TBLI Weekly - January 31st, 2023
Robert Rubinstein
Leading Sustainable Investment Advisor | 25+ Years of Experience
Your weekly guide to Sustainable Investment
This week's Featured TBLI Events
TBLI Virtual Networking (Mixer)
Feb 3, 2023
3:00 PM - 4:30 PM CET
Connect with impact investors, entrepreneurs, and thought leaders.
All upcoming TBLI Talk webinars in Q1 are free to attend for all that have voted in TBLI Better World Prize - click here to access voting page.
Once voted, send an email to robert@tbligroup.com to request a free ticket.
TBLI Investor Salon - 2023
In the coming months, the virtual TBLI Investor Salon will be returning showcasing innovative companies that are making an impact.
Are you an investor and would you like to attend? Submit this form to subscribe to our Investor Salon events
Exclusive access to investment allocators only.*
Radical Truth - TBLI Podcast
Can you create a Post Growth Economy?
Post Growth—Life After Capitalism
Capitalism is broken. The relentless pursuit of more has delivered climate catastrophe, social inequality and financial instability—and left us ill prepared for life in a global pandemic. Weaving together philosophical reflection, economic insight and social vision, Tim Jackson’s passionate and provocative book dares us to imagine a world beyond capitalism—a place where relationship and meaning take precedence over profits and power. Post Growth is both a manifesto for system change and an invitation to rekindle a deeper conversation about the nature of the human condition.
Prof. Tim Jackson will share his vision for a Post Growth Economy
Click here to listen to the episode on Anchor.
You can find also find our podcast here:
‘Recession Resilient’ Climate Start-Ups Shine in Tech Downturn
When Arebeth Pease was laid off from the tech start-up MasterClass last year, she could have had her pick of jobs. But so many tech companies’ missions rang hollow, she said, and many were creating more problems than they were fixing.
Ms. Pease, 42, was drawn instead to Span, a start-up that makes smart home electrical panels and is among a class of fast-growing companies aiming to combat climate change. She joined Span in September as an operations manager, with the start-up’s focus on slowing the effects of climate change as the main selling point.
“We’re actually doing work that matters,” she said.
As tech companies slash perks and cut jobs, the downturn has spurred a wake-up call among many workers, causing them to question whether their company’s role in society — selling ads or selling stuff, often — was actually making the world a better place. The result? More are now flocking to climate start-ups, just as investors pour money into the field.
Last year, climate start-ups in the United States raised nearly $20 billion, topping 2021’s high of $18 billion and nearly tripling 2020’s $7 billion, according to Crunchbase, a data provider. At least 83 climate-focused companies around the world are worth more than $1 billion, according to HolonIQ, a research firm.
Despite worries of a recession, enthusiasm about climate start-ups is undimmed. Laurence D. Fink, the chief executive of the investment firm BlackRock, recently declared that 1,000 more $1 billion so-called climate unicorns were on the way.
“There is no line of business that will not be impacted by climate,” said Chris Sacca , one of the founders of Lowercarbon Capital, a climate-focused venture capital firm, at a conference run by Axios in October. “That’s also the opportunity.”
The momentum and excitement, investors said, are different from the cleantech boom of the mid-2000s, when investors poured money into a cohort of clean energy companies that were reliant on government subsidies. Many of those start-ups eventually went under.
“There were a lot of lessons learned from the first cleantech wave,” said Ben Marcus, an investor at the venture capital firm UP.Partners. “Investors are not just looking to invest in science projects but in real companies.”
Now broader economic trends have coalesced to bolster the market. The cost of renewable energy has fallen over the last decade. The Securities and Exchange Commission last year proposed a rule that would require companies to report their emissions, creating demand for tools to measure them. The Inflation Reduction Act, passed last year, dedicated $370 billion to climate-related spending.
Large corporations have also elevated climate-focused initiatives to the boardroom, with 91 percent of the global economy now covered by “net zero” pledges of some sort, according to Net Zero Tracker, a nonprofit site.
