Natural Capital

Closely connected for
enhanced outcomes

Investing to help restore nature
and mitigate climate change

Robert Hall
Quote
Nature-based solutions are an exciting and developing part of the market for institutional investment, and a crucial part of achieving net zero, which we are embarking on through industry-leading partnerships.

Why Federated Hermes Natural Capital?

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Institutional expertise

Federated Hermes Private Markets has considerable experience in long-term land-use change projects and real asset development. Over the years, we have deployed billions of pounds across the UK working with stakeholders across the public and private sector.

As a firm, we combine institutional investment expertise across Private Markets with a commitment to best practice in sustainable and impact investment.  

Experienced, multi-disciplinary team

The extensive experience of the Federated Hermes Natural Capital team includes over 40 years of real world, practical experience of delivering both large and small-scale Natural Capital investments and has worked throughout the value chain, from on-the-ground delivery as contractors through to the construction, management and valuation of institutional-scale Natural Capital investment portfolios.

This deep understanding is further complemented by a market-wide network with experience of having worked on some of the earliest carbon projects in the UK, including those that predate the existing market infrastructure.

Innovation through unique partnership  

The UK Nature Impact Strategy brings together the institutional investment capabilities and infrastructure of the Federated Hermes Private Markets platform with the origination, structuring, and nature-based advisory expertise of leading environmental investment boutique, Finance Earth.

Born out of a shared vision and complementary expertise, the partnership creates what we believe to be a highly differentiated capability. The UK Nature team has underwritten more than £1bn in UK-based Natural Capital investments and advised over 100 diversified nature-based impact investments. This experience helps the team understand how to manage risk and how to identify opportunities.

Seeking measurable, long-term positive impacts

Investments undergo an extensive impact screening and evaluation process to help ensure we take a holistic view of ecology, landscape, the agricultural system and community resilience and history as we seek to deliver long-term positive climate, nature and social impacts.

Impacts will be independently measured, validated and reported on. We will report the positive impact which our investments have on:

  • Climate
  • Nature & Biodiversity
  • Society and Community

We will work directly with the UK’s leading natural scientists and social scientists in order to ensure that we consistently and systematically pursue best practice and invest on the basis of science.

Selective and differentiated
investment process

Our strategy seeks to invest into established nature markets that are experiencing exponential and resilient growth in demand and, as such, can deliver strong and resilient returns. We focus on pursuing quality investment opportunities that exhibit attractive long-term fundamentals and demand growth, alongside robust, definable downside risk mitigation.

Our differentiated origination approach is underpinned by existing and long-standing relationships with the key stakeholders in UK nature markets.

This access to some of the UK’s largest landowners and cutting-edge science allows us to be well-positioned to source high-quality, institutional-scale opportunities in a market that has, until now, had limited ability to scale.

The geographic focus on the UK further supports risk mitigation: the UK is an emerging leader in nature-based impact investment, hosting some of the highest quality voluntary carbon and nature markets in the world, alongside some of the most experienced land managers and conservationists.

How we invest

We target investments into scalable habitat creation or restoration projects of the highest ecological quality, sourced from a select and carefully chosen number of trusted and experienced counterparties.

We seek to deliver strong and attractive returns through both capital growth and income generation, including but not limited to revenues earned through the delivery and sale of multiple goods and services, including “ecosystem services” - such as timber, carbon removal and biodiversity.

Our strategy also makes a complementary allocation to impactful unlisted businesses within the nature restoration supply chain and/or which provide enabling nature-market infrastructure
in the UK.

Across our portfolio, we target quality investment opportunities that exhibit attractive long-term fundamentals – including exponential demand growth – and, critically, for which we can incorporate downside risk mitigation strategies.

Through carbon removal and abatement, restoring nature and biodiversity and creating skilled green jobs, across the UK, we aim to generate long-term and large-scale climate, biodiversity and social impacts while seeking to provide investors with solid financial returns.

Our investment universe includes:

Nature-based Real Assets

Woodland Creation

Woodland Creation

Returns primarily expected from the sale of ecosystem services, including premium carbon credits and timber.

Peatland Restoration

Returns primarily expected from the sale of premium peatland carbon credits to corporates, asset owners and asset managers committed to net zero.

Biodiversity Net Gain

Returns primarily expected from the sale of biodiversity units to housing and infrastructure developers in England.

lake landscape

Mixed-use Rural Estates

Returns primarily expected from a combination of woodland and peatland carbon, timber, land value, lease or option income, recreation, tourism and leisure, plus other diversified traditional estate revenues.

Impact Private Equity

Blue Impact

Returns primarily expected from the growth of impactful SMEs operating across the UK blue economy, including sustainable aquaculture and mariculture.

Green Impact

Green Impact

Returns primarily expected from the growth of SMEs operating in the nature restoration project supply chain or providing market enabling technology.

Team

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Closely connected for enhanced outcomes

Heritage and track record​

We have been connecting clients to Private Markets opportunities since our first real estate investment in 1983.​

Client-centric investing​

We’re passionate about connecting clients to innovative investment solutions that seek to deliver financial, as well as social and environmental returns.​

Access to high-quality investment opportunities​

Our 40+ year track record is driven by a mindset of building and nurturing long lasting relationships that deliver outcomes.​

Enhanced outcomes and portfolio diversification

We believe our experience, deep networks and partnership approach enable us to get clients closer to the opportunities in Private Markets – because we are.

Uncover the real potential
in Private Markets

Connect with us to find out more:

Douglas Anderson

Head of Consultant Relations, Federated Hermes Limited

To contact our IR team: [email protected]