£900m Borders Pension in Nuveen timber investment

Scottish Borders Council’s £900 million pension fund has partnered with Nuveen, the $1.1 trillion global asset manager of TIAA, 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 investments including both forestry and farmland.

Nuveen said 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 Borders pension fund is part of the UK’s Local Government Pension Scheme (LGPS) and has assets of £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.

Nuveen said its 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,” said Nuveen.

“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 said it 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 worldwide.

Councillor David Parker, chair of Scottish Borders Council Pension Fund, said: “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, said: “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.”