Developments and commentary in and around the ESG investment space.

Earth Security
A report by environmental finance specialists Earth Security says that global investments for regenerating mangrove forests could return $11.8 billion by 2040 if carbon markets reflected the “true” value of nature.

The 66-page report, Financing the Earth’s Assets: The Case for Mangroves as a Nature-based Climate Solution, says the forests aren’t fully appreciated as a way of slowing global warming.

Mangroves can store carbon up to 400 per cent faster than land-based tropical rainforests and could unlock 380 million tonnes of CO2 of sequestration by 2040, the report said. 

The study says that there needs to be a global municipal bond fund that will support the creation of a network of 40 cities in their investment in mangrove regeneration.

“This would provide a mechanism for municipalities to access finance for climate adaptation projects that use mangrove regeneration to provide green infrastructure and blue carbon offsets. A fund that aggregates financing of many municipal locations would allow investors to spread investment risk across developed and emerging markets, while reaching the global scale needed for a product to be viable in global fixed income markets,” it said. 

“The proposal for a municipal mangrove bond fund follows the example of the Nordic Investment Bank for the Baltic Blue Bond and Kommuninvest in Sweden. These bodies’ aggregate projects across multiple municipalities or countries into one bond issuance or fund to raise finance that is then lent to cities and regions,” it continued. “These aggregated projects can scale to an issuance size and length that is attractive to the fixed income market, namely $200 million to $500 million for a 10-year bond.”

The report warns that half of mangroves - among the most threatened ecosystems on the planet - have already been lost. Their loss rate is even faster than among coral reefs and other forests, such as those in tropical and sub-tropical regions.