L&G Commits $235M to Nature Conservation & Sustainable Development

Legal & General (L&G) has announced a $235 million (£183 million) commitment to nature conservation and sustainable development in emerging markets through the launch of its Nature and Social Outcomes strategy.

This initial investment comes from L&G’s Future World Multi-Asset Fund and Retirement Income Multi-Asset Fund, both key components of its Target Date and Lifetime Advantage Fund ranges. These funds, available to 5.5 million UK Defined Contribution (DC) members, will continue to grow with regular capital inflows.

The $235m investment for the strategy brings L&G’s total commitment to nature conservation and sustainable development in EMs to over $1.1bn (£890m) – capitalising on the investment opportunity presented by the $4 trillion annual funding gap to meet the UN Sustainable Development Goals, and the potential for strong returns and diversification that exposure to EMs can provide.

The newly launched Nature and Social Outcomes strategy further diversifies L&G’s Private Markets platform, expanding its commitments to addressing the critical funding gap faced by developing countries. By leveraging innovative financing methods that benefit from credit enhancement through multilateral guarantees and insurance, such as use of proceeds bonds, debt conversion bonds, and outcome bonds, the strategy will deploy capital through projects that aim to deliver strong commercial returns alongside positive nature and social outcomes. Indicative projects will target habitat and biodiversity conservation, as well as socially beneficial infrastructure to support education, healthcare, and access to clean water.

L&G has now committed over $1.1bn in private debt financing for nature conservation and sustainable development in EMs, targeting projects worldwide:

• Over $465m invested in debt conversions for nature in Belize, Ecuador, and Gabon, offering much-needed support for marine, forestry, and freshwater conservation. This includes L&G’s $250m cornerstone investment in Ecuador’s record-setting transaction which seeks to generate $323m for marine conservation in the Galapagos islands over 18 and a half years.
• Almost $350m invested in use of proceeds bonds across Africa and Eastern Europe to support the financing of critical social infrastructure such as drinking water supply, social housing, and a public university in the Ivory Coast, as well as solar power projects in Senegal.
• Up to $100m committed to women-led EM infrastructure debt investor ImpactA Global, which aims to address the critical infrastructure deficit in EMs through debt financing.
• $235m initial investment into the Nature and Social Outcomes strategy, made on behalf of its DC members from L&G’s Future World Multi-Asset Fund and Retirement Income Multi-Asset Fund.

L&G completed its first direct investment for the Nature and Social Outcomes strategy in December 2024 with an investment in Ecuador’s second debt conversion for nature. This initiative, led by the Republic of Ecuador and The Nature Conservancy, is the first of its kind to support forestry and freshwater conservation. The partnership should provide significant gross savings over the life of the transaction, unlocking around $460m to facilitate the Biocorridor Amazónico program, which aims to protect 4.6 million hectares of forest and 18,000km of freshwater, as well as benefitting indigenous populations and communities.

Jake Harper, Senior Investment Manager, Asset Management, L&G: “Exposure to EMs has the potential to offer attractive returns for investors whilst aiming to support communities and ecosystems which play an indispensable role in upholding economies across the globe. Innovative debt financing allows investors to allocate to nature conservation and sustainable development in EMs whilst benefitting from an improved credit rating and higher returns. By leveraging our proven track record and long-standing industry relationships, we believe L&G has distinct access to diverse investment opportunities and is advantageously positioned to shape future transactions in the sector.”

L&G utilises a proprietary sustainable investment framework to assess and monitor the impact and outcomes of its investments for the strategy. Individual investments are measured against key performance indicators aligned with the strategy’s targeted core themes: inclusive economy; health, wellbeing, and quality of life; and protecting and enhancing nature. This is underpinned by active engagement with key project stakeholders, including development finance institutions and charities, and the wider industry, on the sustainability commitments and outcomes, governance, and monitoring and reporting requirements.

Jesal Mistry, Head of DC Investments, Asset Management, L&G: “We’re delighted to be launching our Nature and Social Outcomes strategy as an opportunity for DC members to gain exposure to a fast-growing and impactful part of the global debt market. Today’s announcement is a great example of the increasingly diverse range of assets that DC schemes can invest in, combining the need to unlock financing where it is often most needed with the aim of delivering positive returns for members in retirement.”