Aviva Investors has launched a carbon removal fund that will invest directly in both nature-based and engineered carbon removal solutions as part of a blended portfolio, it has announced.
The fund has been seeded with an initial commitment from Aviva’s investment, wealth and retirement business; the size of the commitment was not disclosed.
According to Aviva, the fund has been designed to provide access to investments such as afforestation and restoration projects across areas of peatland and mangroves, as well as commercial forestry, venture capital and private equity-based nature tech, and alternative carbon removal companies.
Daniel McHugh, chief investment officer at Aviva Investors, said the fund was designed for investors with ambitious decarbonisation pathways in place and that are looking for ways to hedge against exposure to carbon pricing.
“Investors have been consistent in calling for investment strategies that can deliver long-term performance whilst also helping them to align with net zero ambitions,” he said.
“We think our carbon removal fund is truly at the forefront of how asset managers can best capture these opportunities.”
Beyond carbon removal credits and low-carbon investments, the fund will also seek assets and projects that can provide measurable co-benefits, such as biodiversity enhancement, species protection and reintroduction, and improved water quality, the asset manager said.
Greta Talbot-Jones, director of natural capital at Aviva Investors and co-portfolio manager of the carbon removal fund, said that, through the fund, the asset manager would 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.”
The asset manager said the fund would have a global remit allowing it to invest across both temperate and tropical climates, something which Aviva Investors believed is critical to address given the climate investment adaptation gap that exists between developed and emerging markets around the world.
The asset manager will be making disclosures for the fund according to Article 9 of the Sustainable Finance Disclosure Regulation (SFDR) framework.
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