Pollination group and HSBC have announced an investment fund focussed on putting a value on natural resources.  The fund will invest in regenerative agriculture, sustainable forestry, water management, blue carbon capture through aquatic ecosystems, nature-based bio fuels, and other nature based projects. HSBC and Pollination group, a climate change advisory and investment firm, are expected to launch the fund midway through 2021 and aim to raise $1bn.

The fund places a value on resources including clean air, water, and soil and will deliver returns on the basis of reduced greenhouse gasses and regenerated resources.  HSBC will be the cornerstone investor for the first fund, followed by a second ‘carbon credit’ fund of up to $2bn.

So what?

While many carbon funds and ecosystem regeneration projects are underway and have been for many years, HSBC creating such a fund and targeting institutional investors such as sovereign wealth funds, insurers, and pension funds signals a shift towards the mainstream.  Furthermore, that the fund seeks not only to offset greenhouse gas emissions and preserve ecosystems, but to regenerate and enhance ecosystems and biodiversity signals a shift in approach and mindset from major financial players.

As evidenced by HSBC’s global asset management chief executive, “clients are increasingly focussed 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 biodiversity.”  Biodiversity and greenhouse gas emission reduction have often been considered separate topics; this fund connects the two and seeks to turn a profit through regeneration.