Investment in ‘green’ industry and cleantech companies has increased while money flowing to anti-ESG funds has declined.
Just Climate, one of the world’s largest eco-investor institutions, has beaten its target of $1 billion and raised $1.5 billion to invest in the highest impact solutions that can radically reduce or remove emissions, while generating attractive risk-adjusted financial returns.
Meanwhile, funds that market themselves as being opposed to environmental, social or governance (ESG) investment have seen a fall in new investor deposits, according to research firm Morningstar.
Just Climate comfortably cleared an initial target of $1 billion as investors including Microsoft and Goldman Sachs backed its plan to support companies that can “radically reduce or remove emissions” while generating returns.
Recipients of investment include ABB E-mobility, a Swiss-based specialist in electric vehicle (EV) charging solutions; H2 Green Steel, a Sweden-based industrial start-up which aims to accelerate the decarbonisation of the steel industry; and Meva Energy, a Sweden-based provider of gasification technology to generate renewable energy for manufacturing sectors.
Just Climate’s founding investor group included Microsoft’s Climate Innovation Fund which anchored the Fund, IMAS Foundation, Ireland Strategic Investment Fund, Harvard Management Company, the Imprint Group of Goldman Sachs as well as Hall Capital Partners and its clients.
“Establishing climate-led investing as a capital allocation imperative is core to our mission,” Clara Barby CBE, senior partner at Just Climate, said. “We start with climate impact, identify solutions that will make the biggest difference, and then direct and scale institutional capital to those solutions that we believe can generate attractive risk-adjusted returns.1 We’re grateful that many of the world’s most significant institutional investors see the opportunity that climate-led investing represents — for capital markets, for the planet and for people everywhere.”
The Fund will be part of Just Climate’s industrial climate solutions focus and will pursue investments in growth-stage, asset-heavy companies globally which have the potential to deliver transformational climate impact across some of the highest-emitting, hard-to-abate industries — including energy, mobility, industry and buildings — in order to generate outsized emissions abatement in the next decade.
Shaun Kingsbury CBE, chief investment officer of Just Climate, said: “More than 50 per cent of the world’s emissions come from the hard-to-abate industries. Without radical and urgent changes to the way that the financial sector approaches the decarbonisation challenge in these industries, which are the building blocks of our economy, there will be no net zero by 2050. Proven, transformational climate solutions are being developed to decarbonise the industrial sectors. With the right investment support, we believe they can scale rapidly to achieve better gross margins, a lower cost of capital and widespread market adoption.”
Just Climate’s integrated approach to impact management is embodied in the Fund’s long-term incentive structure. Under the Fund’s integrated performance fee, financial returns drive the amount of performance fee accruable. How much of the performance fee is ultimately available is 100 per cent linked to the delivery of ambitious greenhouse gas abatement goals. With this approach, Just Climate is demonstrating its conviction that climate solutions for the hard-to-abate industries are capable of delivering attractive risk-adjusted returns and highest climate impact.
Since being established by Generation Investment Management in October 2021, Just Climate has built a team of investment professionals who combine skills in growth equity, project finance, engineering and impact measurement with the capabilities to find and support business models that can provide transformational solutions for the hard-to-abate industries.