Climate Investment Newsletter 2/6 - 2/12

Individual Deals and Market Watch

SPAC ATTACKS Sustainable Development Acquisition I Corp Announces Pricing of $275 Million Initial Public Offering [business wire]

• Sustainable Development Acquisition I Corp. (“SDAC” or the “Company”), a public benefit corporation and pending B Corporation, announced the pricing of its upsized initial public offering of 27,500,000 units at a price of $10.00 per unit. The units are expected to be listed for trading on the Nasdaq Capital Market under the ticker symbol “SDACU” beginning February 5, 2021.

Ikea foundation bets $250m on green investment fund [FT]

• A foundation backed by Ikea, the Swedish furniture retail giant, has committed $250m to seed a sustainable equity fund designed by Osmosis, a specialist investment boutique.
• The allocation by Imas, an €11bn foundation that invests on behalf of the charitable arm of Ikea, is the second large contract it has awarded to Osmosis.

Rad Power Bikes raises massive $150M round to scale e-bike business across globe [Geek Wire]

• It’s the largest investment in an e-bike brand and reflects investor confidence in a global electric bike market expected to nearly double in size to $70 billion by 2027.

Powin Energy Raises $100M to Compete for Leadership in Grid Storage Market [Green Tech Media]

• Energy storage startup Powin Energy has raised more than $100 million in equity investment to compete with better-funded rivals in the large-scale grid battery market.
• Powin buys battery cells and hooks them up with proprietary software controls and ancillary equipment to produce full-fledged power plants. It competes in the upper echelons of the energy storage integration market with the likes of Tesla, Fluence and Wärtsilä.

Danica almost triples green investments in 2020 to €3.5bn [IPE]

• Danica Pension reported that its investments in the green transition ballooned to DKK27bn (€3.5bn) by the end of last year – up from the DKK20bn it reported at the beginning of October, and almost three times the DKK10bn volume of such assets it had at the end of 2019.

US-based Intercontinental Exchange (ICE) to shift EU carbon trading from London to Amsterdam [FT]

• EU carbon trading is set to move from London to Amsterdam in the latest knock-on effect of Brexit on the UK’s financial services industry.
• ICE will move the carbon contracts, a central part of the EU’s flagship policy on climate change, to its ICE Endex exchange in coming months, according to a notice to its customers on Monday. It is the world’s biggest carbon trading market, handling more than €1bn of contracts a day.

Europe invested a record €26bn in offshore wind in 2020 [Euractiv]

• Europe invested €26.3 billion in new offshore wind farms in 2020, financing 7.1 GW of new capacity, despite the COVID pandemic, according to industry association WindEurope.
• The farms will be built over the coming years, adding to the 2.9 GW of offshore wind capacity constructed in 2020.

Highlands port selected as base for £3bn wind farm [The Times UK]

• Dozens of jobs are to be created at a Highlands port after it was selected as a logistics base for the £3 billion Seagreen offshore wind farm.
• Global Energy Group’s Port of Nigg will take delivery of 114 wind turbine foundations and will store them until they can be deployed into the Firth of Forth. The agreement will sustain 93 jobs at the site in Tain as well as creating 48 new positions.

Macquarie Raises Almost $2 Billion for Renewable Energy Fund [Bloomberg Green]

• Macquarie Group Ltd.’s green investment arm raised 1.6 billion euros ($1.94 billion) for a renewable energy fund.
• The company’s Green Investment Group Renewable Energy Fund 2 closed after exceeding its target of 1 billion euros and received commitments from 32 pension funds and insurers from largely the U.K. and Germany, as well as from some sovereign wealth funds, according to a statement.

