Case Study

Developing a 'Mangrove Bond' in partnership with HSBC Australia

Earth Security is working in partnership with HSBC Australia, to develop the blueprint for a ‘Municipal Mangrove Bond’, as an innovative financing model for nature-based climate solutions based on its coastal economic value.

The project builds on previous work conducted by Earth Security in 2020, in collaboration with HSBC’s Centre for Sustainable Finance and other global partners including UBS Optimus Foundation, the Swiss Agency for Development and Cooperation and CDC Group, the UK government's DFI.

Earth Security's previous work considered the global mangrove ecosystem as an investable asset, identifying and developing a proposal for municipal districts and cities to issue green bonds to support mangrove ecosystems and also 40 specific locations around the world, including Brisbane and Darwin, with the potential to do so - and the concept of a Municipal Mangrove Bond as an instrument that could be scaled globally.

The collaboration of HSBC Australia and Earth Security focuses is taking next steps in the implementation of this concept in Australia, and the opportunity for a commercial bank to develop a financing product for capital markets that expands a green bond portfolio towards nature-based climate adaptation and carbon sequestration. 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.

In this project Earth Security is bringing together analysis, engagement and market facilitation. It is advancing the design of a 'mangrove bond' in a selected Australian region, where this natural asset is abundant and its economic value tangible. The project identifies ways of monetising the value of this natural asset, designing a practical bond model for the Australian market in consultation with stakeholders across the scientific, conservation, government and financial sectors. This will entail the identification of eligible projects and revenue streams, metrics and data, and the engagement with specific actors, both public and private, to support them to move from insights to action, providing a market facilitation role that enables these stakeholders to launch a product together.

"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.” - Alpa Bhattacharjee, HSBC Australia’s Head of Corporate Sustainability

“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." - Alejandro Litovsky, CEO and Founder

Why mangroves matter: Mangroves are a cost-effective climate solution.

  • Act as a natural barrier to storm damage, providing an estimated USD65 billion in storm and flood protection to coastal properties around the world every year
  • Capture and store, or sequester, carbon up to 400% faster than tropical rainforests.
  • Fish found in mangroves and similar ecosystems contribute 75% of Australia’s commercial fishery catch and 90% of our recreational fisheries.