Investment Made in Flood Defenses and Ecological Restoration Infrastructure by LGPS Fund

In a significant move towards addressing environmental challenges, the West Yorkshire Pension Fund (WYPF) has acquired a 25% stake in Rebalance Earth, a UK-based nature restoration finance company. This investment, worth £25 million, is set to play a pivotal role in backing UK growth and mitigating flood risks.

Rebalance Earth's investment strategy is uniquely focused on addressing both flood risks and water quality issues. The company plans to deploy artificial intelligence, remote sensing, and geospatial mapping to guide investments in natural landscapes. This technology is intended to reduce flooding and maintain water supplies during dry spells.

Rivers and wetlands, according to Rebalance Earth, can filter pollutants, ensuring cleaner water for ecosystems and human use. By financing nature as infrastructure, Rebalance Earth generates returns through "nature as a service contracts."

The investment in nature-based solutions is expected to address water quantity and quality issues, a concern that has been highlighted by recent reports. An insufficient water supply in London is estimated to cost the economy £500m per day by 2050. Meanwhile, the London Climate Resilience Review has reported that a typical flooding incident in the UK costs businesses an average of £82,000 each.

The timing of this investment is particularly relevant, given the current state of UK water companies. In 2023, these companies released sewage for more than 3.6 million hours. Furthermore, according to the Environment Agency, 185,000 businesses in England and Wales are at risk of flooding.

Leandros Kalisperas, WYPF's chief investment officer, stated that the investment is to provide direct patient capital to nature as infrastructure and address climate change adaptation and resilience in the UK. Walid Al Saqqaf, CTO and co-founder of Rebalance Earth, shared similar sentiments, emphasising the investment's potential to address water quantity and quality issues.

Notably, Chancellor Rachel Reeves has launched a pensions review to merge the UK's 86 separate Local Government Pension Scheme funds. While this review does not directly involve Rebalance Earth, it could potentially pave the way for larger investments in similar nature restoration initiatives in the future.

In conclusion, the WYPF's investment in Rebalance Earth marks a significant step towards addressing environmental challenges and promoting sustainable growth in the UK. By investing in nature-based solutions, the fund aims to reduce flooding, improve water quality, and ensure a more resilient future for the country.