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Federated Hermes and Finance Earth

collaborating on UK Nature Impact Investment Strategy

16 November 2022
Defra to make £30 million investment into new strategy to help deliver HMG’s 25 Year Environment Plan

London – Federated Hermes, Inc., a global leader in responsible investing, and Finance Earth, the UK’s leading environmental impact investment advisor, have announced they are co-designing a UK Nature Impact Investment strategy. This is a blended finance strategy for the UK’s natural capital markets aimed to help address the climate and biodiversity crises.

The Department for Environment, Food and Rural Affairs (Defra) in the UK will make a £30m investment into this new UK-wide strategy, which will seek to raise private capital over and above the public commitment. Defra’s capital will facilitate further investment into high-integrity nature projects in England which help to deliver HMG’s 25 Year Environment Plan.

Federated Hermes and Finance Earth’s broader strategy will seek to invest into high-integrity Nature-based Solutions (NbS) across land, coasts, rivers and sea in the UK. It will be directly informed by the UK’s leading capabilities across climate science and ecology,and will invest into both NbS real assets (nature restoration projects) and impactful businesses operating across the nature restoration value chain.
This strategy aims to be the first to invest across the full spectrum of UK Nature-based Solutions at an institutional scale.

It aims to help accelerate recovery of nature in the UK and support key targets and objectives set out by the UK government, such as protecting 30% of UK land by 2030, unlocking infrastructure and housing developments and “levelling up” by creating skilled green jobs across rural areas and coastal communities.

The strategy is expected to launch during 2023.

Eoin Murray, Head of Investment at Federated Hermes Limited, commented, “Over £6 billion of average annual investment is needed for the next 10 years for the UK to deliver its nature-related commitments. The aim of our UK Nature Impact Investment strategy will be to drive long-term sustainable returns for investors, whilst helping to accelerate the recovery of nature in the UK and support key targets and objectives set out by the UK Government.”

“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 partnerships with the likes of Defra.”

Rich Speak, co-founder and Managing Director at Finance Earth, commented, “the UK Nature Impact Investment Strategy is a significant opportunity to scale and deliver a high integrity Nature-based Solutions market, setting the standard for the rest of the industry.

Over the last six years we have been partnering with the UK’s leading environmental NGOs to define what high quality means in natural capital investment and where private capital can meaningfully play a role, and are designing a robust investment strategy that is seeking to deliver on financial, social and environmental targets.

Having worked with Defra for a number of years on developing a market for nature investment and creating opportunities for private capital to support the UK’s nature recovery ambitions, we are delighted to have Defra as the first investor in this strategy showing the UK’s commitment to closing the nature funding gap.”

In support of this initiative, Emma Howard Boyd, CBE, Chair, at the Green Finance Institute, providing the following comment:

“Investors want to generate both financial returns and benefits like reducing pollution and flood risk, accelerating towards net zero and giving more people access to green and blue spaces.

“This strategy from Finance Earth and Federated Hermes, with £30 million from Defra’s Big Nature Impact Fund, will help us see and measure how environmental improvements are profitable. This means they can be scaled up at pace around the world and establish the UK as a leader for high-integrity nature markets.

The Green Finance Institute looks forward to continuing our support, building on our existing work with Defra and the Environment Agency, through initiatives such as the Natural Environment Investment Readiness Fund.”

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