Will Steffen, ‘courageous’ climate scientist, dies in Canberra aged 75
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Steffen remembered as a ‘truly leading thinker’ and someone who influenced scientific agenda and governments worldwide
Globally renowned Australian climate scientist Prof Will Steffen has died, aged 75, with former colleagues and family remembering him as an inspiring, courageous and gentle human. Steffen died in Canberra hospital on Sunday evening after almost a year of treatment for pancreatic cancer. Colleagues from around the world described him as a scientific giant who had spent a career studying and communicating the risks of climate change.
Steffen was known for his studies on the rate humans were driving changes to the planet and the risks of irreversible “tipping points” that could push the world to “hothouse” conditions. He was known as a skilled communicator, delivering countless public talks and interviews to the media, and was a trusted adviser to the Gillard government. The director of the Potsdam Institute for Climate Impact Research in Germany, Prof Johan Rockström, said: “Such a loss for humanity. There is no better friend and colleague for humanity and a livable planet.”
Steffen moved to Australia from the US in 1977, taking a post-doc position at the Australian National University. He was a pivotal figure and leader in coordinating international research collaborations.
In Australia he was a highly respected adviser on climate change policy and worked on a multiparty committee around 2010 that helped devise a mechanism to put a price on carbon.
Steffen was part of a group of scientists including Rockström who described nine “planetary boundaries” that regulate the planet and formed the basis for a Netflix documentary narrated by Sir David Attenborough.
European Solar And Wind Surpass Gas Power For The First Time
Wind turbines and solar panels produced more than a fifth of the EU’s electricity last year, for the first time delivering more power than natural gas, a new report shows.
The analysis, from independent energy think tank Ember, indicates that wind and solar produced 22% of the EU’s electricity over the year, while gas generated 20%. The report further shows that the rise in renewable electricity generation helped to avoid €10 billion ($10.89 billion) in gas costs.
The use of coal, the most carbon-intense fossil fuel, rose by 1.5% over the year to generate 16% of European electricity—but this rise was short-lived, with thermal coal generation dropping markedly in the latter part of the year.
Meanwhile, hydropower and nuclear generation, which generate the lion’s share of EU electricity, both fell to the lowest levels seen in 20 years. Dry conditions across much of the continent caused river levels to fall, cutting hydroelectric generation, while nuclear reactors were taken offline—some for maintenance, others permanently.
The largest increase in terms of renewables was seen in solar, which surged by 24%, delivering an additional 39 terawatt hours of electricity over the previous year. No less than 20 EU nations achieved a record share of solar generation.
Overall, the year saw electricity demand decline, with a fall in demand of 7.9% in the last quarter of 2022 compared with the same period in 2021—a drop Ember attributed to warmer weather, affordability concerns, and energy-saving behaviours among Europeans.
Responsible investing is set to become even more popular
Market turbulence was a defining feature of 2022 and punch-drunk investors, reeling from a combination of market sell-offs and the cost of living crisis, responded by withdrawing record sums from their investments.
In September, the Investment Association registered the eighth consecutive month of net outflows from investment funds, with investors cashing in some £7.6bn from funds. Responsible investment funds, however, have been much more resilient and have only experienced one month of negative flows so far this year.
Although they have continued to attract investors over the course of 2022, the performance of many RI funds has been hit this year and the headwinds they have faced have been well-documented.
Those areas of the market that performed strongly in 2022, such as oil-producers, are generally excluded from RI portfolios. At the same time, the growth-oriented technology companies, where RI funds may have greater exposure than their peers, have fallen back, having led markets for several years.
Investing is a long-term game, and no investment strategy should be judged on 12 months’ isolated performance. However, there are strong indications that we are at the cusp of a secular shift whereby the way in which a business conducts itself is of equal importance to investors as the profits it generates.
This shift in mindset is likely to tilt whole sectors towards supporting a more sustainable future.
Take carbon emissions as an example. The recent Cop27 conference saw governments around the world reaffirm commitments to combatting climate change. Geopolitics also plays its part: the war in Ukraine has demonstrated the need for energy security with renewable energy being touted as part of the solution to this problem.
Many of the world’s largest companies, meanwhile, are now working towards net-zero carbon emissions, and pressure is mounting for others to follow their lead. Regulators are adding further impetus to this.
