November 7, 2024

By Gerelyn Terzo, Global AgInvesting Media

With the UN Climate Change Conference, aka COP29, in Baku, Azerbaijan days away, investors have their sights set on climate plans. Right on cue, U.K. asset manager Aviva Investors has introduced its Carbon Removal Fund (CRF), the strategy for which involves natural capital and nature technology. Aviva expects the fund will provide British institutional investors, including corporates, pension funds, insurers and local government pension schemes, exposure to carbon removal solutions amid a two-pronged strategy comprising returns and long-term net-zero goals.

Aviva Investors Chief Investment Officer Daniel McHugh stated, “This is a fund designed for investors with ambitious decarbonization pathways in place and that are looking for ways to hedge against exposure to carbon pricing.”

Last year, Aviva Investors partnered with the Woodland Trust, including a £10m (US$10.7 million) donation, to support carbon removal, improved air quality and greater biodiversity through woodland creation and peat restoration. The firm also oversees the Climate Transition Global Equity fund and the Social Transition Global Equity Fund, which reportedly boast assets under management of £722 million (US$774.6 million) and £34.6 million (US$37.1 million), respectively.

Aviva in a report addressed what it described as a “daunting nature crisis” through which investors can recognize and engage with issues to uncover opportunities. Aviva Investors Chief Sustainability Officer Mirza Baig pointed to innovative solutions developed by the firm, including data analytics tools, that help them to better uncover, evaluate and monitor nature-related risks and opportunities across portfolios while providing investors with insight on the nature-related “footprint” of their investments, per the report.

Baig also noted how so far, many sustainability activities tackle climate change without adequately acknowledging what he described as an “interdependence between climate and nature”. Biodiversity loss, he said, is a critical driver of the climate crisis and vice versa. Consequently, the state of nature is intrinsically linked to the climate crisis while the urgency around restoring nature surpasses climate considerations alone.

While carbon removal has a wide scope, the new fund has identified several market segments aligned with ag investing. These include afforestation and restoration projects in pockets of peatland and mangroves, as well as commercial forestry, venture capital and private equity-based nature tech. In addition to carbon removal credits and low-carbon investments, the fund will target assets and projects that deliver tangential benefits, such as biodiversity enhancement, species protection and reintroduction, improved water quality, employment and public access, per the announcement.

Greta Talbot-Jones, Aviva’s director of natural capital co-portfolio manager of the new fund, stated, “Through our Carbon Removal Fund, we will be able to work directly with conservation groups, NGOs, specialist land managers and development partners. That is a vitally important element of this strategy as it should provide clearer, more direct and less diluted reporting lines from the projects we fund on how investment capital is being deployed, which activities that funding is supporting and where, and the impact it is having in terms of real-world outcomes. We are excited to combine our sustainability policy and private markets investment expertise in order to shape the portfolio.”

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