UK pension fund takes stake in climate change asset manager

USS joins with three other investors for majority holding in London-based Climate Change Capital.

The £30bn (US$58.7bn) Universities Superannuation Scheme (USS) in the UK has become one of the first pension funds to take a direct equity stake in a climate change fund manager. The fund has joined with three other investors to take a majority holding of just over 50% of Climate Change Capital (CCC), the London-based investment banking group and fund management business. USS, along with Alliance Trust, the FTSE 100 company and investment trust, SNS REAAL, the Dutch based banking and insurance business and Mitsui & Co, one of Japan’s largest trading houses, will invest a combined £56m into the capital of CCC and place an additional £20m into a new climate change fund of funds. CCC employees, including co-founders CEO Mark Woodall and vice-chairman James Cameron, will retain approximately 30% of the company.
Peter Moon, chief investment officer at USS, said: “We believe the low carbon investment arena is poised for considerable growth in the coming years. As a long term responsible investor, USS holds the view that the fund should take steps to reduce the risks associated with a changing climate.”

The Universities fund has invested in climate change-related vehicles since 2000. Before the CCC deal it had just short of €100m invested in the sector and is understood to be aiming for allocations in the region of €500m in the coming years. Alliance Trust said it would also increase its exposure to climate related investments on the back of the CCC stake. Katherine Garrett-Cox, chief investment officer, said: “We have been developing our involvement in this sector over the last three years but this is a significant step up in terms of investment because we believe this presents an opportunity for real growth over the longer term. As an investor we believe carbon reduction is a compelling investment theme that we are keen to explore. We are also seeking to invest efficiently in private equity by investing in funds and co-investing, where possible, to ensure we maximise our returns and reduce costs. We intend to commit more funding to the climate change sector in the future and with CCC in particular due to their leading market position.” Seperately, CCC has appointed Vivienne Cox, executive vice president and chief executive of BP’s alternative energy business, to its board.