Mr. Balharry endorsed killing deer en masse. But much of the local economy in the Highlands was built around hunting, and drastically reducing the number of deer would hurt professional guides who helped visitors bag a nice set of antlers on a roaming buck. It wouldn’t help Mr. MacDonell’s fencing business, either, because many estate owners hired him to build enclosures around trees they wanted to preserve from ravenous ungulates.

And yet, Mr. MacDonell couldn’t deny what he saw with his own eyes. Those graceful, highly huntable deer had snacked rural Scotland into a monoculture. When Mr. MacDonell broke a vertebra, he switched jobs, and by 2002 he was running Glenfeshie. That year, he convinced the then-owner — a different rich Dane, as it happens — that the estate should focus on saving the landscape. That meant killing deer. A lot of deer.

It came to be known as the Glenfeshie cull. Mr. MacDonell and his team killed about 1,000 deer a year for many years, using helicopters to transport stalkers and haul away carcasses. An uproar ensued. With its profession jeopardized, the Scottish Gamekeepers Association made national news, denouncing the killing as unsporting and disgraceful. For a while, Mr. MacDonell fought his way out of bars.

“That’s probably my personality,” he said. “I could have walked out as people started calling me names, but my temperament is not that way inclined.”

The cull was a few years in when Mr. Povlsen arrived at Glenfeshie to appraise the place for possible purchase. Mr. MacDonell drove with him up a hill in a Land Rover and explained his vision. Forget the whole hunting thing, he told Mr. Povlsen. Let the cull continue, and we’ll revive the land.

Within weeks of that Land Rover plea back in 2005, Mr. MacDonell found that he had more than just a thumbs-up from the new owner. He had an eager partner. Mr. Povlsen bought other estates near Glenfeshie and acquired property in the west, including the Aldourie estate, featuring the only habitable castle on Loch Ness. In the north he owns a handful of estates and is currently transforming a house, designed in 1878 for the Duke of Sutherland, into a five-star spa and lodge.

The cull proved hugely beneficial for trees and vegetation. The landscape at Glenfeshie is now covered with juniper, heather and a wide variety of moss. There are also abundant seedlings of pine and birch, some poking just a few inches out of the ground. During a ride on the property, Mr. MacDonell stopped the car to point out more than a few of them, like a proud father.

“You might look at that and think, ‘What the hell is he getting so excited about?’” he said, pointing to a budding pine. “But to start to get this woodland to expand will be good for everything in this environment.”

The cull was good for peatlands, too, but that was just a happy byproduct. Wildland had been repairing peat for years for the same reason a homeowner might replace an old carpet if money was no object: It just looked better.

In 2012, the Scottish government started the Peatland Action Program, providing funds for land managers who wanted to restore peat. It was the first sign to Mr. MacDonell that peatland was about to hit the jackpot.

For centuries, when uncultivated Scottish land was appraised, only two numbers mattered: How many birds could be shot from the sky above it, and how many deer could be killed on the ground? Nothing said “wealth” quite like a hunting party in tweeds with servants to carry lunch, guns and ammo.

Now, prospective land buyers have a new question: How much damaged peatland is on the property? Typically, the answer is: “A lot.” Roughly 80 percent of Scotland’s peatland needs repair, according to NatureScot, the public body that advises the government on environmental matters. Any number of culprits have been blamed. The fault lies with overgrazing by deer and sheep, but also with industrial pollutants, like acid rain — partly the fallout from Chernobyl, which affected much of Europe.

A warming planet is part of the problem, too. On the first day of our tour in February, Mr. MacDonell was amazed that he could drive up a narrow, potholed dirt road on the estate. “This road is usually covered in snow,” he said, “and I can’t drive here until around July.”

Without snow, peatlands are more vulnerable to high winds that erode the lid of green that keeps them intact. Fabricating new lids is central to peatland restoration. One method deploys a backhoe to put moss back in place, then cover the moss with mulch. Jute, a natural fiber, is then laid on top, to keep the mulch in place. Dams are also built to trap water that will keep the peat soggy.

