According to research estimates of total investments in energy, innovations and climate adaption etc start at $3.5 trillion per annum, increasing to $7 trillion in later years in meeting our 2050 net zero target.
As part of that, investing in start-ups and growth businesses offering climate related technology is crucial to tackling climate change. Despite progress, finance and entrepreneur talent are still the missing key to making positive steps towards climate action, says boutique investment bank, DAI Magister.
According to recent findings in ‘Investing in the Green Economy 2022’, a report from the London Stock Exchange’s research arm, the market capitalisation of green equities ballooned from under $2 trillion in 2009 to over $7 trillion in 2021. The uptick in investment for green innovation companies in recent years (up 100% growth to just below $100bn invested in 2021) mirrors a similar boom in investment in technology companies over the past decade – some of which are now the most influential businesses on the market.
Marc Deschamps, Co-Head at DAI Magister said: “The Economic realities of climate change makes a compelling investment case for entrepreneurs and so the large VC, private equity funds and family office investors are jumping in rapidly. But despite this, DAI Magister believes there is still a long way to go before climate tech-focused businesses and start-ups can achieve their goals.”
Similarly, the last few years have seen ‘environmental, social and governance’ concerns be put at the front and centre of institutional finance more generally. A COP26 coalition of representatives from private equity, pension funds and banks vowed to use the $130 trillion at their disposal to tackle climate change.
Marc is set to represent DAI Magister at this year’s COP27 in Egypt and commented: “I am looking forward to meeting with our climate tech entrepreneurs and private funds peers. Our momentum is key part of the solution.
“Companies harnessing renewable energy, supporting clean water and reducing dependency on traditional fossil fuels are gaining momentum, signifying that the markets, and the people that drive them, are at last beginning to face the climate crisis. This means putting people and planet first.
“While there has been a great deal of interest in investing in start-ups and growth businesses offering climate related technology and innovations, more must be done by financiers and investors if we’re to unlock the potential of this technology. The increase of finance of innovations worldwide is key and so are the financing of pioneer projects and projects across the emerging markets where the path to stable ROI’s is less defined. Therefore, the government sector needs to be the catalyst here.”
The 2022 United Nations Climate Change Conference, known as COP27, is taking place between Sunday 6th to Friday 18th November 2022 in Sharm El-Sheikh, Egypt. This year’s conference marks the 30th anniversary of the adoption of the United Nations Framework Convention on Climate Change.
COP27’s Thematic Days will include Decarbonisation Day, Energy Day, Science Day and Finance Day.
Marc added: “It’s encouraging to see finance taking such a centre stage during COP27 and this may be the catalyst that bolsters more significant investment in climate tech. This will be an opportunity for the ESG and clean tech investment community, but also the general private equity funds to have their say, highlight the current obstacles that climate-focused financing is experiencing, and suggest how the finance community can better provide future-focused funding.
“The importance of finance as a tool for change across the climate change agenda was highlighted in Glasgow at COP26, so we’re looking forward to hearing from industry leaders and delegates about the latest financial innovations, tools and policies that will support climate action and the delivery of a greener future.”