UK master trust to invest in natural capital
UK DC provider NatWest Cushon has agreed to an investment in natural capital after recently signing the new Mansion House Accord.
The investment is part of NatWest Cushon's Sustainable Investment Strategy, which has committed to a 2% allocation to the Aviva Investors Carbon Removal Fund.
The £3bn master trust said it intends to place a number of UK and international deals over the coming months with UK allocations aimed at meeting the master trust meet its Mansion House targets, which requires signatories to invest at least 10% of their default funds in private markets.
Aviva Investors’ Carbon Removal Fund aims to deliver a return of 8% per annum over 25 years whilst also supporting institutional investors’ long-term net zero ambitions. It invests directly in nature-based and engineered carbon removal solutions, including afforestation and restoration projects, as well as commercial forestry, venture capital and private equity-based nature tech, both in the UK and globally.
Currently, about a third of the fund's portfolio is committed to carbon forestry and nature restoration it is also looking at opportunities in peatland restoration, carbon sequestration and forestry investments. Over the next ten years, the fund intends to branch out into engineered carbon removals.
The Fund aims to invest in assets and projects that can provide measurable co-benefits, such as biodiversity enhancement, species protection and reintroduction, improved water quality, employment and public access.
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NatWest Cushon has been the first master trust to use carbon credits in a bid to reduce its carbon footprint. It was also a was a major investor in the UK’s first LTAF, Schroders Capital Climate+, building the pension scheme’s private assets exposure.
Veronica Humble, NatWest Cushon CIO commented on the latest commitment: “It’s great to add diversity to our strategy and continue to lead the way in private assets, but first and foremost this is about the investment case and the range of benefits natural capital adds to the wider strategy for our members.
“Our climate framework assesses real-world decarbonisation and portfolio resilience as well as portfolio decarbonisation. Natural capital contributes to all of these objectives over the long term. Many climate scenarios incorporate future increases in carbon prices, so we were searching for a fund positively correlated to those increasing prices over the long-term.
Jill Barber, chief distribution officer at Aviva Investors, added: “We are absolutely delighted that our Carbon Removal Fund will form a part of NatWest Cushon’s sustainable investment strategy. We look forward to contributing towards the long-term investment outcomes of its members whilst playing a key role in supporting its broader sustainability ambitions.”
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