Wall Street, which has always traded stocks and bonds, is turning its attention to estimating the financial value of nature and how to align investment strategies with those values to drive new green investment initiatives. It’s also keeping academics busy solving complicated puzzles, such as “how much is a bee worth?
The Financial Times (FT) reports that HSBC Pollination Climate Asset Management, a joint venture between Swiss private bank Lombard Odier, French fund manager Mirova, and HSBC Holdings and environmental investor Pollination, has formed the Natural Capital Investment Alliance” and set a goal to raise $10 billion by 2022, hoping to learn how to generate new revenue streams from natural habitats such as forests, oceans and coral reefs to protect or restore these environments.
Solutions from these natural capital initiatives include investing in businesses that prevent plastic pollution, and more difficult solutions include buying and improving land uses that no one wants. In the long run, these advocates hope to create a multitude of assets that are linked to nature.
One of the obstacles to developing more innovative, nature-linked financial products, however, is the difficulty of accurately estimating the value of natural resources. Scholars at Stanford University’s Natural Capital Initiative (NatCap) are therefore working with university and NGO researchers around the world to develop models that can “survey and estimate the value of nature’s goods and services” and estimate the value of the contribution of multiple ecosystem processes to the economy. The value of the economic contribution of a variety of ecosystem processes, such as crop pollination and flood mitigation, is being developed by NatCap scholars in collaboration with university and NGO researchers around the world.
However, NatCap Director Daly says that putting a price on nature is not enough to preserve the natural environment, and that policies and mechanisms to direct investment into preserving natural capital are needed.
The current source of revenue for natural capital investment is still the familiar way – the sale of “carbon offset” (carbon offset) related goods.
HSBC Pollination intends to launch a carbon offset fund of up to $200 million, while Mirova has launched a €500 million natural capital fund in which about one-third of the investment will also be related to carbon offset programs.