Foresight Group, a prominent investor in global infrastructure, natural capital, and UK businesses, has secured £27 million in fresh equity for its subsidiary, Foresight Natural Capital Ltd (FNC). This investment, backed by the East Riding and West Yorkshire pension funds, will drive the expansion of FNC’s natural capital portfolio, which currently includes a strong focus on afforestation and forestry assets.
The additional capital will support the diversification of FNC’s investment strategy, opening up opportunities in areas such as Biodiversity Net Gain (BNG) projects, peatland restoration, and regenerative agriculture. These initiatives are seen as integral to addressing climate change, improving biodiversity, and delivering long-term sustainable returns.
With the new investment, the total net asset value of Foresight’s UK natural capital strategy reaches £300 million. FNC’s portfolio mainly consists of afforestation projects—primarily focused on tree planting to create new woodlands—which will make a significant contribution to the UK’s overall afforestation efforts. By 2024, FNC aims for its afforestation assets to cover approximately 28% of the UK’s total afforestation area.
Pension Funds Highlight Long-Term Benefits of Natural Capital
Representatives from both pension funds expressed their support for natural capital investments, noting the importance of these projects in both generating stable returns and mitigating climate risks.
Darran Ward, Head of Alternatives at West Yorkshire Pension Fund, emphasized the strategic value of investing in nature as a critical infrastructure, contributing to long-term returns while supporting sustainable ecosystems. “We view nature as keystone infrastructure and an emerging asset class,” Ward stated, highlighting the alignment with the fund’s broader investment principles.
Neil Berry, Investment Manager at East Riding Pension Fund, echoed these sentiments, underlining the dual benefits of natural capital investments: stable, risk-adjusted returns alongside contributions to climate change mitigation, in line with the fund’s net-zero objectives.
Both pension funds are part of the Local Government Pension Scheme (LGPS), with East Riding participating in the Border to Coast Pool and West Yorkshire in Northern LGPS.
The move to expand Foresight’s natural capital investments reflects a broader trend of institutional investors looking to align their portfolios with sustainability goals while also seeking reliable, long-term financial returns. Natural capital investments are increasingly recognized for their ability to offer diversification, generate environmental impact, and help address urgent climate challenges.
The Role of Natural Capital in the UK’s Climate Goals
As the UK strives to meet its net-zero emissions targets by 2050, investments in natural capital are gaining traction. Projects like afforestation, peatland restoration, and sustainable agriculture contribute to carbon sequestration, biodiversity preservation, and the resilience of ecosystems, all of which are vital for long-term environmental and economic stability.
Foresight’s focus on regenerative agriculture and other nature-based solutions could also play a pivotal role in reducing the carbon footprint of farming while improving land use practices. These initiatives, combined with the growing interest from institutional investors, underscore the increasing recognition of natural capital as an asset class that can deliver both financial and ecological benefits.
In summary, the £27 million investment by East Riding and West Yorkshire pension funds is a significant step in expanding the UK’s natural capital market. It reflects the growing convergence of financial returns and environmental impact, with institutional investors playing a critical role in funding sustainable, climate-positive projects across the UK.
References:
- Foresight Group. “Natural Capital Investments.”
- West Yorkshire Pension Fund, Investment Strategies.
- UK Government. “Net Zero Strategy: Build Back Greener.”
