January 12, 2021

By Lynda Kiernan, Global AgInvesting Media

Pioneer natural capital investors HSBC Pollination Climate Asset Management, Lombard Odier, and Mirova, an affiliate of Natixis Investment Managers have announced themselves as the three founding members of the Natural Capital Investment Alliance established by HRH The Prince of Wales as part of his Sustainable Markets Initiative. 

The Alliance was announced by HRH The Prince of Wales following his launch of Terra Carta (Earth Charter), a charter outlining the basis of a global recovery plan to 2030 that creates a new standard of value creation with Nature, People, and the Planet at its heart. 

Modeling its name upon the Magna Carta – the 800 year-old charter outlining the rights of man signed by King John at Runnymede in July 2015 – the Terra Carta was designed by former chief design officer at Apple, Sir Jony Ive, and is based on a series of recommendations garnered over the course of a year through HRH gathering “coalitions of the willing” across every industry tasked with identifying courses of action that would be a foundation for a more sustainable future.

The charter builds upon global initiatives and agreements such as the Paris Climate Agreement, the Convention of Biological Diversity, and the UN’s Sustainable Development Goals, outlining 10 areas of focus that are an umbrella for nearly 100 actions for businesses to take. 

One of these actions  – the Natural Capital Investment Alliance – was launched at the One Planet Summit in Paris aiming to accelerate Natural Capital as an investment class and to engage the US$120 trillion investment management industry to mobilize US$10 billion in capital toward Natural Capital themes across asset classes by 2022. 

“The  interdependence between human health and planetary health has never been more clear,” said His Royal Highness The Prince of Wales speaking at the One Planet Summit. “For so many of the problems we face, Nature, with the benefit of billions of years of evolution, has already  provided us with the solutions. But time is fast running out and we are rapidly wiping out, through mass extinctions, many of Nature’s unique treasure trove of species from which we can develop  innovative and sustainable products for the future. As we urgently seek to rescue the situation, we  must now look to invest in Natural Capital as the engine of our economy.”

“It is also why I have created a Natural Capital Investment Alliance to help us arrive at a common language on Natural Capital Investment so that we can start putting money to work and improve the flow of capital.”

The three founding members: HSBC Pollination Climate Asset Management, Lombard Odier, and Mirova, an affiliate of Natixis Investment Managers, couldn’t be better placed.

HSBC Pollination Climate Asset Management was launched in August 2020 as a joint venture between Pollination Group Holdings Limited, an Australian specialist climate change advisory and investment firm, and HSBC Global Asset Management Limited, to form what will be the largest natural capital manager in the world, and the first large-scale venture to mainstream natural capital as an asset class. 

Both HSBC Global Asset Management and Pollination will provide resources to the independently operating venture, which through the creation of private funds, offers investors a wide exposure to global natural capital themes including regenerative and sustainable agriculture, sustainable forestry, water supply, blue carbon – that is, carbon captured by oceans and coastal ecosystems – nature-based biofuels, and nature-based projects that generate returns from reducing greenhouse gas emissions.

Created with the intent of attracting large-scale investment into natural capital assets from sovereign wealth funds, pension funds, institutional investors, and insurers, the proposed group of funds will be launched with a debut fund in mid-2021. HSBC plans to be a cornerstone investor in this initial vehicle that will be looking to raise up to $1 billion. A second carbon credit fund is to follow, with a funding goal of up to $2 billion.

“We recognize nature is capital,” said Christof Kutscher, executive chairman, HSBC Pollination Climate Asset Management. “Over the century, we have depleted nature creating possibly our  biggest challenge to date. It is high time to take action at an unprecedented speed and scale. Investing  in nature is a major investment opportunity, and the one action we must urgently take to protect our  future.”

In November 2020, Lombard Odier announced the launch of a Natural Capital global equity strategy inspired by His Royal Highness The Prince of Wales, and developed in partnership with the Circular Bioeconomy Alliance – an initiative established by The Prince of Wales under his Sustainable Markets Initiative and of which Lombard is a founding member.

“The investment industry seeks  returns as its primary objective and today some of the most convincing opportunities for growth and  returns come from a transition to a more sustainable economic model that both harnesses and  preserves Nature,” said Hubert Keller, managing partner, Lombard Odier Group. “At Lombard Odier, we develop solutions that allow mainstream investors to  position capital to benefit from this untapped investment opportunity. We are proud to be founding members of this important Alliance, inspired by His Royal Highness’ vision, and to contribute to mobilising capital at a scale commensurate with the opportunity and challenges.”

Mirova has been involved in advancing natural capital investment strategies for more than seven years, and has launched a natural capital platform focused on five areas of intent: land degradation neutrality; climate; sustainable oceans; Brazil biodiversity; and the AGRI3 strategy designed to help address the limited capacity of commercial financiers to back sustainable agricultural solutions. 

“Natural capital protection and restoration represent a  global challenge but also a real opportunity,” added Philippe Zaouati, CEO, Mirova. “By joining forces with pioneering financial partners  under the leadership of HRH The Prince of Wales, Mirova’s ambition is to continue the growth of the  Natural Capital investment thematic and support the development of a nature positive economy. By  mobilizing more investors, including pension funds and insurance companies, significant financial  assets can be deployed to support those businesses able to generate both attractive returns and tangible  environmental and social impacts. Through this approach, the Sustainable Development Goals can be  within reach.”

Together, these founders aim to be the foundation for an initiative that serves as a central hub for global corporations and financial institutions looking to scale up their investments in natural capital themes, and in support of biodiversity restoration, including carbon offsets. They are also intent on sharing their investment expertise and to be the drivers behind making natural capital a mainstream investment theme, and to demonstrate scalability for appropriate investment vehicles and the range of opportunities across asset classes. 

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.