HSBC Australia and Earth Security launch new project to create a 'Mangrove Bond'

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Published on
September 8, 2021

Press Release: London, September 1 2021

HSBC Australia and Earth Security have launched a new project that will develop a framework for a mangrove bond that can be used to protect and restore vital natural habitats. 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.

Why mangroves matter

Mangroves are a cost-effective climate solution which:

  • 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

Mangroves have economic benefits too:

  • Fish found in mangroves and similar ecosystems contribute 75% of Australia’s commercial fishery catch and 90% of our recreational fisheries.

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.

“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.

Learn more about The M40 Initiative here.

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