Octopus Investments plots move into nature-based carbon credits market

view original post

Octopus Investments has become the latest financial firm to move into the voluntary carbon market, today unveiling fresh to invest in nature-based solutions that can generate carbon removals credits alongside other revenue streams.

Octopus Investments – a sister investment management firm to energy giant Octopus Energy – has launched a new Natural Capital Strategy, through which it plans to focus on acquiring “land-based assets with conservation potential” with an initial focus on the UK.

The assets are expected to generate revenue from the sale of sale of carbon credits and a range of “ancillary” revenue streams, including from property restoration, biodiversity net gain credits, regenerative agriculture, ecotourism, renewable energy, and .

The company said the aim of the strategy was to generate high-integrity carbon removal credits through “comprehensive conservation and land management”, in order to provide investors with “attractive, sustainable returns and the opportunity to accelerate the transition to net zero by kick-starting the natural capital economy”.

Mike Toft, senior fund manager at Octopus Investments, said the Natural Capital Strategy formed the next step in its goal to grow its assets under management from £13bn today to £50bn by 2030.

He said the move into natural capital formed the next part of the firm’s plan, following the launch of its Octopus Sustainable Infrastructure Fund and the Octopus Affordable Housing Fund.

“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,” said Toft. “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.”

The move comes amid intense scrutiny of the voluntary carbon market due to heightened concern about the sale of ‘junk’ carbon credits, which are accused of failing to deliver promised emissions-reductions or removals.

However, proponents of the sector argue high integrity carbon credits can deliver emissions savings and are likely to play a critical role in driving much-needed investment into nature-restoration and carbon removal projects. A number of standards bodies – including the Integrity Council for the Voluntary Carbon Market – are now working to improve standards and transparency across the sector in a bid to bolster confidence in projects’ ability to deliver promised emissions savings.

Meanwhile, leading standards-setting organisation the Science Based Targets initiative (SBTi) is currently working on proposals that could see it tweak its Corporate Net Zero Standard, which could increase the scope for firms to use carbon credits to offset their value chain emissions.

Octopus Investments announced it has appointed Alex Godfrey to lead its new Natural Capital Strategy, who has joined the firm from property giant Savills where was head of natural capital.

Godfrey has been tasked with honing Octopus Investments’ approach to high quality carbon credits, focusing on data-led monitoring, co-benefits of biodiversity, improving the ecosystem, and carbon credit permanence and transparency.

“I have seen over the years how Octopus makes use of its capital,” said Godfrey. “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.”

Want to understand what is going on at the cutting edge of sustainability? Check out BusinessGreen Intelligence – the premier information for professionals focused on the UK’s green economy.