A UK local government pension fund has acquired a minority stake in an asset manager specialising in curbing corporate exposure to nature-related risks, the organisations announced Monday.
The West Yorkshire Pension Fund (WYPF), with approximately £20 billion in assets under management, said that its undisclosed investment in London-based Rebalance Earth aims to help bridge the financing gap on nature restoration in the UK, estimated at £50-100 bln.
“As a large asset owner with a long-term horizon, we have a responsibility to provide direct patient capital to nature as infrastructure and to start to address critical issues like climate change adaptation and resilience here in the UK,” said Leandros Kalisperas, WYPF’s chief investment officer.
“Investing in Rebalance Earth is crucial for fostering innovative solutions and backing UK growth.”
Rebalance Earth plans to launch a fund, dubbed Re(Darwin), seeking to mobilise investments towards nature protection and restoration in the UK, targeting five problem areas – flooding, drought, water quality, biodiversity and ecosystem health, and carbon emissions.
Founded in 2023, the manager specialises in so-called “nature as a service” contracts, whereby it assesses corporate nature-related risks, identifies restoration projects that have the potential to mitigate them, and earns returns from companies’ payments for their reduced exposure.
Additional returns for investors could be achieved through biodiversity net gain (BNG) units as well as voluntary carbon credits, said the press release.
SETTING THE STANDARD
“WYPF is setting the standard on the level of commitment needed to put the brakes on the UK climate and nature crisis,” said Robert Gardner, CEO and co-founder of Rebalance Earth.
“With their investment, we can build an expert team, launch our fund, and restore landscapes and seascapes across the UK.”
Gardner said Rebalance Earth aims to mobilise over £10 bln towards restoring nature across the country over the next 10 years.
“A ‘2% for nature’ allocation from the £5 trillion in UK pension and wealth assets would generate the necessary funds … needed for nature restoration in the UK,” he added.
Since nature loss has moved up the ESG agenda, asset managers have started taking steps to incorporate natural capital into their investment decision-making, though the majority still ignore biodiversity risks, as pointed out by responsible investment charity ShareAction.
In 2023, a separate report by the advisory firm Pensions for Purpose showed that pension funds in the UK fell short in integrating nature into investment decisions, mainly due to the lack of specialist knowledge.
By Sergio Colombo – sergio@carbon-pulse.com
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