Pension funds locked from green investments

The British Government has urged pension funds to step up and support the UK’s drive to “build back better”. Many schemes have been forced to limit their attempts to invest in green infrastructure in the United Kingdom because of insufficient supply.

Back in August this year, Prime Minister Boris Johnson and the Treasury published a letter aimed at the pension fund sector, arguing that:

“UK institutional investors are under-represented in owning UK assets.”

The letter urged the funds to make investment in long-term UK assets like green infrastructure and green bonds to support the country’s recovery from the pandemic. Despite the funds’ desire to invest, they are now facing blocks preventing their access to infrastructure investment opportunities.

The exceptionally high demand present for assets related to green infrastructure in the UK has resulted in pension funds not being able to invest as much in the asset class as they would like, according to recent industry figures. Experts argue that domestic pension funds are hungry for UK infrastructure investments but are plagued by two key issues. The first is the lack of assets available to invest in, and second is the extreme competition in play to acquire them.

Larger funds like sovereign wealth funds and commercial fund managers have significant capital to put towards investments and are often able to pay more for assets and accepting lower returns long term.

UK investors in need of financial advice or portfolio management in Chester, London and other areas often enlist the aid of wealth management services. As financial experts, they can help clients select assets that suit their ethics like green investments opportunities.

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