Hyzon Motors, the leading hydrogen fuel cell heavy vehicle company, announces business combination with Decarbonization Plus Acquisition Corporation; combined company expected to be listed on Nasdaq [Cision]

• Transaction to provide gross proceeds of up to approximately $626 million to the company, including a $400 million fully committed common stock PIPE at $10 per share, anchored by existing and new investors, including funds and accounts managed by BlackRock, the Federated Hermes Kaufmann Funds, Fidelity Management & Research Company LLC, Wellington Management and Riverstone Energy Limited

DBSA issues $242 million green bond to support a low carbon economy [ESI AFrica]

• The Development Bank of Southern Africa (DBSA) has announced the launch of its first green bond. The €200 million ($242 million) bond was issued through a private placement with the French development finance institution, the Agence Française de Développement (AFD).
• The bond will be structured in alignment with the Bank’s recently released Green Bond Framework, which reiterates the DBSA’s commitment to playing a role in the just transition to a low carbon economy.

ESG Core Rises in Europe’s First Sustainable SPAC Listing [Bloomberg Green]

• ESG Core Investments BV rose in its Amsterdam trading debut Friday after raising 250 million euros ($303 million) in the first initial public offering of a sustainability-focused blank-check company in Europe.
• ESG Core climbed 3% to 10.3 euros at 11:40 a.m. in Amsterdam from the offering price of 10 euros per unit. The listing is the first in Europe this year by a special-purpose acquisition company, and only the third such offering since the blank-check craze took Wall Street by storm in 2020.

Macro Commitments

Scottish Widows targets net zero across £170bn pension fund range by 2050 [Business Green]

• Scottish Widows will aim to halve the carbon footprint of its investments by 2030 on the way to achieving net zero across its entire portfolio of investments by 2050, the pension provider announced today. The UK pension provider becomes the latest in the sector to commit to both 2030 and 2050 portfolio decarbonisation targets

Exxon Mobil to invest $3 billion in carbon capture and other projects to lower emissions [NYT]

• Exxon Mobil, which has long been criticized by environmentalists and some investors and elected leaders for not doing enough to curb climate change, said on Monday it would invest $3 billion over the next five years in energy projects that lower emissions.

South Korea unveils $43 billion plan for world's largest offshore wind farm [reuters]

• South Korea unveiled a 48.5 trillion won ($43.2 billion) plan to build the world’s largest wind power plant by 2030 as part of efforts to foster an environmentally-friendly recovery from the COVID-19 pandemic.

Garanti BBVA presents a consumer loan to purchase solar energy systems [BBVA]

• Garanti BBVA supports Turkey’s fight against climate change through innovative sustainable finance solutions. In collaboration with Solarçatı, Garanti BBVA will offer affordable interest rates for loans to install individual solar energy systems. Furthermore, as part of the collaboration with Solarçatı, Garanti BBVA customers who apply for consumer loans will receive discounts of up to five percent. Therefore, the customers’ costs for their financed purchases is reduced.

Brazil's Focus Energia to build USD-413m solar complex in Bahia [Renewables Now]

• Brazilian energy company Focus Energia is planning to build a solar power complex in Bahia state for a total cost of BRL 2.2 billion (USD 414m/EUR 343m).
• The photovoltaic (PV) plants will be part of the Futura project and will be located in the town of Juazeiro, the local government announced last week.

Empire State Realty Trust uses 100% wind power [Smart Energy Decisions]

• Empire State Realty Trust (ESRT), a real estate company focusing on retail properties in Manhattan, announced on Feb. 3 that, after its latest contract, it now has enough wind energy to power its entire 10.1 million-square-foot commercial portfolio.
• The company says its three-year contract with Green Mountain Energy makes ESRT the nation's largest 100% user of green power in real estate.

CANDRIAM launches new Sovereign Sustainability Model [Institutional Asset Manager]

• CANDRIAM, a global sustainable and multi-asset focused investment manager, has launched an updated Sovereign Sustainability Model, highlighting how the emphasis of sovereign analysis must shift from economic development to sustainable development.

Newly seeded with $16 billion, Africa’s Great Green Wall to see quicker growth [Global Landscapes Forum]

• The Great Green Wall for the Sahel and the Sahara Initiative, which seeks to restore 100 million hectares of degraded land and create 10 million green jobs by 2030, has entered a new phase with partners pledging USD 16.85 billion in international finance for the Wall’s 11 involved countries over the next five years. To date, 4 percent of the Wall is estimated to be complete, bumped to 18 percent when taking into account associated improvements outside the direct intervention areas.

