September 5, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Climate Asset Management (CAM) was formed in 2020 as a joint venture between HSBC Asset Management and Pollination, a climate change and advisory firm, with the goal of being the world’s leading asset management company fully dedicated to natural capital providing investment solutions that benefit nature, people, and the planet. 

At the time, GAI News had the privilege of speaking with Martijn Wilder, co-founding partner of Pollination, to learn more about the venture.

“We actually came up with the idea at the start of COVID-19, and we negotiated the entire process on Zoom,” explained Wilder. “So what would normally take a long time, we’ve done in record time, over nine-to-ten weeks.”

“It was a pretty remarkable effort,” continued Wilder, “and it speaks to the strength of the partnership. And what we’ve found with COVID, there’s challenges to the global economy, and I think one of the important lessons that we’ve been finding is that institutional investors, and others, have turned their minds to making things more sustainable, and the realization that what we do needs to be done in a much more sustainable way.”

GAI News was told that the venture was launched with HSBC as a cornerstone investor in the initial vehicle – with a funding target of $1 billion from sovereign wealth funds, pension funds, institutional investors, and insurers – to be deployed across both emerging and developed markets in a diverse range of projects that will preserve, protect, and enhance nature over the long-term. A second carbon credit fund was to follow, with a funding goal of up to $2 billion.

Since that conversation, a lot has occurred. Most recently, CAM announced its successful completion of the acquisition of approximately 1,800 hectares of farmland in Queensland, Australia, through its Natural Capital Fund – its third large-scale land transformation project to-date.

The growing awareness of sustainable and regenerative investing reflects an increasing need that has been demonstrated by the ever-greater capital being committed to the space. A report issued by the Croatan Institute called Soil Wealth: Investing in Regenerative Agriculture across Asset Classes identified 127 investment strategies with $321.1 billion in AUM that explicitly integrate sustainable food and ag thematically or as criteria in their investment thesis in the U.S. market alone, let alone on a global scale. 

This regenerative agriculture project will involve the transformation of farmed land previously used for high-intensity sugar cane production into a sustainably managed, native, and high-value Macadamia orchard that will be cultivated and harvested using regenerative practices taking a holistic land management approach. 

Located between two of Australia’s national parks, approximately 10 percent of the project land area will be allocated to native habitat restoration, targeting propagation of a critically endangered flora species, as well as a range of other species, to improve connectivity between the national parks. The project is also planning partnerships with various stakeholders and a local herbarium. 

To actively manage cultivation, CAM is working with an experienced local operating partner that is a leader in all aspects of macadamia production. There will be significant conservation of water resources through water efficiency strategies and the application of precision technologies. The project also will achieve up to a 50 percent reduction in the use of synthetic fertilizer and chemical pesticides – changes that are expected to have a knock-on effect of positive impacts for the Great Barrier Reef Marine Park by reducing chemical and sediment runoff.

“We are excited to have the opportunity to partner with Climate Asset Management and be involved in this large-scale conversion of land use from sugarcane to Macadamias,” said Scott Allcott, managing director of Macadamia Farm Management. 

“Combining the propagation of a native species endemic to the region on such a large scale will create local and community involvement in all aspects.”

Ultimately, the project aims to achieve net zero for Scope 1 and 2 emissions, and to generate additional carbon removal units by increasing carbon storage in above and below ground biomass. It also intends to advance the understanding of carbon removal by permanent crop systems to inform the development of appropriate methodologies in both the international voluntary and Australian compliance markets. 

“We are excited to have made our first Australian acquisition for the fund,” said Ben O’Donnell, chief investment officer, Climate Asset Management’s Natural Capital Fund. “This native macadamia project complements the fund’s existing Iberian projects in Spain and Portugal producing almonds and olives and demonstrates the viability of our model across geographies.”

“We are experiencing increasing appetite from investors for opportunities in natural capital to help diversify and rebalance investment portfolios targeting net zero,” continued O’Donnell. “We continue to raise and deploy funds for our Natural Capital strategy through a healthy pipeline of projects in ANZ, North America, and Europe.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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