Three UK pension funds pump fresh cash into carbon offset investment vehicle
Three UK Local Government Pension Scheme (LGPS) Funds have made commitments to the Stafford Carbon Offset Opportunity Fund, which aims to improve and restore natural forests.
Essex, Leicestershire and the City and County of Swansea Pension Fund have all invested in the carbon offset investment vehcile, with commitments of $121.4m (£100m), $66.8m (£55m) and $50m (£40m), respectively.
The Article 9 impact fund will look to invest in afforestation, natural forest restoration and improved forest management projects on a global basis.
The fund was launched in December 2022 with a $1bn fundraising target and is managed by private markets and advisory group Stafford Capital Partners.
According to the firm, $242m (around £200m) has been committed at initial close of the fund by investors in the LGPS.
The LGPS is one of the largest pension schemes in the UK, with more than 6.1 million members working in local government or for other employers that participate in the programme. It is administered locally by 86 pension funds in England and Wales.
Angus Whiteley, CEO of Stafford Capital Partner, said: “We believe this fund will deliver the important combination of potential financial returns and environmental benefit that is so needed today.
“We are very grateful to the investors who have enabled us to achieve this milestone and look forward to making a meaningful contribution to their decarbonisation agenda.”
The fund is expected to invest in 200,000 hectares of sustainably managed timberland and generate 30m in verified carbon offsets for investors, which are each equivalent to 1 tonne of CO2.
The Article 9 fund is also expected to provide a source of sustainable, low-carbon wood raw materials.
We believe this fund will deliver the important combination of potential financial returns and environmental benefit that is so needed today.
Decarbonising investment portfolios
Stafford Capital Partners said it will also deliver an investment with a substantially negative carbon intensity profile and reporting framework that can support the broader decarbonisation objectives of the LGPS funds’ investment portfolios.
Jeff Dong, deputy section151 and head of pension fund, told Room151, Net Zero Investor’s sister title, that he is "pleased to announce this further step towards the fund’s ambitious objective to reach net zero emissions by 2037.
“The decisions we take day-to-day make a real difference and our efforts so far were recognised last year when the fund won the ‘Best Climate Change Strategy’ local authorities pension fund investment award.
"We are determined to do more and will continue working towards achieving our 2037 net zero target and the fund’s wider climate objectives,” Dong concluded.
