Environment Agency Pension Fund (EAPF), a £4.5bn (€5.3bn) UK local authority pension fund, has committed to a sustainable private credit strategy launched by Lombard Odier Investment Managers (LOIM) to help it implement its net-zero policy.
LOIM said it was not in a position to disclose the size of the commitment and EAPF did not respond to IPE’s question about the size of the investment.
The strategy aims to provide primarily bilateral senior secured private loans to diversified North American climate transition-oriented industries.
In a statement, Graham Cook, chief investment officer at the EAPF, said the local government pension scheme believed the fund would provide “the desired double bottom line of strong investment returns coupled with real world impact in addressing the challenges of climate change”.
EAPF, which is part of the Brunel Pension Partnership, is a signatory to the Paris Aligned Investment Initiative, committed to achieving net-zero portfolio alignment by 2050 or sooner. It is itself aiming to halve the carbon emissions associated with its investments by 2030, and reduce them to net-zero by 2045.
“The transition to a net zero global economy will be highly dependent on the targeted provision of debt financing to corporations to help them make the necessary changes to their business models”
Graham Cook, CIO at the EAPF
“The transition to a net zero global economy will be highly dependent on the targeted provision of debt financing to corporations to help them make the necessary changes to their business models,” said Cook, adding that EAPF had identified this as a priority for investment in its net-zero policy.
“We were delighted therefore to see the launch of Lombard Odier Investment Managers’ sustainable credit fund, with its focus on facilitating the transition using a science-based approach.”
LOIM has classified the strategy under Article 9 of the EU sustainable finance disclosures Regulation (SFDR) “pursuant to its sustainable investment objective of advancing the transition to net zero”.
It said the strategy was designed to deliver “tailored solutions-based structured liquidity within less-efficiently financed markets, while pursuing compelling risk-adjusted returns expected to be less market correlated than traditional direct lending strategies”.
Ritesh Bamania, head of UK & Ireland institutional sales at LOIM, said: “The EAPF is recognised for its strong sustainability focus and we are excited to be working together with them as a key partner.”
Earlier this year APG, on behalf of two of its Dutch pension fund clients, made an investment of $750m (€660m) in an ILX emerging markets private credit fund that follows the UN’s Sustainable Development Goals.