The project will develop a blueprint for a mangrove bond that could be used by issuers in Australia and other global markets.
The Australia-first project is part of HSBC Australia’s broader commitment to developing new financial tools, including nature-based climate solutions, which can support the transition to a low carbon economy and also protect livelihoods in local communities.
The two-year project builds on previous work conducted by Earth Security in collaboration with HSBC’s Centre for Sustainable Finance and other global partners. This previous work identified the opportunity for municipal districts and cities to issue bonds to support mangrove ecosystems and also 40 specific locations, including Brisbane and Darwin, with the potential to do so.
“This is the next step in our efforts to create financial products that will trigger a genuine shift in behaviour. There is a real need to drive large-scale investment in capital market solutions that will help us meet the goals of the Paris Agreement,” said HSBC Australia’s Head of Corporate Sustainability, Alpa Bhattacharjee.
Mangroves are a cost-effective climate solution which:
Mangroves have economic benefits too:
“Australia’s natural capital provides a powerful resource to increase climate adaptation and mitigation; and we need financial institutions to begin to see nature as an asset. Our partnership with HSBC Australia is a pioneering example of how to move from insight to action, with a solution that has the potential for global scale,” said Alejandro Litovsky, Founder and CEO of Earth Security.
The new project will aim to design a practical bond model for the Australian market in consultation with stakeholders across the scientific, conservation, governance and financial sectors.
“This project in Australia provides us with the basis to replicate an investment instrument across other coastal regions of the world that show similar potential,” Mr Litovsky said.
Municipal bonds are already a proven method of financing climate resilient infrastructure. More than half of the largest US cities have issued municipal bonds to fund resilience projects, including projects related to mangroves and seawall construction.
HSBC BANK AUSTRALIA
In Australia, the HSBC Group offers an extensive range of financial services through a network of 45 branches and offices. These services include retail and commercial banking, trade finance, treasury and financial markets, payments and cash management and securities custody. Principal HSBC Group members operating in Australia include HSBC Bank Australia Limited (ABN 48 006 434 162 AFSL/Australian Credit Licence 232595) and The Hongkong and Shanghai Banking Corporation Limited (ABN 65 117 925 970 and AFSL 301737).
Earth Security is a London-based company linking global finance to nature’s capital. It was founded in 2011 to support the breakthrough models that are needed for global financial institutions to invest in planetary resilience. Earth Security works with global investors, companies, governments and foundations around the world creating programmes to catalyse innovative action. It develops the data and analysis, new investment pathways and connects investors with solutions that recognize the value of nature as the ultimate asset class.