HSBC Pollination Climate Asset Management and two international fund managers have founded an initiative to accelerate investment in natural capital.
The Natural Capital Investment Alliance has been established by the Prince of Wales as part of his Sustainable Markets Initiative. HSBC Pollination Climate Asset Management is joined by Lombard Odier and Mirova as foundation partners.
The alliance aims to accelerate the development of natural capital as an investment theme and to engage the US$ 120 trillion investment management industry and mobilise this private capital efficiently and effectively for natural capital opportunities.
The alliance aims to attract both asset owners and asset managers to create scaled investment in natural capital investments through the following goals: mobilise US$10 billion towards natural capital themes across asset classes by 2022; to serve as a central hub for global corporations and financial institutions seeking to scale-up their investments into natural capital, in support of biodiversity restoration, including through carbon offsets; and to share investment knowledge and expertise to help mainstream the natural capital investment theme and demonstrate scalability of appropriate vehicles and the multiple opportunities across asset classes.
"The first thing is providing opportunities for investment," said Martijn Wilder, co-founder of Pollination Group. "The limitations of natural capital is not being able to find thing to invest in. we will be helping to do that from the outset. Number two is, in doing that, we create an investment class, create types of investment and bring other people along in that way. That's the most fundamental thing. There have been a lot of calls of late for the need to finance biodiversity. Again, how do you crack that, create investments that people can put money into, and in doing that, actually enhance the environment and gets economic return at the same time."
HSBC Pollination Climate Asset Management is a joint venture between HSBC Global Asset Management and specialist climate change advisory and investment firm Pollination. As previously reported in FS Sustainability, HSBC Pollination Climate Asset Management is establishing a series of Natural Capital funds, directly investing in the preservation, protection and enhancement of nature.
Lombard Odier launched a first-of-its-kind global equities investment strategy for natural capital last year, developed in partnership with the Circular Bioeconomy Alliance, established under Prince Charles' Sustainable Markets Initiative. Mirova has established a natural capital platform proposing strategies in the field of land restoration, blue economy and forest protection with more than 30 experts.
"What we're trying to do with natural capital investing is invest in those activities that interact with nature to produce economic returns," Wilder said. "We're trying to ensure that this is being done in a way that's in harmony with nature and increases the natural landscape, makes it more resilient and enhance other benefits like storage of carbon emissions, for example."
Wilder pointed to activities like regenerative agriculture as other examples of what investing in natural capital to enhance environmental and financial return could look like.
The area of natural capital is set to rise on the sustainability agenda through 2021 and into the future. The coalition that led the development of the Taskforce on Climate-related Financial Disclosure (TCFD) have turned their attention to developing similar guidelines for measurement and reporting in natural capital through the Taskforce on Nature-related Financial Disclosure (TNFD), indicating the momentum of financial and corporate institutions to address loss of natural capital as they have climate change.