“It’s about keeping the bog wet,” said Mr. MacDonell. “If the hydrology is correct, the peatland is pickling, rather than rotting.”

The work isn’t cheap. It costs about $270,000 to restore roughly 250 acres. With 4.5 million acres of peatland to repair throughout the country, the government can’t afford to subsidize restoration efforts indefinitely. Saving peatland needs to somehow become a profitable enterprise that tempts investors. It needs to become a business.

That’s where carbon-credit markets come in. In the United Kingdom, the Peatland Code provides a certified standard for peatland projects hoping to sell climate benefits. A landowner registers an amount of peat to be restored on the U.K. Land Carbon Registry. An independent third-party validator is dispatched to appraise the land, quantifying the greenhouse gas emissions saved if the peat is repaired and assessing the restoration plans.

Five years later, an independent verifier returns to check whether the promised restoration has happened, and whether the site is indeed re-wetted and revegetated. If so, the land’s owner is issued Peatland Carbon Units that can be sold, either through a broker or directly by the owner. The buyers are companies eager to mitigate their carbon footprint, either because it’s good for the earth or good PR, or both.

To date, it’s far from clear whether the hundreds of offset programs that have been tried around the world actually work, beyond salving the consciences of polluters and concerned citizens. Some climate scientists maintain that the cash-for-credits approach has yet to produce anything close to promised environmental gains. Others contend that such systems could succeed if expanded beyond a modest group of voluntary participants.

At minimum, for it to endure, carbon finance has to be profitable. Which it might be, eventually, in Scotland.

“It’s a very young market,” said Renée Kerkvliet-Hermans, the peatland code coordinator for the International Union for Conservation of Nature U.K. Peatland Program. “We have 11 validated projects, and the first was registered in 2018. So next year will be our first verification.”

The big unknown is what those carbon credits will be worth.

“Are we talking about £10 per ton of sequestered carbon, or are we talking about £400 per ton?” asked Peter Hutchinson, peatland program manager at NaturScot. “We need to make this market attractive to private finance, and we’re not waiting. We’re talking to various companies, we’re going to financial advisers. The government has committed 250 million pounds” — about $327 million — “and we’d like landowners to take advantage of that resource.”

Because of Mr. Povlsen’s deep pockets, Wildland hasn’t rushed to register its peatlands, doing so for the first time just last year. This gives the company four years to strategize about marketing those credits. Mr. MacDonell already knows this much: He won’t sell to just anyone.

“There’s reputational risk in selling to the wrong people,” he said. He wouldn’t want to see Wildland credits go to some company extracting lithium from the Democratic Republic of Congo, for instance, or a company linked to Russian oil.

The most likely buyer is actually Mr. Povlsen, on behalf of Bestseller or one of his other holdings — which may strike some as perverse. Mr. Povlsen would be getting a government subsidy for one company (Wildland) to create carbon credits that could be acquired by another (Bestseller) to minimize the latter’s carbon footprint. Then there’s another view: Maybe creating and buying your own carbon credits is one definition of environmental responsibility. At minimum, it demonstrates a commitment to the planet that runs deeper than in the vast majority of Mr. Povlsen’s corporate peers.

As the owner of a fast-fashion company, he fully understands that the source of his wealth makes him a figure of suspicion to some.

“I get it, I get it,” he told me during our video call. “The fashion industry has huge challenges. I mean, things we weren’t even aware of five years ago, like the impact of microplastics on the ocean.”

Still, he insisted that his efforts are not contradictory. Wearing an Oxford shirt with blue and white pinstripes, Mr. Povlsen had a gray-flecked beard and unpretentious manners. Although long considered Denmark’s richest man — a title he surrendered in March, Bloomberg reports — surprisingly few Danes know his name or life story. His parents started their company in 1975, beginning with a single store peddling summer dresses to tourists in a small coastal town in Denmark. By 1999, Bestseller was a worldwide retail chain of 612 stores.

As a child, Mr. Povlsen skipped gym classes so that he could chip in at a company warehouse, he once told a Danish newspaper. He loved diving into the company’s books. The thing that most fascinated him, he said, was accounting. “It’s almost sport for me.”

