HSBC Global Asset Management and IFC, which sits within the World Bank Group, have completed the third close on an emerging markets-focused climate action fund after $474m of new financing.
The HSBC Real Economy Green Investment Opportunity GEM Bond fund, known as REGIO, was designed to support climate risk-mitigation investments across emerging markets in spite of prevailing market turmoil.
HSBC and IFC said emerging countries are hardest hit by climate change, with the investment targeted at both abatement and energy transition. It operates as a dedicated green bonds fund that will use private and public capital to achieve its goal.
At the launch of the initial strategy, HSBC and IFC each committed $75m to the fund as anchor investors. Since then, seven private investors have joined and others are expected to commit later this year.
The fund was designed as a solution for global institutional investors seeking to achieve impact and generate sustainable returns at the same time. The fund will invest in a diverse range of geographies and companies in the real sector through a diversified portfolio of green and sustainable bonds.
Commenting on the strategy, Nicolas Moreau, global CEO, HSBC GAM, said: ‘We are at a tipping point of climate change. Investing in the real economy in emerging markets is critical to achieving the global transition to a lower carbon economy. Funds such as REGIO prove how we can achieve real-economy impact in the markets that are most challenged by it.’
The fund is supported by HSBC Global Asset Management’s ‘Green Impact Investment Guidelines’, which set out a framework for the firm’s green impact strategies across asset classes, including eligible projects and activities aligned with impact.
The framework aims to show potential bond issuers the eligibility criteria the firm will apply when selecting green bonds for REGIO. The framework is aligned to the United Nation’s Sustainable Development Goals and their targets and indicators and contributes directly to financing the objectives of the Paris Climate Agreement.