The asset management arm of German insurer Gothaer has taken part in a $650m capital raise by HSBC-backed natural capital investment manager Climate Asset Management.

Gothaer Asset Management has made a $100m commitment to Climate Asset Management’s Natural Capital Strategy (NCS), a fund that invests in sustainable agriculture and forestry projects in Europe, North America, Australia and New Zealand.

Climate Asset Management, formed in 2020 as a joint venture of HSBC Asset Management and Pollination, said it has raised over $650m across its NCS and Nature Based Carbon Strategy (NBCS) funds.

The manager said the funds were backed by a geographically diverse range of global financial institutions and corporations from Europe, the US, Asia-Pacific and the UK, with HSBC acting as an anchor investor for both strategies.

NCS aims to deliver long-term financial returns alongside improved environmental outcomes from regenerative landscape management in agriculture, forestry and environmental assets. The fund’s initial investment is 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.

NBCS targets landscape restoration in developing economies. NBCS finances nature-based carbon projects, particularly in their early stage of development, whilst looking to ensure that meaningful benefits flow to the local communities. The fund’s announced investment is the Restore Africa Programme, a programme aimed at restoring 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.

Alina vom Bruck, board member at Gothaer Asset Management, said: “Investments in natural capital are sustainable investments – or impact investments – that have a positive impact on sustainability. The focus is on CO2 reduction and the enhancement of biodiversity.

“We are currently looking at investments that comply with Article 9 of the EU Sustainable Finance Disclosure Regulation. However, there are very few such investment opportunities in the market here at this time. The conversion of land to regenerative agriculture and sustainable forestry is the first step towards reducing existing carbon emissions, and by creating new or optimised land we can also make a positive contribution to biodiversity.”

Harald Epple, CFO and board member with responsibility for sustainability at Gothaer, said: “We are determined to deliver credible sustainability, both as a company and as an investor. In 2021, when we set the target of net-zero emissions in our portfolio by 2050, we also committed to a timeframe for the coal-based energy phase-out.

“If we are to achieve the Paris Agreement goals our society and economy will have to undergo fundamental transformations. Gothaer will contribute to the achievement of those goals primarily with its investments and by continuing to play leading role as a commercial and industrial insurer.”

Christof Kutscher, CEO of Climate Asset Management, said: “We are delighted to have secured these commitments from a diverse global institutional investor base for our Natural Capital and Nature Based Carbon strategies.”

Kutscher said Gothaer has long been recognised as a leading innovator in the insurance sector. Their commitment to the Natural Capital Fund, which aims to conserve and restore nature, improving biodiversity and soil health while ”generating a long-term uncorrelated return, is a great example of their pioneering spirit”.

“Both investment strategies are grounded in nature-based assets and we find they are increasingly attractive to forward-thinking organisations 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,” Kutscher said.

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