Protest against Avon Pension Fund's investment in BlackRock, 2021Room 151 | 27 November 2024Avon Pension Fund to invest a further £150m in natural capital
by Aysha Gilmore
Avon Pension Fund plans to further allocate between £100m and £150m to natural capital investments in 2024/25, according to its latest Responsible Investment report.
The investment will target assets such as sustainable forestry and agriculture due to the assets return factors, the report revealed. The return from natural capital is driven from the production and sale of natural assets and carbon markets, for example timber and construction and carbon credits.
This allocation builds on the Local Government Pension Scheme (LGPS) fund’s existing natural capital investments, which are primarily committed to the Brunel Pension Partnership’s Cycle 3 infrastructure portfolio.
One of Avon’s commitments is an investment in Aurora Sustainable Lands, which actively manages and conserves North American forestlands to remove and store carbon from the atmosphere.
The further natural capital allocation will form part of Avon’s existing 32% strategic allocation to illiquid assets.
Paul Crossley, chair of the Avon Pension Fund Committee, said: “Over the coming year, the fund will focus on its priority environmental, social and governance (ESG) themes and take the necessary action to accelerate progress towards our net zero goal by looking at allocations to natural capital solutions such as forestry and sustainable agriculture.”
The LGPS fund seeks to deliver net zero by 2045 and has committed to divest from high impact companies that cannot show a credible alignment strategy before 2030.
Avon Pension Fund is not the first LGPS fund to invest in natural capital. In March 2024, South Yorkshire Pension Authority (SYPA) entered into a £260m joint venture with Royal London Asset Management to acquire a farmland portfolio.
In addition to its focus on natural capital, Avon’s Responsible Investment report outlines plans to target investments in “climate solutions” over the coming year. These include financing projects in renewable energy and waste management.
The report also highlights the fund’s broader responsible investment achievements. Avon has reduced the carbon intensity of its listed equity portfolio by 63% and made significant commitments to local solar energy (£35m) and affordable housing (£50m).
