Aviva Investors has launched an innovative Carbon Removal Fund (CRF) to offer institutional investors, such as corporates, pension funds, insurers, and local government pension schemes, access to carbon removal solutions aimed at generating returns while supporting their long-term net zero goals. The fund, seeded with an initial commitment from Aviva’s Investment, Wealth, and Retirement business, will invest in a blend of nature-based and engineered carbon removal projects, generating high-integrity carbon removal credits.
The CRF will target investments in afforestation, peatland and mangrove restoration, commercial forestry, venture capital and private equity-backed nature tech, and alternative carbon removal companies. In addition to carbon removal credits, the fund will target projects that offer measurable co-benefits, such as biodiversity enhancement, species protection, improved water quality, job creation, and public access.
“We are incredibly pleased to bring this fund to market, which serves as another example of our ability to match investment expertise with product innovation,” said Daniel McHugh, Chief Investment Officer at Aviva Investors. “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. We think our Carbon Removal Fund is truly at the forefront of how asset managers can best-capture these opportunities. This is a fund designed for investors with ambitious decarbonisation pathways in place and that are looking for ways to hedge against exposure to carbon pricing.”
The launch coincides with the publication of Aviva Investors’ research paper, Navigating Nature: Opportunities for the Investor of Tomorrow, which explores why nature-related risks and opportunities matter to investors and how to identify and engage with nature-focused initiatives. This aligns with the CRF’s commitment to sustainable finance under the Article 9 framework of the Sustainable Finance Disclosure Regulation (SFDR), allowing it to invest in both temperate and tropical climates, thereby addressing the climate investment adaptation gap between developed and emerging markets.
Ashish Dafria, Chief Investment Officer at Aviva, added, “As one of the largest investors in the UK, Aviva has the opportunity and responsibility to actively create positive change, so we’re delighted to support the launch of the Carbon Removal Fund. It’s another example of our commitment to developing and supporting attractive investment opportunities in environmental initiatives. We recently funded peat restoration and woodland creation schemes and believe this new fund can help us do even more, making the most of the investment expertise of our Aviva Investors colleagues and their ability to find projects that can deliver long-term value for us as a business, and for the UK.”
Earlier this year, Aviva Investors partnered with PAR Equity and Scottish Woodlands Ltd to complete the first phase of peatland restoration at Glen Dye Moor in Aberdeenshire, Scotland, restoring 172 hectares of degraded peat as part of a larger project aiming to restore 1,800 hectares, potentially capturing over 1.4 million tonnes of carbon.
Greta Talbot-Jones, Director of Natural Capital at Aviva Investors and co-Portfolio Manager of the CRF, emphasised the fund’s direct approach: “Through our Carbon Removal Fund, we will 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. We are excited to combine our sustainability policy and private markets investment expertise in order to shape the portfolio.”