HSBC Global Asset Management has teamed up with climate change advisory firm Pollination Group to create the world’s largest natural capital manager which will invest in nature-based projects that reduce greenhouse emissions while generating returns. HSBC Pollination Climate Asset Management is the first large-scale venture to mainstream natural capital as an asset class, the two companies said in a statement.
The joint venture, subject to regulatory approval, aims to launch its first fund in the middle of next year, seeking to raise up to US$1 billion, followed by a carbon credit fund at up to US$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.
Industry veteran Christof Kutscher will be named executive chairman of the venture. HSBC Global Asset Management and Pollination will both provide resources to the venture, which 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 seek to attract capital from institutional investors, including sovereign wealth funds, pension funds and insurers into natural capital investments.
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.
Capital invested in sustainable infrastructure projects rose three times from 2010 to 2018 to around US$31 trillion globally, according to the Global Sustainable Investment Alliance.