UK’s Avon Pension Fund plans to allocate an additional $127-$190 million (£100–£150 million) to natural capital investments in 2024/25, as detailed in its latest Responsible Investment report.
This commitment focuses on sustainable forestry and agriculture, driven by returns from natural asset production, such as timber, and carbon markets, including carbon credits.
The new allocation builds on the fund’s existing natural capital investments within the Brunel Pension Partnership’s Cycle 3 infrastructure portfolio.
Among these is an investment in Aurora Sustainable Lands, which manages North American forestlands to sequester carbon from the atmosphere.
According to the report, natural capital investments will contribute to Avon’s 32% strategic allocation to illiquid assets.
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Paul Crossley, Chair of the Avon Pension Fund Committee, emphasized the fund’s dedication to its environmental, social, and governance (ESG) priorities.
In the next year, the Local Government Pension Scheme (LGPS) fund will focus on accelerating progress towards our net zero goal by exploring natural capital solutions like forestry and sustainable agriculture, Crossley stated in the report.
Avon Pension Fund is targeting net zero by 2045 and plans to divest from high-impact companies lacking credible alignment strategies by 2030.
Avon follows in the footsteps of other LGPS funds, such as South Yorkshire Pension Authority, which launched a $330 million farmland joint venture with Royal London Asset Management earlier this year.
Beyond natural capital, the fund’s Responsible Investment report highlights investments in climate solutions, including renewable energy and waste management projects.
Notable achievements include reducing the carbon intensity of its listed equity portfolio by 63% and committing $44 million to local solar energy and $63 million to affordable housing.
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