When Mr. Povlsen took the helm of Bestseller in 2001, the privately held company, which owns brands like Jack & Jones and Selected, shifted into a higher gear. From the start, Mr. Povlsen was grappling with how to square his job with his passion for land preservation. He remembers meeting Douglas Tompkins, the founder of The North Face and Esprit, who left the fashion business after concluding that capitalism could never help reverse damage to the environment. Mr. Tompkins became an environmental hero, buying 2.2 million acres of land in Latin America and turning them into nature sanctuaries.

“Before he even said hello to me he said, ‘Why don’t you sell your business and get involved with something important?’” Povlsen recalled of his encounter with Mr. Tompkins. It’s advice he did not take, and it’s worth noting that Mr. Tompkins didn’t shut down The North Face. He sold it, leaving its approach to the environment in someone else’s hands. Mr. Povlsen wanted to keep control of Bestseller and, as he put it, “drive it in the right direction.”

He has a list of reforms in mind. He aspires to push the industry to focus more on secondhand garments and to reuse materials more efficiently, and he wants to ensure cotton is produced with less water and fewer pesticides. Bestseller’s website underscores its environmental ambitions by publishing an annual sustainability report that outlines goals achieved. To name one: The share of recycled polyester “of our overall polyester sourcing grew to 13 percent in 2021.”

These are gains, but they are overwhelmed by the larger, malign effects of Bestseller, said Dana Thomas, author of “Fashionopolis: The Price of Fast Fashion and the Future of Clothes.”

Most fast-fashion garments are two-thirds polyester, she said, and are worn an average of seven times, then thrown out. To this toll add the roughly 20 million items produced by the industry each year that go straight to landfills because they didn’t sell. Then there’s the pollution caused by an energy-intensive network that hauls clothing produced in far-off countries, where labor is cheap, to stores around the world.

Bestseller is not blind to these defects. While it boasted in that sustainability report about a company-built solar plant that now fully supplies its Danish operations, it acknowledges that the biggest effects on climate come from outside Denmark, in raw materials, yarn production and transportation. The company noted that its emissions were up last year. The reason: “2021 has been a financially strong year and we have seen an increase on number of products sold.” In other words, what’s good for business is bad for the climate.

Fetching and affordable as it is, that “strappy midi dress” in African violet sold by Selected for about $72 comes with a steep environmental cost. Mr. Povlsen may be among the more enlightened leaders in the fashion business, but Bestseller is a net minus for the climate.

“He’s churning out way more carbon with his business,” Ms. Thomas said, “than he’ll ever be able to suck in with his peat bogs.”

For many years in Scotland, sheep were more valuable than people.

At least, they were to large landowners, known as lairds. Starting around 1760, during the birth of the Industrial Revolution, wool spinning entered the era of mass production. A few thousand sheep could generate more revenue for a laird than a few hundred farmer-tenants. This unsentimental calculation led to the forcible removal of people who’d lived and worked on properties for generations.

The Highland Clearances had begun. Over the decades, tens of thousands of Scots were ordered to pack and go. Homes were burned. Some older people starved or froze to death. On one estate alone, belonging to the Duchess of Sutherland, 15,000 people were pushed out to make room for 200,000 sheep. Many of the dispossessed emigrated to the United States and elsewhere. It was a major impetus behind the Scottish diaspora.

A new chapter in this terrible history came when the British government began paying former enslavers, and other beneficiaries of the slave economy, to compensate for the abolition of the slave trade in 1833. The modern equivalent of $20 billion was eventually disbursed to thousands of recipients. The newly flush bought properties in the Highlands, which they stocked with grouse and deer.

Though never as well known as the Potato Famine, which spurred a mass exodus from Ireland, the trauma of the Clearances had lasting effects.

“People often say to me, ‘Why should we care about something that happened 200 years ago?’” said Magnus Davidson, a research associate at the University of the Highlands and Islands. “But if you look around, you see repercussions everywhere — landscapes that are degraded environmentally, landscapes that are devoid of people.”