Increasing Women’s Economic Productivity: The Case for Gender Lens Investing
The year 2022 saw the global economic outlook deteriorate amidst high inflation, fiscal tightening, and supply chain uncertainties arising from both the Russia-Ukraine war and the prolonged COVID-19 pandemic. Global Gross Domestic Product (GDP), after expanding by some 5 percent in 2021, contracted in the first half of 2022. This brief makes a case for gender lens investing (GLI) as a means to boost women’s participation in economic activity, and thereby contribute to improved global GDP. It argues that governments, as well as wealth and asset management firms, must tap into the potential of GLI in optimising the contribution of women to global productivity.
Global economic activity is experiencing a broad-based slowdown sharper than expected, with inflation rates running higher than in the previous decades. Indeed, in 2022, uncertainty and volatility were the dominating themes of the global economy, despite cautious optimism in the beginning as COVID-19 restrictions were gradually eased. Today the global economic outlook is uneven, and some countries, regions and territories are managing post-pandemic recovery better than others.
The Russian invasion of Ukraine has compounded the challenge as it caused a severe energy crisis in Europe which has further hampered economic activity. With Russia cutting deliveries to less than 20 percent of the 2021 levels, gas prices have increased more than four-fold in the region since 2021.[1] The conflict has also pushed food prices up, causing erosion of real incomes for large populations in many developing countries.[2]
Expanding costs of government borrowing and large capital outflows are also exacerbating fiscal and balance of payments pressures in these economies.[3] Meanwhile, global warming is reaching an alarming point, where heatwaves, drought events, and other extreme weather events are becoming more intense and frequent.[4] Also contributing to the uncertainty is the resurgence of COVID-19, particularly in China. The country’s property sector is in crisis, causing spillover effects on the domestic banking sector, which is weighing heavily on the country’s growth and thereby having negative cross-border effects.[5]
It is amidst these volatile conditions that recent data releases have confirmed projections that the global economy will grow between a mere 2.5 and 2.8 percent in 2022—[6]a substantial downward revision from previous forecasts released by the Department of Economic and Social Affairs of the United Nations in January[7] and May 2022.[8] Inflation, which has risen to a multi-decade high, prompting rapid monetary policy contraction and constricting household budgets—and a tightening fiscal space have made future projections highly uncertain. Most indicators suggest, however, a further slowdown in global economic growth in 2023.[9]
Goldman Sachs Announces $1.6 Billion Raised for Private Markets Climate Fund
On January 10, 2023, Goldman Sachs Asset Management announced that it had closed over $1.6 billion in funding for Horizon Environment & Climate Solutions I (Horizon Climate), the first in an expected series of funds through which Goldman intends to target investments toward “key sustainability trends.” Managed by Goldman’s Sustainable Investing Group, Horizon Climate exceeded its initial fundraising goals and serves as Goldman’s “inaugural direct private markets strategy dedicated to investing in climate and environmental solutions.” The fund is classified under Article 9 of the Sustainable Financial Disclosure Regulation. The fund has already committed almost $1 billion to twelve different “portfolio companies at the forefront of climate and environmental innovation” across North America and Europe. The initial investments include companies manufacturing lithium-ion batteries, sustainable packaging materials, recycled cotton fibers, and businesses seeking to promote agricultural water efficiency and energy efficiency in commercial and industrial buildings.
Overall, Horizon Climate will direct its investment strategy in accordance with the five themes “underpin[ning] Goldman Sach’s approach to climate transition”: (1) clean energy, (2) sustainable transportation, (3) waste and materials, (4) sustainable food and agriculture, and (5) ecosystem services.
Goldman’s Chief Investment Officer for Asset & Wealth Management, Julian Salisbury, said that Horizon Climate “represents the transformative power of private capital to help scale cutting-edge technologies that will make a meaningful impact in the race to net zero.” Ken Pontarelli, head of Sustainable Investing for Private Markets at Goldman Sachs Asset Management, added that “Goldman Sachs has been investing in transformative environmental and climate solutions since 2005,” and “as the imperative to transition to a more sustainable economic growth model gathers pace, we are excited to continue backing leading businesses in this space as they develop and scale the environmental and climate solutions of tomorrow.”
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