16 Finance Companies Invest in Clean Tech
16 Finance Companies Invest in Clean Tech
Major finance companies are changing the way big investors impact the environment through fundraising and new fund launches. Sustainability practices are expected to impact water, energy, and agriculture industries nationally and overseas. These investments support cleantech and middle market companies dedicated to creating a positive social impact while alleviating poverty. While steady investments creep toward meeting Sustainable Development Goals, sustainability and efficiency practices impact small family companies and large corporations alike.
Set up a new business unit to house its planned impact investing fund. The fund will invest in small and medium-sized companies in areas like renewable energy, education, and environmental management, with themes tied to the United Nations’ Sustainable Development Goals. The new unit will be run by Robert Antablin, previously KKR’s head of energy private equity for the Americas, and Ken Mehlman, KKR’s global head of public affairs.
Launched its own impact investment fund, The Rise Fund, last year. The fund reached $2 billion in assets last October from major investors including the New York State Common Retirement Fund, the Washington State Investment Board and Swedish pension fund Andra AP-fonden. In April, the company announced that former U.S. Secretary of State John Kerry joined the new fund as a senior advisor, with a focus on identifying renewable energy investment opportunities.
- Bain Capital
Launched its Bain Capital Double Impact Fund in 2016, which invests in middle market companies that create positive social impact in areas like water, energy, and agriculture. The fund raised $390 million with new commitments coming last year from institutional investors like the Los Angeles City Employees’ Retirement System and the Los Angeles Fire and Police Pension Fund.
- Partners Group
The $74 billion Swiss private equity firm launched PG Life, a $1 billion global impact investing fund, last month. PG Life will seek investments that help alleviate poverty and support companies developing affordable and clean energy technology. The fund promises attractive returns as well as a measurable, positive social and environmental impact. PG Life will make equity investments in deals ranging from $100 million to $1 billion. Existing investors such as the Canada Pension Plan Investment Board, public pensions in Texas, and the Korea Investment Corp., are also expected to invest in the new fund.
Sweden’s largest pension fund is boosting its commitment to the NN-FMO Emerging Markets Loan Fund, an emerging markets fund that focuses on financing projects tied to the UN’s Sustainable Development Goals. The $91 billion Alecta doubled its commitment to the fund last month, raising it from $100 million to $200 million. The fund had a first close at $250 million in assets. A second close is expected to net another $750 million later this year. NN-FMO is a collaboration of NN Investment Partners and the investment arm of Dutch bank FMO.
More major banks are stepping up to commit to low carbon, sustainable finance:
- Wells Fargo
In April, the bank committed to investing $200 billion in sustainable business by 2030, with 50 percent focused on clean technology and renewable energy transactions that support a transition to a low carbon economy. The remainder is expected to go toward sustainable agriculture, recycling, and conservation projects.
- Morgan Stanley
Committed to $250 billion in low-carbon financing by 2030. The money is expected to fund cleantech and renewable energy financing, sustainable bonds and other transactions that enable low-carbon solutions. Since 2006, the company says it has financed more than $84 billion in projects that support cleantech and renewable energy and has underwritten $27 billion in sustainable bonds.
These announcements follow other major banks making similar commitments in recent months, including:
- J.P. Morgan
Committed $200 billion
- TD Bank
Committed $78 billion
Committed $100 billion and announced it will stop financing most new coal power plants, oil sands projects and arctic drilling
Says it will cut its exposure to coal power to zero by 2025
- BNP Paribas
Says it will no longer finance shale or oil sands projects
Meanwhile, former partners at Kleiner Perkins Caufield & Byers have raised $298.2 million for a new venture capital firm, G2VP, according to a filing with the SEC. The new fund’s founders - Brook Porter, David Mount, Benjamin Kortlang, and Daniel Oros - were all partners in Kleiner Perkins' $1 billion Green Growth Fund. G2VP will focus on sustainability and resource efficiency as well as sectors like transportation, manufacturing, energy, agriculture, and logistics. So far, it has made investments in companies like Shift, Scoop, and Kespry.
CleanCapital LLC and CarVal Investors, which was formed by Cargill, announced a $250 million equity partnership, including debt capital, to acquire up to $1 billion of solar projects. CleanCapital's team has acquired nearly $100 million of operating solar projects to date. The firms are working toward the first “pure” small scale solar C&I securitization transaction. The new partnership plans to purchase small, already operating C&I solar projects in the U.S. and aggregate them into funds to offer to family offices and other accredited investors.
In April, J.P. Morgan Asset Management launched a suite of fixed income indices, called the J.P. Morgan ESG index (JESG), in collaboration with BlackRock. It's intended to address growing demand from bond investors looking for a benchmark that targets emerging market issuers with strong ESG practices.
At the same time, UBS launched a portfolio dedicated to environmental and socially-friendly stocks and bonds in Asia, following the launch of a similar portfolio in Europe earlier this year. Client demand is driving the new portfolios to 100% sustainable investing across asset classes.
Institutional and high-net-worth investors are focusing more on climate risks and sustainable investing. Demand for sustainable investments in Asia is particularly strong, and investors are realizing that sustainable investing is becoming a source of alpha in their portfolios, says Simon Smiles, global CIO for ultra-high net worth at UBS Wealth Management.
Other major institutional asset owners who are focusing on sustainable investing include:
- New York City’s comptroller
Scott Stringer, who oversees the city’s pension funds, recently issued an RFP for a consultant to advise on its potential divestment of $5 billion in fossil fuel investments.
Recently committed $1 billion to an internally managed ESG global equities fund, developed by QSI, and hired the first investment director of its Sustainable Investment Program.
Although capital appears to be flowing into sustainable and low carbon investments, it is still not enough to meet Sustainable Development Goals, according to a U.N. report released in April. The report calls for more national action and shifting focus towards areas such as digital finance, the roles of rating agencies, and key policy platforms. While sustainability investments continue toward making an impact, the "next phase of sustainable finance" will require better performance metrics for the financial system, metrics that integrate the process of sustainability as well as outcomes.