Climate Finance | December 14, 2022

HSBC-backed Climate Asset Management raises $650 million for natural capital funds.

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, December 14 – U.K.-based Climate Asset Management launched in 2020 to prove that protection and restoration of natural resources can be attractive to institutional investors. The firm’s Natural Capital Strategy is looking to raise $1 billion to acquire land parcels in advanced economies to restore for regenerative agriculture and agroforestry.

Investors will earn a return from both the land’s appreciated value and revenues from its productive use.

For its first investment, Capital Asset Management has acquired almost 1,000 acres of poor quality farmland in Spain, which it will restore and convert to almond and olive production. The strategy includes planting cover crops and using drip irrigation to conserve water.

The fund is anchored by HSBC, which launched Climate Asset Management in partnership with climate investor Pollination.

“Having a new product as a new asset manager, investors wanted us to restrict this [strategy] to developed markets,” Climate Asset Management’s Martin Berg told ImpactAlpha.

Even with one of the biggest natural capital strategies in the market, fundraising has not been easy. Says Berg, “Anything in finance that is new and that not everyone else is investing in is difficult to do.”

Carbon credits

A second fund, Nature Based Carbon Strategy, also anchored by HSBC, will invest in carbon projects in emerging markets to generate carbon credits for corporate investors in the fund. Rather than acquiring assets, Climate Asset Management will invest in projects owned by local stakeholders and other developers.

The firm is partnering with the Global EverGreening Alliance and is looking to raise $600 million for the fund, primarily from corporations. It has a pipeline of projects in six African countries.

The partners aim to restore nearly five million acres of farmland and support 1.5 million smallholder farmers.