The £20bn West Yorkshire Pension Fund (WYPF), which is part of the Northern LGPS Pool has acquired a 25% stake in Rebalance Earth, a fund manager which specialises in nature restoration in the UK.
The manager finances nature as infrastructure, with its latest fund (RE)DARWIN generating returns through “nature as a service contracts”. These contracts act as a long-term offtake agreement that deliver reduced flood and drought risks, consistent water availability, improve water quality and increase biodiversity and carbon sequestration.
According to WYPF, which is part of pooling vehicle Northern LGPS, its investment is “crucial” to backing UK growth and mitigating flood risks, with a typical flooding incident costing UK businesses an average of £82,000 each, according to the London Climate Resilience Review.
“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.
This investment comes as chancellor Rachel Reeves has launched a pensions review to look at how to merge the UK’s 86 separate Local Government Pension Scheme funds, in search of boosting investment in the UK.
The Environment Agency states that 185,000 businesses in England and Wales are at risk of flooding, and estimates that an insufficient water supply will cost London's economy £500m per day by 2050
This summer, the Environment Agency also revealed that UK water companies released sewage for more than 3.6m hours in 2023.
Walid Al Saqqaf, CTO and co-founder of Rebalance Earth, said: "Our investment in nature-based solutions will address water quantity and quality issues.
“By deploying our own cutting-edge technology that harnesses artificial intelligence, remote sensing, and geospatial mapping we can intelligently guide investments in natural landscapes to reduce flooding and maintain supplies during dry spells.
“At the same time, rivers and wetlands can filter pollutants, ensuring cleaner water for ecosystems and human use."
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