The Royal County of Berkshire Pension Fund has announced investments in the global food and water supply chain, with a private equity mandate investing in two US start-ups driving sustainable consumption.
Berkshire’s mandate with private equity manager WP Global Partners is the latest example of a local authority fund increasing its allocations to environmentally-friendly companies.
In June, Strathclyde Pension Fund announced a suite of investments in renewable energy and food waste companies as a "diversification play".
Nick Greenwood, pension fund manager at the Berkshire scheme, said it had entered into a “co-investment vehicle as a limited partner and invested in two companies", though the amount allocated was not disclosed.
The fund is looking to the two US-based companies to provide it with exposure to growing opportunities in the "food and water value chain", according to the scheme's annual report.
This chain is used by market experts to describe a global network comprising farmers, traders, food companies and retailers, who satisfy consumer demands in a sustainable way.
Brightfarms works with major supermarkets to grow lettuce, tomatoes, and herbs on nearby sites aiming to cut transportation costs and waste, while Quench provides water filter systems to business across the US with the aim of saving money versus bottled water deliveries.
A survey published by Natixis Global Asset Management this month found more than half of those surveyed (54 per cent) believed environmental, social and governance investment has long-term growth benefits.
A similar proportion (55 per cent) said ESG measures help them mitigate idiosyncratic risks such as loss of assets from lawsuits, social discord, and environmental disasters.
Euan MacLaren, head of UK and Ireland institutional business at Natixis, said institutional investors are increasingly looking at how ESG-focused investments can be used to generate returns rather than merely overlaying funds with ESG principles.
“People are looking at businesses that are offering innovative solutions to the world’s problems – businesses that create value and generate long-term alpha,” said MacLaren.
Simeon Willis, principal consultant at consultancy KPMG, said he believed schemes had the opportunity to create value in targeted areas of the economy through ESG investing, but thought the strategy should be applied broadly across the fund. “There's not much point in a slice in ESG and [to elsewhere] remain exposed to vices," he said.
