29 Nov. 2022
Our last two blogs dove into ESG, explaining both the terms and basics as well as how you can incorporate them into your business plan.
Read our first ESG blog here: https://www.setpoint.ai/blog_post/esg/
Read our second ESG blog here: https://www.setpoint.ai/blog_post/incorporating-esg-business-plan/
For our last blog on our ESG series, we want to dive into ESG and Climate Tech, tapping into new trends and the future of ESG investments.
ESG investment considers placing an emphasis on companies’ commitment to environmental, social, and/or governance factors before making an investment.
The intensifying climate crisis and our increased dependence on fossil fuels has driven public interest in clean energy and climate technology. Venture capitalists are recognizing this trend and thus shifting their attention toward this sector. This has resulted in an unprecedented demand for innovators and investors in Climate Tech, and specifically in the clean energy sector.
According to a last year’s State Of Climate Tech report by PwC, “Fundraising for climate-tech-focused venture funds is on track to hit a record $26 billion this year” and “It is forecasted that $35 billion to $40 billion will flow to US-based, VC-backed climate tech companies through special purpose acquisition companies (SPACs) in the next 24 months”
In 2020, enabling technologies, including AI, advanced manufacturing, robotics and the Internet of Things, attracted 24% of climate tech VC investment in 2020 (PwC).
These types of technologies make CleanTech innovations possible and commercially successful. Plus, a lot of capital is expected to enter this space in 2022 and in the near future.
Today’s digital age with unlimited information has called for an increased level of transparency. Claiming and labeling something as ESG-related without backing up the results no longer sits well with investors. With many companies being mocked for “greenwashing” by spreading misinformation to present an environmentally responsible public image, investors are now demanding more valuable insights into whether companies are really setting and achieving real ESG goals.
Investors want data-supported, concrete answers about exactly how companies are reducing their carbon footprint. Claiming that you’re going green isn’t enough. Investors are looking for real innovation and real environmental benefits.
Data will continue to improve real-time analysis on the ESG rating of a portfolio, allowing investors to make more informed decisions.
Today’s investors are passionate about exchanging dollars for a difference. Being profitable, saving money, and the planet are all part of every investor’s ESG dream.
Investors should start conversations with their advisors about the optimal diversification of ESG funds, accounting for the best possible risk/return of their overall portfolio. Investors should cross compare their choices and find out which plan is best for them.
The future of ESG investing will demand accountability and the ability to make a solid connection between the investment of capital and the creation of a real change in our environment. This change will transform not only the future of ESG investing, but also mainstream investing and, therefore, investments in global capital markets. If done well, ESG investments can create a domino effect for all future investments.
ESG principles are crucial for every company and investor out there. With the rise of innovative technology and increased preoccupation with our environment, we urge every business to consider how Climate Intelligence can help support ESG principles, and ultimately reduce the carbon footprint.
Every company should consider ESG principles in their business plan. Only then will our investing practices accomplish their promise to transform the world, environmentally, socially, and governance-wise.
Learn more about Sepoint’s Climate Intelligence solution here: https://www.setpoint.ai/Contact