Octopus Investments has announced the launch of its natural capital strategy this week. The new initiative aims to generate carbon removal credits through conservation and land management, offering investors sustainable returns and contributing to the transition to net zero emissions.
The strategy will focus initially on the UK, targeting land acquisitions with potential for conservation. It will explore various revenue opportunities tailored to each project, including property restoration, biodiversity net gain credits, regenerative agriculture, ecotourism, and renewable energy.
Alex Godfrey has been appointed as the investment director for the strategy. Godfrey, who joins Octopus from Savills where he was head of Natural Capital, brings over 15 years of experience in investment banking, venture building, and environmental consulting. His expertise includes carbon markets, biodiversity, and water management.
Under the direction of Mike Toft, senior fund manager at Octopus, the strategy will emphasise data-led monitoring and the co-benefits of biodiversity, aiming to improve ecosystem quality, permanence, and transparency.
Octopus Investments plans to grow its assets under management from £13bn to £50bn by 2030. The firm has previously launched several funds, including those focused on sustainable infrastructure and affordable housing.
The Natural Capital Strategy is part of Octopus's ongoing expansion into institutional business and its commitment to addressing climate change challenges.
The global carbon market can be distinguished between the unregulated voluntary carbon markets, and various initiatives by political institutions such as the European Union to establish regulated carbon markets. A key challenge for these regulated carbon markets will be the pricing of these carbon credits.
The EU announced this week that it is considering introducing emissions removal credits into its carbon market, a move which could significantly bolster global carbon credit markets. The EU has so far banned the use of international carbon credits due to concerns about the pricing and transparency around international voluntary carbon credits.
The UK currently has an emissions trading scheme in place which caps the total use of carbon but does not formally factor in carbon credits. A recent Kings College research points out that the inclusion of carbon credits into the emissions trading scheme could provide a significant boost to the UK’s net zero efforts.
The use of carbon credits to offset emissions was also at the forefront of a recent dispute within the Science Based Targets initiative, with critics warning of greenwashing risks.
NZI with Nawar: What is behind the carbon credits row at the SBTi?
