The 2019-2020 Australian bushfire, western mega droughts and Jakarta flash floods have demonstrated that we cannot protect our land, water and other natural resources without long-term financial commitments. That’s why, some investors are betting big on ‘natural capital,’ i.e. economic solutions to ensure that the planet’s most critical areas – places that provide us food, water, shelter and more – remain intact.
HSBC Global Asset Management has joined hands with climate change advisory firm Pollination Group to create an asset management venture focused on “natural capital,” which aims to put a value on resources such as air, soil, and water to help to protect the environment.
The joint venture – HSBC Pollination Climate Asset Management – plans to raise up to $1 billion for its fund next year, targeting investments that “preserve, protect and enhance nature over the long-term,” it said in a statement.
HSBC Pollination Climate Asset Management will seek capital from institutional investors, including pension funds, sovereign wealth funds, as well as insures into natural capital investments.
“Natural capital is just a way of thinking about nature as an asset that provides a flow of services and benefits to people and the economy,” said John Morton, a former climate director in the Obama Administration who is a partner at Pollination. “We see the devastation that is brought through poor natural capital investments, so investing in nature has to be part of the solution to our climate ch
In the past year, a growing number of asset owners, especially pension funds, have shifted their focused to projects that aim to protect the planet’s biodiversity while also making a buck.
“Clients are increasingly focused on environmental matters and this initiative is designed to help them achieve a financial return, while at the same time creating a positive impact on the world’s biodiversity,” said HSBC Global Asset Management Chief Executive Nicolas Moreau.
The asset management venture will provide exposure to projects such as water supply, sustainable forestry, regenerative and sustainable agriculture, nature based bio-fuels, and projects that help generate returns while also reducing greenhouse emissions.
According to HSBC, the first fund will be followed by a carbon credit fund of up to $2 billion. With the Pollination Asset Management venture, HSBC aims to become a keystone investor in the first fund.
Pollination Group and HSBC Global Asset Management will provide resources to the joint venture and it will operate independently.