Nordea’s Entire $425 Billion Wealth Unit Is Going ESG [Bloomberg Green]

• The entire wealth and asset management business of Nordea Bank Abp -- which currently oversees about $425 billion -- may exclude all investments that aren’t deemed sustainable in as little as half a decade.

M&G invests five billion pounds in sustainable investments [Born2Invest]

• M&G, through its with-profits investment vehicle, currently worth $186.8 billion (£136 billion), will invest up to $6.86 billion (£5 billion) in private companies working to make the world a more sustainable place. The Catalyst team will seek global opportunities to invest in unlisted companies that would otherwise struggle to access growth and development capital.

Brookfield Pursues $7.5 Billion Fund Devoted to ‘Net-Zero’ Shift [Bloomberg Green]

• Brookfield Asset Management Inc. plans to raise at least $7.5 billion for a new climate-focused fund, as the Canadian investment firm builds out an ESG business led by former Bank of England Governor Mark Carney.

EIB approves 600 million euros in financing for Valeo’s research projects related to technologies designed to reduce CO2 emissions and improve active safety [Automotive World]

• The European Investment Bank (EIB) has approved a 600 million euro package for automotive supplier Valeo to finance its research projects focused on reducing CO2 emissions and improving vehicle safety. The funds are to be allocated to Valeo’s Europe-based research projects, primarily in France, but also in Germany, the Czech Republic and Ireland.

DeSantis Proposes $1 Billion for Climate Change Resilient Infrastructure [WGCU]

• The funds will be used to address issues such as sea level rise, floods, and intensifying storms, among other climate change related issues, like wastewater treatment and healthcare.

Frameworks and Case Studies

9 key takeaways from the 600-page Dasgupta Review on the Economics of Biodiversity [GreenBiz]

• The long-awaited Dasgupta Review on the Economics of Biodiversity emerged last week, and its message is stark: The world needs to fundamentally overhaul how society measures economic success if it is to stem the rapid decline of biodiversity that threatens civilization itself. The central conclusion — that our demands on nature far exceed its capacity to supply them, putting biodiversity under huge pressure and society at "extreme risk" — may not be a new observation, but it is rare to see it presented quite so clearly in a government-commissioned report.

Putting a price on natural capital [The Scottish Farmer]

• A first-of-its-kind study in the UK has provided quantitative evidence of the natural capital benefits of planting new woodlands.
• Commissioned by Scottish Forestry, Tilhill and SEPA, the study assessed a newly planted mixed woodland site at Larriston near Newcastleton. The woodland was then valued to measure its natural capital potential over the next 50 years.

Singapore consults on a taxonomy for the financing of environmentally sustainable activities [JDSupra]

• Singapore has issued a consultation paper on a proposed green taxonomy that will, to a large extent, be aligned with the EU’s Regulation EU 2020/852 on the establishment of a framework to facilitate sustainable investment (EU Taxonomy Regulation).

China aluminium sector must shut inefficient coal power to meet climate goals - report [reuters]

• China’s aluminium sector must shut dedicated power capacity equivalent to more than Germany’s entire coal fleet over the next decade to keep Beijing on track to meet its carbon pledges, climate think tank Ember says.

LBA Realty: Climate risk assessment report and resiliency plan [Smart Energy Decisions]

• LBA Realty (LBA) is a full-service real estate investment and management company with a diverse portfolio of industrial and office properties in major markets throughout the United States.

The three European Supervisory Authorities publish Final Report and draft RTS on disclosures under SFDR [EIOPA]

• The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) delivered today to the European Commission (EC) the Final Report, including the draft Regulatory Technical Standards (RTS), on the content, methodologies and presentation of disclosures under the EU Regulation on sustainability-related disclosures in the financial services sector (SFDR).

Report: Getting the message right on nature‐based solutions to climate change [Global Change Biology]

• Nature‐based solutions (NbS)—solutions to societal challenges that involve working with nature—have recently gained popularity as an integrated approach that can address climate change and biodiversity loss, while supporting sustainable development. The report discusses the promise and pitfalls of the NbS framing and its current political traction, and presents recommendations on how to get the message right.

