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Finance & Investment
2 New Funds Show Companies, Investors Putting Money Where Their Mouths Are on Biodiversity Commitments

With a fresh spotlight on the critical role of biodiversity in the health of the planet, climate and economy, two ambitious new funds aim to mobilize millions in resources to scale on-the-ground, nature-preservation and -regeneration projects and nature-based climate solutions around the world.

Kering, L’Occitane Group launch Climate Fund for Nature

Image credit: Kering

Earlier this month, at COP15 in Montréal, luxury fashion group Kering and premium and sustainable cosmetics company L’Occitane Group launched their joint Climate Fund for Nature — an ambitious effort to mobilize resources from the luxury fashion and beauty sectors to protect and restore nature, with a particular focus on women’s empowerment. €140M are already committed out of a €300M target size; and the fund will be open to new partner companies to support the scaling up of its impacts on the ground. The fund will be managed by sustainable equity firm Mirova.

“We are proud to work with Kering, L’Occitane Group and more corporates to accelerate the mobilization of resources for nature-based solutions to climate change and women’s empowerment,” said Anne-Laurence Roucher, Deputy CEO and Head of Natural Capital and Private Equity at Mirova. “A net-zero and nature-positive economy requires huge amounts of capital; and the ambitious contribution of corporates is essential to achieve this transition.”

With a fresh spotlight on the critical role of biodiversity in the health of the planet, climate and economy, countries and companies are stepping up their commitments to fight the biodiversity crisis; so, the need to scale-up finance and investment in nature-based solutions is now acknowledged as critical. Looking to the future, if the world is to meet its climate change, biodiversity, and land-regeneration targets, investment in nature-based solutions should at least triple by 2030 and increase four-fold by 2050, according to the UN’s State of Finance for Nature report. This acceleration would equate to cumulative total investment of up to US$10 trillion, and a future annual investment rate of US$674 billion.

“The Climate Fund for Nature provides an opportunity for the luxury fashion and beauty sectors to collectively support biodiversity restoration and conservation at scale,” explained Marie-Claire Daveu, Chief Sustainability and Institutional Affairs Officer at Kering, which has committed to having a net-positive impact on biodiversity by 2025. “Kering is proud to collaborate with Mirova; and we welcome the fund’s first partner, L’Occitane Group. Innovative financing mechanisms are crucial to channel much-needed investment into nature-based solutions if we are to reverse biodiversity decline by 2030 and, simultaneously, address climate change, which is intrinsically interlinked with nature. We entreat further companies to join this ambitious initiative to contribute to a nature-positive future.”

The Climate Fund for Nature will start operations as of Q1 2023. With the objective of supporting high-quality projects dedicated to nature protection and restoration, the fund will also support farmers in their transition to regenerative practices; deliver carbon credits; and generate co-benefits for communities, with a specific emphasis on women’s empowerment. Eligible projects will mostly take place in countries where the Kering and L’Occitane Group brands source their core raw materials. The projects’ progress will be monitored to ensure they deliver measurable outcomes for nature, climate and livelihoods.

The projects supported will also be required to significantly contribute to women’s empowerment by addressing existing gaps related to access to finance, land and training. To that end, the fund and Mirova will collaborate with 2X Collaborative — a global industry body for gender-lens investing.

“With our planet facing a global climate and biodiversity crisis never witnessed before, L’Occitane Group is proud to join forces with Kering and Mirova to scale-up its action against the degradation of nature, which provides the very resources and services we rely on,” said Adrien Geiger, Managing Director of L’Occitane en Provence and Chief Sustainability Officer of L’Occitane Group — which launched a ‘nature-positive’ biodiversity strategy in 2021. “While reducing our emissions and impacts is our priority, the Climate Fund for Nature will help us go further by supporting projects that encourage regenerative practices, benefiting both nature and communities.”

HSBC-backed Natural Capital Investment Fund raises $650M for nature-based climate solutions

Image credit: Tim Mossholder

Meanwhile, Climate Asset Management — the dedicated natural-capital investment manager formed as a joint venture between HSBC Asset Management and climate change investment and advisory firm Pollination — has achieved commitments of more than US$650 million across its two Natural Capital strategies.

Commitments have been raised from a geographically diverse range of global financial institutions and corporations from Europe, the US, Asia-Pacific and the UK — with HSBC acting as anchor investor for both strategies. This investor mix underlines the increasing awareness of the benefits an investment into this important asset class can deliver to a range of institutional investors, including insurers and corporates with net-zero/carbon-neutral targets.

The two investment strategies are particularly relevant given the recent inclusion of nature-based solutions for the first time in the cover text at COP27 and the focus on financing for biodiversity and biodiversity credits at COP15. Respectively, they offer investors the choice of investing in nature for a financial return or to receive high-quality carbon credits.

The Natural Capital Strategy (NCS) aims to deliver long-term financial returns alongside improved environmental outcomes from regenerative landscape management in agriculture, forestry and other environmental assets.

To support the deployment of capital committed, NCS has developed a pipeline of natural capital investment opportunities — building on an initial investment into a land-development project in Extremadura, Spain. The project aims to transform 400 hectares of traditionally flood-irrigated farmland to regenerative, high-value almond production — with specific areas allocated towards enhanced biodiversity.

The Nature-Based Carbon Strategy (NBCS) targets landscape restoration in developing economies to deliver biodiversity improvements at scale for climate resilience, community benefits and high-quality carbon credits with a view to enabling global corporations to achieve their decarbonization targets.

NBCS finances nature-based carbon projects, particularly in their early stage of development, while looking to ensure that meaningful benefits flow to the local communities. Its first publicly announced investment, the Restore Africa Programme, is a key example of this. Led by the Global EverGreening Alliance, the Programme aims to restore nearly two million hectares of land and directly support 1.5 million smallholder farming families across six African countries — Kenya, Ethiopia, Malawi, Tanzania, Uganda and Zambia. It has already progressed to implementation in three of those countries (Uganda, Kenya and Malawi) in less than 12 months after the collaboration between Climate Asset Management and Global EverGreening Alliance was first announced at COP26. NBCS will continue to scale this traction with the commitments announced today.

The commitments to date and the ongoing capital raising demonstrate Climate Asset Management’s continued contribution to the goals of the Natural Capital Investment Alliance, of which Climate Asset Management is a founding member.

Christof Kutscher, CEO of Climate Asset Management, commented: “We are delighted to have secured these commitments from a diverse, global institutional investor base for our Natural Capital and Nature-Based Carbon strategies. Both investment strategies are grounded in nature-based assets; and we find they are increasingly attractive to forward-thinking organizations that are themselves committed to the transition to net zero. The commitments will help us to support bold and scalable nature-based investment solutions as we strive to secure a more climate-resilient, nature-positive and inclusive world.”

Climate Asset Management continues to raise funds across both strategies and expects to make further announcements during 2023.