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Eddie Howell2024-07-17 11:00:182024-08-09 12:07:01Time for investors to turn the world green
Time for investors to turn the world green
One of the biggest obstacles to investing in the green economy has been the lack of data and standardisation in the sector. But over the last decade, things have shifted dramatically, as visitors to The Conduit over London Climate Action Week recently heard.
“The future is always much bigger than the past. And I want a disproportionate share of the future,” said Lord John Brown, Chairman and co-founder of BeyondNetZero, General Atlantic’s climate growth investment fund. He was speaking at GA’s event, and at the panel that followed with guests from Systemiq, the Global Real Estate Sustainability Benchmark (GRESB), and the UK Centre for Greening Finance and Investment (CGFI), one picture became clear: the sector has come a long way in the last decade and is now ripe for investment.
The infrastructure needed to make climate action investable is finally coming into place in the form of regulation, standards and frameworks like the Science Based Targets Initiative (SBTi), Task Force on Climate-Related Financial Disclosures (TCFD), and Corporate Sustainability Due Diligence Directive (CSDDD).
“We often underestimate the impact of a Limited Partner (LP) asking portfolio companies to measure scope three emissions,” said Federico Apéstegui of General Atlantic, “but if you think about it, it’s actually regulation exerting that pressure.”
As noted by Chris Pyke from GRESB, while “it is foundational to get regulation and standards and frameworks in place…the end to which they are used is the most important thing.” And according to Matt Scott, who played a role in shaping TCFD in his former job at the Bank of England, regulation must ensure the focus remains on spurring real economy transition, rather than encouraging investors to dump their carbon-heavy investments for less environmentally intensive tech ones.
Panellists agreed, though, that positive change need not be all top-down. Rhea Hamilton spoke of a “changed” world of sustainable investing, explaining that BeyondNetZero’s portfolio companies no longer fill out a form to report on their environmental impacts. Rather, they meet with the asset manager and “work hand in hand to help them decarbonize.” This means companies can benefit from knowledge shared across the portfolio, as well as expertise held by Systemiq, a systems-change consultancy brought on as a partner by BeyondNetZero to ensure their measurements are rigorous.
Amy Paterson, an expert from Systemiq focusing on real estate and private equity, agreed that the landscape was changing dramatically. While the headlines painted “an image of gloom and doom,” she said, “we are starting to see a much more sophisticated view of transition risks.” She praised the unlisted real estate managers she works with for “constantly upping their game on pricing risk into their portfolios,” and pointed to a step change in progress on ‘scope four’ emissions, or emissions avoidance, which is a relatively new area.
The infrastructure to invest in the climate isn’t perfect. It is still being shaped and re-shaped every day by governments, investors, companies, scientists, and regular citizens. But when estimates of the capital needed to reach our climate goals circle around $3.5tn per year until 2030, the time for private capital to invest in climate is now.
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1708
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Eddie Howell
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Eddie Howell2024-07-17 11:00:182024-08-09 12:07:01Time for investors to turn the world green
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