Pension Funds Seek ESG-Conscious Money Managers, Survey Shows [Bloomberg Green]

• Pension funds and insurers no longer look for just financial performance from their money managers, but also solid ESG credentials, according to a survey of institutional investors with more than $7 trillion in assets.

Coal-Fired Power Took a Beating During the Pandemic, Study Finds [NYT]

• The share of energy generated from coal has dropped more sharply during the coronavirus pandemic than that of any other power source, according to a new report on Monday that looked at coal demand in some of the world’s largest emitters of greenhouse gases.

Report from Nature Climate Change: Day-to-day temperature variability reduces economic growth [Nature Climate Change]

• Elevated annual average temperature has been found to impact macro-economic growth. However, various fundamental elements of the economy are affected by deviations of daily temperature from seasonal expectations which are not well reflected in annual averages. The study shows that increases in seasonally adjusted day-to-day temperature variability reduce macro-economic growth independent of and in addition to changes in annual average temperature.

Coal to exit U.S. power system by 2033 [Smart Energy Decisions]

• Coal is on track to disappear from the U.S. power grid by 2033 as the push for a carbon-free electricity system gains strength, according to Morgan Stanley.
• The fossil fuel will be supplanted largely by renewables, which will supply 39% of U.S. electricity in 2030 and 55% in 2035, said a report released on February 1 from Morgan Stanley, according to Bloomberg News. The shift comes as a growing number of states implement laws mandating utilities eliminate carbon emissions from their fleets.

IEA: India is on ‘cusp of a solar-powered revolution’ [Carbon Brief Daily]

• India is entering a “solar-powered revolution” that will see it edge out coal as the nation’s top electricity source, according to the International Energy Agency (IEA).

National Carbon Market Tool to Achieve China's Low Carbon Transition [Fitch Ratings]

• The operational phase of China’s national emission trading scheme began on 1 February 2021, starting with 2,225 entities in the power sector. The first compliance cycle requires entities to report and verify 2019-2020 emissions, which, along with carbon intensity and other variables, will determine their free allowance allocation. Entities whose emissions exceed the free allocation will be required to purchase an allowance in the open market. Trading is targeted to begin in mid-2021.

Agriculture could help investors reach carbon-reduction goals [Pensions & Investments]

• ESG and impact investors working toward a net-zero carbon economy should not overlook the role of agriculture, according to a report released Tuesday by U.S. Farmers and Ranchers in Action.

30 Big Ideas Shaping ESG: Finance [Private Equity International]

• ESG-backed finance facilities have been one of the fastest growing areas of innovation in private-equity over the last 12 months.

European aviation maps flight path to carbon neutrality [KFGO]

• Europe's aviation sector on Thursday, February 11th, laid out how it could eliminate its net carbon dioxide emissions by 2050, a commitment it said would depend on policy support to scale up sustainable fuels and breakthrough technologies.

Climate Targets Could Cost Petrostates $13 Trillion, Study Finds [Bloomberg Green]

• The economies of at least 19 countries dependent on oil and gas exports are at risk from climate change targets that could cost them trillions of dollars in lost revenue by 2040, according to a study published Thursday, February 4th.
• The results are “a wake-up call” for the fossil fuel dependent nations to diversify their economies, and for richer countries to help those with weak finances make the transition to cleaner energy, according to the report by Carbon Tracker.

Securities Regulators Back International Climate Risk Disclosure Body [Insurance Journal]

• Global market regulators have thrown their weight behind plans for a new international standards body for company disclosures on climate risks and sustainability, saying it would cut the scope for so-called greenwashing.
• The current patchwork of voluntary public and private initiatives for disclosures have at times given misleading and inconsistent information to investors, said Ashley Alder, chair of the International Organization of Securities Commissions or IOSCO

Sustainable investments hit record highs in 2020—and they’re earning good returns [CNBC]

• Sustainable funds reached record highs in 2020 with over $51 billion in new investments, more than double the previous record set in 2019, according to a new report from investment research firm Morningstar. That’s one-quarter of all newly invested money last year.

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