On August 26, 2020, HSBC Global Asset Management Limited and Pollination Group Holdings Limited a specialist climate change advisory and investment firm, announced that they have entered into a joint venture agreement to establish HSBC Pollination Climate Asset Management.
The $6 billion (US) fund will seek novel ways to get a return from projects that protect and restore biodiversity and other natural assets, and increase the earth’s carbon sinks. It is part of a movement to put a monetary value on natural capital—assets such as water, forests, food systems, soil and air—and so bring it into the investment mainstream.
The partnership will aim to create the world’s largest natural capital manager and is the first large-scale venture to mainstream natural capital as an asset class. Industry veteran, Christof Kutscher, will be named Executive Chairman of the joint venture.
Martijn Wilder AM, Co-founding Partner of Pollination said, “To reach the goals set in the Paris Agreement we need to originate and fund new approaches that protect nature, at scale. In a global economy that is on a path to rapid decarbonisation, we regularly hear from investors and organisations looking for investment opportunities that will mitigate long-term climate risk. In natural capital, we’re accelerating investment in an asset class that can help combat climate change and build biodiversity, whilst also generating long-term returns for institutional investors. Investing in the resilience of nature is investing in the resilience of the economy. Nature is the most fertile investment we have.”
HSBC Global Asset Management and Pollination will both provide resources to the planned joint venture and it will operate independently. Through the creation of private funds, HSBC Pollination Climate Asset Management aims to offer investors a wide exposure to global natural capital themes in both emerging and developed markets. The partnership will also provide stewardship and evaluation of the investments, enabling investors to quantitatively measure impact.
The proposed group of funds will aim to attract capital from institutional investors, including sovereign wealth funds, pension funds and insurers into natural capital investments. The first fund, which aims to launch mid next year with half of the projected $6 billion total, will look to raise up to $1 billion followed by a carbon credit fund at up to $2 billion. HSBC intends to become a cornerstone investor in the first fund. The funds will invest in a diverse range of projects that will preserve, protect and enhance nature over the long-term.
Sustainable investment in natural capital provides exposure to projects focused on nature including sustainable forestry, regenerative and sustainable agriculture, water supply, blue carbon (carbon captured by oceans and coastal ecosystems), nature based bio-fuels, or nature based projects that generate returns from reducing greenhouse emissions.
Nicolas Moreau, Global CEO, HSBC Global Asset Management, said “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 which will be felt for generations to come. Through solutions such as this, we’re helping clients achieve their long-term investment objectives, while meeting their increasing demand to actively contribute to a more sustainable world.”
Pollination is a specialist climate change advisory and investment firm, accelerating the transition to a net zero, climate resilient future. The firm brings together global experts in climate investment, finance, strategy, policy, law and technology – connecting dots and linking opportunity where others can’t. Pollination develops holistic, integrated solutions required to address the complex climate agenda. It has a presence in Europe, the United States, Australia and Asia.