Banking on Nature: HSBC partners with Pollination for US$6 billion “natural capital” investment

By Chris Lang

HSBC Global Asset Management and Pollination Group have announced a series of planned billion-dollar funds targetting “natural capital”. The new venture will be called HSBC Pollination Climate Asset Management and aims to raise US$6 billion from institutional investors. But handing over conservation to bankers and neoliberal economists will be a disaster for the climate, for Indigenous Peoples and local communities, and for nature.

For more than a decade, governments, corporations, and conservation NGOs have been developing schemes to put a price on “ecosystem services”. These are supposed to be maintained as “natural capital”, under the assumption that if natural resources can be priced, they will be protected – through global policies, and by local communities.

As Bernice Maxton-Lee points out in a recent Guest Post on REDD-Monitor, the global economic system, “in which the only measure of success is increasing short term financial returns”, is the major cause of deforestation and environmental degradation.

She notes two truths underlying the global economic system:

• everything that can be commoditised, should be;

• the highest possible short-term financial return should determine the fate of a commodity.

Investing in “natural capital” means that questions of conservation are reduced to whether a forest is worth more money standing or clearcut.

“Nature is capital”

The HSBC Pollination webpage states that “Nature is capital” and describes the partnership as “The first large-scale investment opportunity to protect nature, and your returns.”

The webpage states that,

As the global economy shifts and the race to decarbonise assets, sectors and entire economies intensifies, there is growing demand for nature-based solutions to climate change that also diversify investment risk and offer attractive, long-term returns.

The simple truth is understood: failing to invest in the resilience of nature means failing to invest in the resilience of the economy. Nature is now the most fertile investment we have.

HSBC Pollination Climate Asset Management will offer investments in five “themes”:

• Regenerative and sustainable agriculture

• Sustainable forestry

• Oceans, including sustainable fisheries, coastal restoration and blue carbon

• Biodiversity and wildlife protection and restoration

• Nature based projects that generate returns from reducing greenhouse emissions.

HSBC Global Asset Management and Pollination aim to “create the world’s largest dedicated natural capital asset management company”. They plan to launch a first fund in 2021, aiming to raise US$1 billion, followed by a US$2 billion carbon credit fund.

A bunch of bankers

The Pollination Group was founded last year by Martijn Wilder and Tony O’Sullivan. Wilder was head of Baker & McKenzie’s global climate law and sustainable-finance practice for 20 years. He’s also President of WWF Australia. O’Sullivan was head of investment banking at Lazard.

The team at Pollination Group includes: John Morton, who was a senior director for energy and climate under President Obama; Patrick Suckling, who was Australia’s environment ambassador; Rob Jesudason, former chief financial officer at the Commonwealth Bank; Sam Mostyn, chair of Citi Australia; Markus Wandt, former Investment Director Private Equity at Mayfair Vermögensverwaltung SE; Kate Rayson who led Qantas Future Planet, the world’s largest airline offset programme; James Cameroon, co-founder of Climate Change Capital, “the world’s first green investment bank”; and Christof Kutscher, former Global Chairman of AXA Investment Managers.

John Morton told CNBC that,

“We are helping kind of pioneer this asset class or at least take an asset class which is quite small, to scale at a moment when it’s really needed by the institutional investor community, certainly needed by the planet, and we feel we can generate strong returns at the same time.”

HSBC Pollination Climate Asset Management may well make money for a small number of already very rich people. But a US$2 billion carbon credit fund will guarantee that millions of tons of greenhouse gas emissions will enter the atmosphere. At this stage of the climate crisis we urgently need to cut emissions to zero. And not to “net zero”, Pollination Group’s target, which allows corporations to continue polluting while relying on others to reduce emissions for them.

Obviously, this new venture fundamentally fails to address the link between the climate crisis and capitalism. On the contrary, it strengthens the link – thus helping exacerbate the climate crisis.