Avon Pension Fund Commits Up to $190M to Natural Capital Investments

The United Kingdom’s Avon Pension Fund plans to allocate $127-$190 million to natural capital investments in 2024-25. This commitment, outlined in its latest Responsible Investment report, highlights the fund’s growing focus on sustainability.

Focus on Sustainable Forestry and Agriculture

The Avon Pension Fund’s new allocation will target sustainable forestry and agriculture projects. These investments will generate returns from natural assets like timber and carbon markets, particularly carbon credits.

This approach aligns with the fund’s broader goal of promoting environmental sustainability while also ensuring long-term financial growth.

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Building on Existing Natural Capital Investments

This new funding builds on the fund’s existing natural capital investments within the Brunel Pension Partnership’s Cycle 3 infrastructure portfolio.

Among these investments is a commitment to Aurora Sustainable Lands, which manages North American forestlands to sequester carbon from the atmosphere. This initiative supports the fund’s overall environmental, social, and governance (ESG) goals.

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Avon’s Strategic Asset Allocation

According to the report, Avon Pension Fund's natural capital investments will contribute to the fund’s 32% strategic allocation to illiquid assets. These investments will support Avon’s ongoing efforts to create a more sustainable and diversified investment portfolio.

Net Zero Goal and ESG Commitments

Paul Crossley, Chair of the Avon Pension Fund Committee, reaffirmed the fund's dedication to environmental and social priorities. The report outlines the fund’s commitment to achieving net zero emissions by 2045. By 2030, Avon plans to divest from high-impact companies lacking credible climate strategies.

Other Key Initiatives in Sustainable Investing

In addition to its natural capital investments, Avon is also investing in renewable energy and waste management projects. Notably, Avon has reduced the carbon intensity of its listed equity portfolio by 63%.

The fund has committed $44 million to local solar energy projects and $63 million to affordable housing, further supporting its climate goals.

Following the Lead of Other LGPS Funds

Avon’s move comes in line with other Local Government Pension Scheme (LGPS) funds, such as the South Yorkshire Pension Authority. This fund recently launched a $330 million farmland joint venture with Royal London Asset Management to explore sustainable agricultural investments.