A London-based investor has partnered with a British-American insurance company to start a biodiversity credit fund in the wake of England’s net gain (BNG) policy coming into force, Bloomberg reports.

Gresham House launched the Biodiversity Co-Invest LP fund on Monday, with Willis Towers Watson (WTW) clients among its investors, the article stated.

The fund – seeking to attract a total of $380 million from investors – will support biodiversity improvements in habitat banks created by the BNG units provider Environment Bank, generating returns from the sale of biodiversity credits.

“With the UK in the bottom 10% globally in terms of biodiversity, we can see no better place to partner with forward-thinking investors such as WTW to tackle this grave threat,” Peter Bachmann, managing director of sustainable infrastructure at Gresham House, was reported as saying.

“If we get nature-based solutions right, it could be really transformational.”

Under the BNG policy, development projects in England need to achieve a net biodiversity improvement of at least 10% as of Feb. 12, 2024.

Environment Bank – part of the Gresham House British Sustainable Infrastructure Fund portfolio – said it plans to develop over 8,000 hectares of habitat banks delivering BNG units by 2026, with the creation of over 6,000 acres of habitat already underway, according to its website.

In January, Rob Wreglesworth, associate ecologist and innovation lead at Environment Bank, said that the conservation company was “overwhelmed” with potential biodiversity credit projects.

The company started marketing voluntary biodiversity credits last year from a 1,200-acre pilot site in Norfolk in a bid to spur demand ahead of the BNG mechanism entering into force. The pilot was funded by Gresham House.

The asset manager also completed fundraising for its forestry and carbon credits fund in October, targeting a 6-8% internal rate of return (IRR).

“We’re really pleased that’s just been closed out at £300 mln and is pretty much deployed,” Olly Hughes, managing director of forestry at Gresham House, told Carbon Pulse. “We’ve got a very strong basis of institutional limited partners (LPs).”

By Sergio Colombo – sergio@carbon-pulse.com

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