Sean McLachlan, senior investment director and Lukasz Michalak, investment director at Octopus Investments outline why LGPS investors are best placed to invest in a new wave of sustainable infrastructure solutions.
A multi-faceted crisis demands a multi-pronged approach
Sean McLachlan, senior investment director Octopus Investments
The UK faces a complex web of challenges. These include regional inequality, a high cost of living and a housing crisis.
In addition to these challenges, climate change is the single biggest issue facing our generation. Achieving our net-zero target is critical to the future.
That said, while renewables are crucial in achieving net zero, they’re just one piece of the puzzle.
To reach a truly sustainable future, we need to invest in a whole new generation of booming infrastructure sectors.
Think electric vehicle charging points, electrified district heating and recycling– all these will be built where they are most needed by local communities and industry, breathing new life into regional economies.
LGPS: investing for a brighter future
This presents an exciting opportunity for Local Government Pension Scheme (LGPS) funds to accelerate the UK’s transition to net zero, access attractive potential returns, and address regional inequality.
The growing demand for net zero solutions is expanding the investment landscape with emerging infrastructure and creating social and environmental impact opportunities.
The beauty lies in its geographic reach.
Infrastructure by its very nature will create opportunities across all regions. This investment can address regional inequality by creating high-quality local jobs in companies building sustainable infrastructure across the UK.
Emerging sustainable infrastructure
Renewable sectors like solar and wind power have matured from promising technologies to established sectors, offering investors the reliability of asset classes with the potential for steady returns.
Now, a new wave of sustainable solutions is poised to emerge, promising the potential for strong returns for those comfortable with their associated risks.
These emerging companies are building assets that will likely become the core, sustainable infrastructure of tomorrow. The focus here is on scaling up proven technology solutions.
The opportunities include electric vehicle infrastructure, clean fuels, energy storage solutions, recycling and energy-efficient digital infrastructure – all crucial for achieving a net-zero UK by 2050.
However, these emerging sectors currently face a funding gap. Until they have reached sufficient scale and have been operational for some time, larger and more traditional infrastructure funds and banks will not be investing in them.
Here’s where LGPS investment can play a pivotal role.
The UK needs infrastructure growth capital – patient capital that can nurture promising sustainable companies after they’ve proven their concept, helping them scale and unlock potential across every region while having the potential to deliver an attractive risk-return profile.
Learn more about sustainable infrastructure investment
To delve deeper into the world of sustainable infrastructure investment and explore the specific opportunities for LGPS funds, download our whitepaper, “Unlocking the UK’s Regional Potential by Building a New Generation of Sustainable Infrastructure.”
Download your copy by heading to their website here.