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Scottish Borders Pension Fund partners with Nuveen to make first natural capital investment

Farmland

The Scottish Borders Council’s Pension Fund (Pension Fund) has partnered with Nuveen, the $1.1 trillion global asset manager of TIAA1, to make its first allocation to natural capital assets.

The Pension Fund has made an initial commitment to Nuveen’s flagship Global Timberland strategy, with the potential for further allocations across the breadth of Nuveen’s natural capital solutions including both forestry and farmland.

This represents the latest step in the Pension Fund’s increased drive towards decarbonising its portfolio and seeking investment solutions targeting both positive environmental and societal outcomes alongside attractive and resilient returns.

The Pension Fund is part of the national Local Government Pension Scheme (LGPS) and has assets of c.£900 million with investments spanning across both traditional and now more alternative asset classes. It represents the interests of local government employees and other related organisations in the Scottish Borders geographic area.

The Nuveen Global Timberland strategy seeks to provide consistent, long-term risk-adjusted returns and regular income yields through a portfolio of high-quality timberland assets. The strategy’s assets are highly regionally diversified with opportunities locally sourced and managed via Nuveen’s global network and team.

The strategy targets a consistent yield with the intention to seed mature, income generative assets. The nature of the strategy also allows flexibility for investors to dynamically adjust allocations as appropriate. Sustainability is at the heart of the strategy’s investment philosophy, and provides investors with standardised carbon reporting.

The strategy is managed by Chris Lipton, Head of Timberland Investments, supported by a senior management team in roles across regional portfolio management, research and sustainability.

Nuveen currently manages over $2.1 billion of timberland assets consisting over 873,000 acres of forestry globally, making it one of the top ten managers in the asset class worldwide2. Nuveen is a recognised leader in natural capital investment more broadly with a heritage dating back to 1986, with current assets under management of $12.4bn across the asset class with over 200 dedicated employees3.

Councillor David Parker, Chair of Scottish Borders Council Pension Fund, commented:
“The Pension Fund’s core objective is to provide our end investors with stable returns and we are increasingly putting their capital to work to drive positive environmental and social outcomes. The Nuveen Global Timberland strategy and its investment philosophy is fully aligned with these ambitions and will help us in our journey towards a more sustainable portfolio. Moreover, the depth of Nuveen’s overall investment platform, the strategy’s global scope and income profile were key factors in forming the partnership.”

Matthew Hamber, UK Institutional Business Development at Nuveen, added:
“Natural capital solutions continue to be of interest amongst LGPS investors as they seek to decarbonise their portfolios and solutions to achieving Net Zero targets. Our partnership with Scottish Borders is a major milestone for our Global Timberland strategy and is further indication that UK institutional investors see the full range of benefits of allocating to natural capital as an asset class. We look forward to deepening our partnership with the Scottish Borders Council Pension Fund and working as a solutions provider to meet both its investment and climate-based targets.”

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1 AUM at 30 September 2023
2 As of December 31, 2022, AUM represents Fair Market Value

Results experienced by individual(s)/entity may not be representative of the experience of other clients/participants, and there is no guarantee of future performance or success. This testimonial was provided by a current investor, and no direct or indirect compensation was given in return. No material conflicts of interest exist on the part of the entity giving the testimonial, resulting from their relationship with the adviser. Results experienced by entity may not be representative of the experience of other clients and there is no guarantee of future performance or success.

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