Interview: Marine de Bazelaire (HSBC): Financing Biodiversity – Investing for Good

#BiodiversityFinance #NaturalCapital #CarbonSinks


About Marine de Bazelaire

Group Advisor on Natural Capital, since January 2021, Marine joined the Group HSBC in 2004, as Head of Sustainability for France and then Europe. Executive committee member of HSBC Continental Europe she accompanies the various businesses and functions in the management of their sustainability stakes and those of their customers. Before joining HSBC, Marine initiated a sustainability strategy for Tiscali Group, Internet Service Provider and headed the multimedia department of the publishing conglomerate Excelsior. Between the world of media and that of finance she worked for Bureau of Public Information of UNESCO. Spare colonel citizen of the French Air Force, she is a non-executive Director of HSBC SICAV RIF SRI, an executive committee member of the Opéra Comique Foundation and Bangladeshi non-profit Friendship. Her academic background range from IHEDN (Higher Education Institute of National Defense) and CHEEDD (Higher Education College of Sustainable Development and Environment), to a pre-doctorate program in Museology from University Paris IV, a Master of Science in publishing and a BBA in Finance from Pace University, New York.


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In the race to reduce carbon emissions to net-zero, Marine de Bazelaire, Group Advisor on Natural Capital, HSBC, conveys a timely reminder that mobilizing private finance to preserve biodiversity can be both a business opportunity and the natural foundation for building and achieving long-term sustainability.


Why do you see financing biodiversity as the next frontier for the banking sector?

The rate of biodiversity loss is an immense challenge. The numbers tell the story: The World Economic Forum estimates that half the world’s GDP - $44 trillion - is dependent on nature. The EU estimates that from 1997 to 2011 annual losses in ecosystems ranged from €3.5 trillion to €18.5 trillion. Our future prosperity is exposed to biodiversity loss. The cost of inaction poses huge risks of reduced crop yields, loss of sources of medicines and reduced fish catches. But the interdependencies and complexity of the issues mean the damage is unevenly priced, leading to unprecedented costs. An example? Look at artificial pollination, in the US only, farmers paid $320 million for commercial pollination services in 2017, and those new practices are rising in different parts of the world.


We support conservation including the aim of enhancing the evidence base for research and decisions relating to biodiversity.
The Equator Principles 2020


How do you address those risks?

HSBC’s approach is to see natural capital risks and opportunities as our sector’s next frontier. Since 2004 HSBC has been developing policies to manage the risks its financing may have on the environment. Our first sustainability risk policies were dedicated to forests and forest products. The policies’ aims are to avoid deforestation and to protect sites, like Ramsar - wetland zones - with dedicated policies for agricultural commodities like palm oil and soy. Do we understand the consequences along the value chain? In this, we are guided by the 2020 Equator Principles that say: “We support conservation including the aim of enhancing the evidence base for research and decisions relating to biodiversity.” Asset Management has also published in 2020 its policy engagement on biodiversity. Still, more needs to be done across the financial system as a whole to understand and address biodiversity risk.


How can private finance and investment in biodiversity be mobilized?


At HSBC we believe there are opportunities to finance “natural capital” and the ecosystem services it provides. Natural capital has always been a fuel for human economic growth. Last October we announced our ambition to align our operations, supply chain, and financing activities to the net zero, in line with the goals of the Paris Agreement. Our plan to achieve this includes supporting our customers in their decarbonization and unlocking new climate solutions including natural capital investing and financing. For example, HSBC has announced the creation of real asset nature-based solutions (NBS) and carbon offset funds. Nature is, of course, the first carbon sink, but given its rate of depletion, nature needs investment to continue to play this role. Other initiatives include supporting customers in assessing their dependence on natural capital and establishing a vision to stop deforestation and overfishing to protect biodiversity. Positively, these can lead to numerous investments, finance and advisory opportunities on sustainable supply chains. We also have clients whose natural capital assets are undervalued for whom understanding biodiversity loss and carbon markets can drive enhancement. There are ways to improve our resilience and well-being using nature-based solutions: like mangroves improving cost-competitive infrastructure to protect offshore wind farms, or HSBC Australia purchasing coral reefs to support coastal farmers’ shift to chemical-free practices. Combining these initiatives with biodiversity data could allow us to build financial products to support biodiversity restoration or preservation.


What needs to be done to increase biodiversity financing?


There is no single fix, but a combination of education, regulation and data is key. There needs to be education throughout the economy, among our employees, clients, regulators and consumers. These things can be achieved through leadership fora like the World Economic Forum’s Alliance of CEO Climate Leaders, as well as through thought leadership and collective action. Our Research team regularly releases papers and holds webinars around those issues for our clients. Our Center of Sustainable Finance is also supporting research: we have released a white paper on building a voluntary carbon offsets market mainly for NBS, adding to the efforts of the taskforce on scaling voluntary carbon markets. We foresee that voluntary action will not drive the change that we need in term of halting biodiversity loss. Broader government and regulatory policies are needed to correct institutional failures. It is key to accelerate the preservation and restoration of natural capital. Data and methodologies will be crucial tools. We see interesting initiatives such as the Global Biodiversity Score that could be enhanced, as could a better understanding of the revenue streams linked to ecosystems services. These could greatly help bankability. We have a role as financial institutions to encourage clients to commit to net-zero, as well as to assess their dependence on natural capital. But first of all, they should assess their own impacts and dependencies on nature and then provide financial services to reduce, restore and protect our biodiversity.