HSBC and Pollination Group launch the first major natural capital asset manager

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On Thursday, HSBC Global Asset Management and Pollination Group Holdings announced a joint venture, HSBC Pollination Climate Asset Management, which positions itself as the world’s largest manager of “natural capital”.

The joint venture combines the financial weight of the world’s sixth-largest bank with the flex business area of ​​Pollination Group, founded in late 2019, which provides climate impact and strategic advisory services to governments, businesses and funds. public / private capital.

Through its venture capital arm, Pollination Labs, the company is also seeking to identify and support projects in seven key economic sectors (agriculture, energy, financial services, healthcare, mining, transportation and water) that can be scaled up. to multiple jurisdictions and supported by funding concessions to leverage the impact. Pollination mainly focuses on investments in the Asia-Pacific region.

HSBC Pollination Climate Asset Management will operate a family of funds offering exposure to several global themes of natural capital in emerging and developed markets, active management of these investments and quantitative assessment of their impact.

HSBC will become a key investor in the first fund, due to launch in mid-2021, aimed at raising $ 1 billion, followed by a $ 2 billion carbon credit fund.

Natural capital

HSBC Pollination Climate Asset Management is positioned as the first large-scale investment platform to introduce natural capital, defined as land assets such as air, water, oil, geology and the wider biosphere, as a distinct alternative asset class uncorrelated to traditional assets, with the objective of attracting allocations from sovereign wealth funds, pension funds and insurers.

“In many cases, these are asset classes that are already providing a base return from current operations, but as a product of natural capital investment, they will also generate additional returns as vehicles for sequestration. carbon and land restoration, ”writes Martijn Wilder AM, founder of Pollination. Partner, who for 20 years headed the global legal and financial firm of Baker & McKenzie. “As the resource is regenerated, it offers the potential for higher yields and higher value outputs. “

Pollination investment themes include nature-based carbon and agriculture projects (including sustainable forestry, carbon cultivation, regenerative agriculture and agricultural technologies, water initiatives and blue carbon), sustainable infrastructure, digital clean energy infrastructure, industrial decarbonization of high-emission sectors, and energy transformation, including renewables and hydrogen. Capital investments in sustainable infrastructure projects like these tripled between 2010 and 2018 to reach $ 31 trillion.

Institutional request

“Customers are increasingly focusing on environmental issues and this initiative is designed to help them achieve a financial return, while creating a positive impact on global biodiversity that will be felt for generations to come,” said Nicolas Moreau, Global CEO. from HSBC Global Asset Management, in a statement Thursday. “Through solutions like this, we help our clients achieve their long-term investment goals, while meeting their growing demand to actively contribute to a more sustainable world.

Earlier this spring, HSBC raised nearly $ 500 million for REGIO, its Real Economy Green Investment Opportunity Global Emerging Market Bond fund, a diversified, long-only portfolio of emerging market green bonds primarily from private issuers, aimed at producing an impact on the real economy of low-income countries.

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