Pension Trio Ready with Billion Investment in Environmental Restoration

23 May 2024

Sampension, AP Pension, and Lærernes Pension have jointly pledged to invest more than USD 160 million, equivalent to approximately DKK 1.1 billion, in the American fund Ecosystem Investment Partners V. The three companies are contributing USD 52, 60, and 50 million to the fund respectively (equivalent to DKK 364, 420, and 350 million), thus accounting for almost a quarter of the fund’s expected size of approximately USD 650 million.

Ecosystem Investment Partners (EIP) invests in environmental restoration in the US with a focus on wetlands, streams, and endangered species. The fund’s business model originates from American environmental legislation, which since the 1970s has required mitigation of environmental impact in connection with the construction of new infrastructure, industry, or properties.

“We have considerable and good experience in investing in nature restoration together with EIP. And the investment in the new fund is a fine extension of our other investments in EIP’s funds, where we have now invested a total of DKK 1.3 billion since 2012. We are pleased with these investments, which form a central part of our portfolio. The investments provide both reasonable returns for our customers and at the same time benefit the environment and biodiversity, which we naturally emphasize as a responsible investor,” says Majken Hauge Johansen, head of alternative investments at Sampension, and continues:

“Biodiversity has been identified as one of the primary focus areas for the further development of our work with responsible investments, and we would look very positively on the fact that this type of investment could also be made here in Europe. Structured in the right way, the regulation can help to activate capital that otherwise cannot be invested in this type of project – where there is no natural economic return – and thus give e.g. pension companies better opportunity to support a very important social concern,” says Majken Hauge Johansen.

As a result of the US legislation, a market for environmental credits or mitigation banking, as it is called in the US, has emerged. Ecosystem Investment Partners implements environmental restoration projects primarily in wetlands that have been drained for e.g. agriculture and livestock. They also focus on returning streams to their original course, which improves water quality and contributes to increased biodiversity and breeding grounds for endangered animal species.

Mitigation banking is an integral part of the US market, where environmental credits are traded on a structured platform. In 2019, the American environmental restoration industry had a turnover of over USD 3.5 billion, and when derivative effects and supporting industry are included, the sector accounts for around 53,000 jobs and a turnover of almost USD 10 billion. The USA is thus the world’s largest market for environmental credits.

Source: Sampension
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