Climate Investment Newsletter 3/27 - 4/2

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Head of Climate Funds Research and Evaluation

• Build and maintain the definitive digital resource on funds, vehicles, large projects, prizes and incubators that are investing (or driving investment) in climate solutions aligned to science-based roadmaps

Individual Deals and Market Watch

Bonds and Loans: Nearly €2bn in loans agreed based on renewables targets [Responsible Investor]

• BBVA has signed a €1.35bn sustainability-linked guarantee facility with Italian power provider Enel
• Austrian electricity company Verbund has issued a €500m green and sustainability-linked bond
• And more…

Vision Ridge Partners closes third sustainable asset fund at $1.25 billion hard cap [Business Wire]

• Vision Ridge Partners, an alternative asset manager focused on sustainable real assets, has closed its $1.25 billion Sustainable Asset Fund III (“Fund III”). The Fund held its final close just four-and-a-half months after commencing fundraising. Fund III initially targeted $1bn of commitments and drew interest beyond the $1.25bn hard cap.

Low-carbon specialist Ara Partners eyes $500m March first close [PEI]

• Ara Partners, a Houston-based firm targeting businesses that help to reduce carbon emissions, expects to have raised more than three-quarters of its latest fund by the end of this month."
• The Houston-based firm is targeting $650 million for Ara Fund II - its sophomore growth equity and buyout fund - according to a source with knowledge of the matter. It is expected to hold a first close on $500 million on 31 March, the source said.

LIVEKINDLY Collective raises $335 million to accelerate adoption of plant-based living and sustainability in the global food system [Business Wire]

• Funding round led by The Rise Fund and joined by Rabo Corporate Investments, S2G Ventures, existing and additional mission-aligned investors.  This investment brings total funding to more than $535 million in its first 12 months, making LIVEKINDLY Collective one of the top three highest-funded and fastest-growing plant-based food companies

Swedish Pension, Alecta makes first direct infra investment with €156M wind firm deal [IPE]

• Alecta has signed its first direct infrastructure investment deal, paying SEK1.6bn (€156m) for a 20% equity stake in Swedish onshore wind operator Stena Renewable.

Netherlands' FMO to invest $137 million in Green Growth Equity Fund [Mint]

• Dutch development bank FMO will invest $137 million in Green Growth Equity Fund (GGEF), targeting more than $900M and managed by EverSource Capital, it invests in India’ low carbon energy transition including renewables, transportation, resource efficiency and energy services.

Canada pension CDPQ to invest $125m in Energize Ventures to focus on digital transformers in the low carbon transition [Reuters]

• The partnership will focus on digital innovations that can transform the energy and sustainable industry sectors, and the two will pool knowledge on climate investments.  Energize was founded by Michael Polsky, founder and CEO of Invenergy, a top five US renewables developer.  The investment extends CDPQ leadership on climate opportunities.

Southeast Asia weighs benchmarks for $3 trillion green financing [Bloomberg Green]

• The countries set up the Asean Taxonomy board last week, which will develop and maintain a set of categories and definitions to guide its members on sustainable economic activities.

Macro Commitments

Chemicals giant BASF, spurred on by customers, allocates up to $4.7Bn for CO2 cuts [Reuters]

• BASF, the world’s largest chemicals producer by sales, pledged to spend up to 4 billion euros ($4.7 billion) to reduce greenhouse gas emissions 25% by 2030.
• Chief Executive Martin Brudermueller said BASF faced growing pressure from carmakers and other big customers to cut emissions and the spending plan included a goal to become carbon neutral by 2050.

3M to invest $1Bn to fast-track environmental goals [Trade Arabia]

• 3M announced it expects to invest approximately $1Bn over the next 20 years to accelerate new environmental goals: achieve carbon neutrality by 2050, reduce water use by 25% at its facilities, and return higher quality water to the environment after use in manufacturing operations.

Commodity and Oil trader Gunvor Group eyes $500M in non-hydrocarbon investments and GHG reduction of 40% by 2025 [The Digest]

• The commitments come as a part of Gunvor’s Sustainability Commitments 2021 document, which outlines how the company is navigating the Energy Transition.
• In a statement, the organization says that it will effectively manage, limit, and, where possible eliminate emissions, given the role hydrocarbons play in today's energy mix. Their plans call for reducing and/or compensating Scope 1 and 2 emissions by 35% and 95%, respectively. [Smart Energy Decisions]

Fund managers representing $23trn in assets join Net Zero Asset Managers [The Investment]

• This brings the total number of fund houses making new, enhanced commitments to support the goal of net zero greenhouse gas emissions by 2050 or sooner to 73, representing $32trn AUM.

Pathways, Frameworks, Case Studies, Research

Climate change needs 'immediate' action or the world could face economic damage of $1.7trn a year by 2025, experts warn [Sky News]

• The economic damage may rise to about $30tn a year by 2075, according to estimates of 738 economists from around the world who were surveyed by New York University's Institute for Policy Integrity.

Report: Investing in Zero-Carbon China [RMI]

• RMI identifies seven key investment areas for China’s zero-carbon transition.
• The market size of the seven areas will reach nearly ¥15 trillion (US$2.32 trillion/yr) by 2050. Meanwhile, from 2020 to 2050, there will be about ¥70 trillion (US$10.8 trillion) in infrastructure investment, comprised mainly of solar + wind, long distance transmission, high speed and intercity rail.

Tropical forest destruction accelerated in 2020 [NYT]

• Worldwide, loss of primary old-growth tropical forest, which plays a critical role in keeping carbon out of the atmosphere and in maintaining biodiversity, increased by 12 percent in 2020 from 2019, according to the World Resources Institute, a research group based in Washington that reports annually on the subject.

A Fifth of Food-Output Growth Has Been Lost to Climate Change [Bloomberg Green]

• About 21% of growth for agricultural output was lost since the 1960s according to research led by Cornell University and published in the journal Nature Climate Change. The study was funded by a unit of the U.S. Department of Agriculture.