Apple has handed a $200 million mandate to Climate Asset Management, the nature-based carbon capture joint venture between HSBC Asset Management and Pollination.
The capital will be split between CAM’s two strategies: a Nature-Based Solutions strategy, which generates carbon credits, and a sustainable agriculture income fund with a $1 billion target. CAM had raised $650 million across both of these strategies by the end of 2022.
This is the corporation’s second bite at the carbon removal apple: the Restore Fund was launched in 2021 with a commitment of “up to $200 million… from Apple and partners”, according to a press release at the time. Goldman Sachs Asset Management acts as the investment manager for the 2021 fund, while Conservation International is a co-investor, Goldman Sachs said.
For the second iteration of the Restore Fund, “Apple will invest up to an additional $200 million”, which entails “doubling the company’s total commitment” since 2021, according to a statement. Apple’s suppliers may “become partners in the fund”, the statement suggests.
CAM’s Nature-Based Carbon Strategy will generate carbon credits by financing the development or restoration of natural assets in emerging markets to increase their carbon absorption. CAM is raising a $600 million-target fund for this strategy, structured as a typical close-ended, pooled private investment fund with limited partners and a term of 15 years. It is not clear, however, whether Apple’s Restore Fund is an LP in this fund or will be co-investing alongside CAM.
CAM’s NBCS fund is targeted at corporate investors that have set carbon reduction targets. Instead of producing a financial yield or capital gain, CAM distributes these carbon credits to investors, who can either redeem them to offset their own carbon footprint or sell them on voluntary carbon markets for a financial return.
Apple has set a 2030 carbon neutrality target for its entire supply chain and all products’ life cycles. This commitment involves reduction for 75 percent of its emissions and carbon removal-based offsets for the remaining 25 percent.
CAM is not the only fund manager to distribute carbon credits in place of financial returns: Manulife Investment Management, which launched a $500 million-target nature-based carbon capture fund in 2022, allows investors to choose whether to draw the carbon credits or their monetary value on voluntary carbon markets.
Claiming carbon credits instead of their spot market value can present several advantages for investors that have set decarbonisation targets. The quality and authenticity of these credits is easier to verify than if investors bought carbon credits from voluntary markets, Manulife’s impact investing managing director Eric Cooperström told New Private Markets last year.
And although investors must commit the capital upfront, the fund mitigates the price fluctuations of nature-based credits on the voluntary carbon market – particularly over a 15-year period when demand for voluntary carbon credits is expected to rise with an onslaught of decarbonisation commitments.
Apple did not respond to requests for comment at the time of publication.