To Mr. Davidson and others, the new “green lairds,” as they’re called, sound depressingly familiar. Once again, the wealthy are buying vast tracts of Scottish land and deciding what should be done with them. No country in Europe has a higher concentration of land ownership than Scotland, where 67 percent of rural land is owned by a fraction of 1 percent of the population, according to Community Land Scotland.

Mr. Davidson is all in favor of peatland restoration. He just believes that leaving the work and its upsides in the hands of a small group of super wealthy men and corporations, few of whom live in Scotland, is a lousy idea. He derided Mr. Povlsen’s peatland rescue efforts as “moral offsets,” suggesting they are as much about sequestering guilt as carbon.

There are currently rules that give locals who have banded together, often with some government money, first dibs on newly available parcels. The government has $13 million to dispense for such groups, a figure that will double next year. But Mr. Davidson argues that this hardly levels the field, as it takes time for local groups to register, a huge disadvantage against green lairds who can act more swiftly. And in a heated market, even with government support, these community groups can’t raise enough funds.

Getting outbid by Mr. Povlsen is what initially turned Ellen Henderson, who lives in a town called Tongue, into a vocal detractor. Last year, she and her husband offered £180,000 (about $235,000) for an empty former branch of the Royal Bank of Scotland, which had been renovated for sale as housing. The couple were outbid by Wildland, which wanted employee housing. Ms. Henderson had imagined retiring in that house, a place for children and grandchildren to gather. She was heartbroken.

When she heard that Mr. Povlsen was staying at a Wildland property in Tongue, she tried to pay him a visit. She ended up face-to-face with his wife, Anne.

“I told her, ‘I’ve never begged for anything in my life but I’m begging you to sell us that bank,’” she recalls. “She asked me why I wanted it, and I told her I want it for a home. And that I belong there, because my ancestors kept that bank alive.”

Ms. Povlsen said she’d need to confer with her husband, and promised to call, said Ms. Henderson. She never did. Now Tongue is the midst of a makeover, facilitated by more than a few locals who sold to Wildland. The company has purchased about 14 buildings, by Ms. Henderson’s count, including a village shop that had been run by the same family for 100 years.

Wildland currently has 60 employees, a number that the company expects will double next year. Most will work at the guest houses, which are the sorts that could turn up in an episode of “Succession.” Like the lodge at Glenfeshie, which has space for 12 people, an on-site chef, a wait staff and a look that could be described as Ralph Lauren meets Prince Albert. A week there costs about $40,000, food and wine included. A new project, the refurbishment of Hope Lodge in Sutherland, will be every bit as luxurious and will require a staff of about 100 people.

“It’ll take a loss for the first five years,” Mr. MacDonell said. “That’s why it takes people like Anders and Anne to deliver this dream,” he said of the Povlsens.

Mr. MacDonell was sitting recently in the office of Tim Kirkwood, Wildland’s C.E.O. The two men were discussing how they will eventually market peatland carbon credits. A professional public relations firm would be hired. A brochure was envisioned. And as for the price, who knows?

“Some early credits sold for £7 a ton,” said Mr. Kirkwood.

“We were offered £60 a ton a few years ago, by an aviation company,” Mr. MacDonell replied.

He added that Wildland’s credits will be “charismatic,” by which he meant they will have more cachet than those of its competitors. The notion suggests that a ton of sequestered carbon isn’t like, say, a ton of nickel. Perhaps when people know the history of Wildland, and grasp the care and extent of efforts undertaken in places like Glenfeshie, the company’s carbon credits will fetch a higher price, for the same reason a handbag made by Hermès is more expensive than one at Banana Republic.

Of course, that depends on how buyers see the story of Anders Holch Povlsen, and of Wildland. Is it the undertaking of a man with all the resources needed to heal an impressively large chunk of Scotland? Or is it an attempt to compensate in one country for harm he’s doing everywhere else?

“There’s a germinal brand here,” said Mr. Kirkwood, the C.E.O., “as long as we don’t screw it up.”