Octopus Investments spreads risk in natural capital portfolio

Octopus Investments has launched its natural capital strategy, which aims for a strong risk return profile by balancing investments in newer markets, like biodiversity, with more assured sectors, like renewable energy and afforestation.

The Octopus Natural Capital Strategy aims to generate high-integrity carbon removal credits through comprehensive conservation and land management. It will look to provide investors with attractive, sustainable returns and the opportunity to accelerate the transition to net zero by kick-starting the natural capital economy.

The Strategy will initially have a UK focus – looking at the acquisition of land-based assets with conservation potential – and will be exploring ancillary revenue streams tailored to each project and locality: whether this is property restoration, biodiversity net gain credits, regenerative agriculture, ecotourism or renewable energy.

The Strategy will be led by Investment Director, Alex Godfrey, who joined Octopus from Savills, where he was Head of Natural Capital (Rural and Projects).

Godfrey said, “I have seen over the years how Octopus makes use of its capital. With its entrepreneurial approach and ability to provide innovative solutions to sectors ripe for change, Octopus aims to tackle some of society’s biggest challenges. In the past there has been huge success with solar power, care homes and the energy transition.

“I’m excited to be part of this next priority area for Octopus with natural capital having similar characteristics to these previous big wins; a specialist area in an underdeveloped part of the market that is expected to grow exponentially. I look forward to bringing this to life, creating impact and generating sustainable investment returns for our investors.”

Octopus Investments says that it has set an ambitious goal to grow its assets under management from £13bn to £50bn by 2030. A large proportion of this growth will come from the expansion of the institutional business. In recent years Octopus has launched several funds, including the Octopus Sustainable Infrastructure Fund and the Octopus Affordable Housing Fund. This move into natural capital is the next part of this plan.

Mike Toft, Senior Fund Manager at Octopus, said, “Climate change is the biggest challenge of our time and while reducing carbon emissions to reach net zero targets is key to addressing this challenge, we will not reach this goal by decarbonisation alone. We know that more high-quality carbon credits need to be generated to help offset carbon and accelerate our net zero efforts.

“We also know that companies want to do the right thing for all stakeholders; the planet, their customers, shareholders and employees. With their own net zero targets approaching, they too are increasingly realising that offsetting will need to play a critical part in that journey. We are aiming to meet this demand through our holistic, nature-based strategy and with Alex now on board with his on the ground conservation experience, we are even better placed to do so.”

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