UK investments and retirement group L&G will invest US$1 billion over five years in emerging markets (EM) debt-for-nature swaps under a strategic partnership with specialist firm Enosis Capital.
L&G said the deal would provide more direct engagement with sovereigns and their partners, enhanced transparency and reporting, and stronger outcomes to clients, including its UK defined contribution (DC) members via the firm’s Nature and Social Outcomes strategy.
It brings L&G’s overall commitment to EM nature conservation and sustainable development to more than US$2.4 billion. Enosis has supported sovereign debt conversions for Belize, Barbados, Ecuador and The Bahamas, previously working alongside L&G on the development of market standards.
According to a recent survey, UK institutional investors currently maintain allocations of 5-10% to public equity and debt allocations to emerging markets and developing economies. The report said climate and sustainability factors were potential drivers of increased investment, but cited a need for greater policy clarity, more robust data, credible and scalable investment structures, and support to build capacity to assess risks and opportunities.
Debt-for-nature transactions allow governments to swap existing bonds or loans for cheaper debt backed by credit guarantees that protect investors against political risk, freeing budgets for nature conservation and climate-related programmes.
“We believe debt conversions remain an attractive investment opportunity, enabling investors to unlock value while supporting communities and ecosystems fundamental to global economic resilience,” said Jake Harper, Senior Investment Manager – Private Credit, Asset Management, L&G.
The firm said the US$4 trillion annual shortfall in funding for the UN Sustainable Development Goals represented a “major investment opportunity”, with public funding constraints creating strong demand for private capital to support high-impact conservation and development projects in emerging markets.
Adam Tomášek, Executive Director of the Debt for Nature Coalition, said the deal sent “a powerful signal” that conservation and sustainable development are core components of long-term investment strategies.
“At a time when many countries face acute fiscal constraints alongside ambitious commitments to protect nature, partnerships like this make a more sustainable future possible,” he said.
