Nuveen has restructured its farmland and timberland investment businesses under a new combined division called Nuveen Natural Capital.
The firm’s farmland investment business, Westchester Group Investment – which has $7.7 billion of assets under management – and its timberland business GreenWood Resources – which has $1.5 billion in AUM – will be led by current Westchester chief executive and president Martin Davies.
Nuveen said its research among LPs has shown that more than two-thirds plan to increase their allocations to natural resources, infrastructure and other alternative assets that can reduce their climate-related financial risks.
“Our view is there’s a call to arms from an investor perspective – they need to bring their capital to the sector to solve the problems that we have,” Davies told Agri Investor. “We believe that with the platform we have already, if we just organize it a little bit differently, we can use that to provide solutions for investors.
“We have to increase calorie consumption by 56 percent by 2050 and we have to increase timber production by 200 percent. Whilst we’re doing that, we need to reduce the greenhouse gas footprint of agriculture alone from 12 to four giga tonnes. The only way that’s going to take place, according to the World Bank, is through between $300 billion and $350 billion of capital invested on an annual basis through to 2030 and beyond. That’s simply what’s driving what we’re doing here.”
The significance of calling the new division its ‘natural capital’ arm is that Nuveen does not want to be a “one trick carbon-only pony, we need to think about natural capital in the widest sense, so that’s why we’re organising ourselves in this way,” said Davies.
“We’ve always looked at assets and we’ve thought about the value based around food fiber and timber, but we’ve never thought about the value that arises from water, clean air, wildlife, health equable climate. Of course, to be able to take advantage of that value you need to be able to measure it and you need to be able to report on it, and we’re structuring ourselves in a way to enable us to do that,” he added.
Davies declined to disclose specific details about the types of vehicles Nuveen Natural Capital will now bring to the market, but did say the firm is unlikely to put farmland and timberland into the same strategy.
He also added that a “natural capital vehicle” could be something that becomes feasible in roughly five years’ time, but at this stage the firm is concentrating on giving investors flexibility to gain exposure to the type of natural assets that fit into their mandate.
HSBC Global Asset Management entered the farmland and timberland investment space in August 2020 through a joint venture with Pollination Group to create a natural capital asset manager.
HSBC Pollination Climate Asset Management will invest in areas including forestry, regenerative and sustainable agriculture, water supply, nature-based biofuels and natural ecosystems. The firm is yet to launch its debut vehicle.