Climate Technology Finance

Very excited to share my latest piece from Forbes, focusing on the business case for climate adaptation. Many thanks is due to Benjamin Zehr (Reciprocal), Tamer El-Raghy (Acumen Resilient Agriculture Fund (ARAF)), Alina Truhina (The Radical Fund) and Emilie Mazzacurati (Tailwind) for lending their time and insights for this article. If anyone is developing a fund, studio, accelerator, etc. focusing on climate adaptation, I would love to hear from you. Here's the TLDR: - We need to meticulously build the business case around climate adaptation. For years we rarely talked about adaptation because it would constitute “giving up”. After-all, why adapt to a warming planet when renewable energy, electric vehicles and carbon capture technologies can limit global warming? - However, as the planet becomes hotter, and staying below the 1.5 C threshold is less likely, we have to adapt. But the adaptation funding gaps are enormous, over 300 BN annually according to some, and potentially over 1 TN according to others. - There is no single explanation for the gap, but we know at least a few key reasons: 1) Adaptation tends to be highly localized, so finding one-size fits all approaches that can scale globally can be a challenge in investors' eyes. 2) Pipelines of adaptation-focused companies are nascent and still growing in many parts of the world; 3) Perceived low returns on investment - many investors still think adaptation solutions are public goods, which yield low or no returns; 4) Impact measurement hurdles - unlike mitigation, there is no single "north start" or success indicator for adaptation. So how do we start building a business case? 1) First, we have to educate the market. For a while we did not discuss adaptation, so there is a time lag we are fighting against. Many people when they hear "climate investment” and “climate technology” still think of energy and mobility. 2) Second, we need to think beyond venture capital - many different types of capital need to be used to fund adaptation - grants, debt, ETF's, etc. 3) Third, we need to be comfortable with not having a single metric that represents adaptation impact. Just as adaptation solutions are often highly-localized, many will have a unique theory of change. 4) Fourth we need to look at new company building models like venture studios/builders. We need to make sure we're building a pipeline that not only attracts investors, but is sustainable and durable, standing the test of time. 5) Fifth, we need to know where demand will be most predictable and bankable. For example, large corporates will likely have growing demand for adaptation solutions. 6) Lastly, we may need to stop using the term “adaptation” as an asset class or business vertical. Adaptation has far too many dimensions and use cases to be lumped under one heading. Many thanks again to the amazing experts who lent their time here, and would love to hear any and all comments!

New research from the Cambridge Institute for Sustainability Leadership (CISL)), with risk analysis from global insurance group Howden Group Holdings, demonstrates the transformative economic efficiency of risk-sharing systems to provide vulnerable countries with financial security from climate related disasters. The smallest and most vulnerable countries risk losing over 100% of their GDP from extreme climate shocks next year, according to the findings, which underlines the scale and severity of the risks faced by the Global South. Small Island Developing States (SIDS) and other vulnerable countries bear these overwhelming threats almost alone. This can be solved. The report, which models Loss and Damage (L&D) implementation, reveals these risks are insurable and proposes a solution using the power of (re)insurance and capital markets to dramatically scale up the impact of L&D funding. The modelling shows that the intolerable financial risks faced by this group of countries could be reduced to just 10% of GDP. The research outlines an action plan for L&D implementation across 100 less developed, climate vulnerable countries. It proposes leveraging donor funding to unlock vast sums from (re)insurance and capital markets to provide guaranteed financial protection to exposed communities now, and through to at least 2050.  https://lnkd.in/e-tX4AsP

New Nature Finance Series Idea? “Boring = Sexy” – Insurance Edition 🔥📉➡️📈 Insurance isn’t the flashiest topic. But here’s the thing—boring is what gets the big money moving. 💰🌍 And nature needs that 💰 💵 💰 . Right now, one of the biggest barriers to scaling nature-based solutions isn’t the projects themselves—it’s risk. Investors worry about carbon credit integrity, natural disasters, regulatory changes… and without a safety net, a lot of them just won’t commit. ❌💸 That’s why this new wave of insurance innovations is such a big deal. This article highlights how warranties on carbon credits, parametric insurance for natural disasters, and risk-sharing tools are quietly making nature finance investable at scale. 📑🔐 Why does this matter? 👉 It gives investors confidence—Less risk means more capital flowing into nature. 🌱💵 👉 It unlocks institutional money—Pension funds, banks, and asset managers need guardrails before they go big. 🏦📊 👉 It makes nature an asset class—When nature investments can be insured like infrastructure or real estate, they stop being “impact” and start being “mainstream.” 🚀🌿 This is how we turn billions into trillions for nature. More boring, please. 😏 Anyone seeing other insurance innovations to accelerate nature solutions? 👀🔥 #NatureFinance #climatefinance #InvestingInNature #ClimateSolutions #Insurance #ScalingImpact Hari Balasubramanian Patricia Zurita Samuel Gill Link to article: https://lnkd.in/eJDZVZaj

🌍 Reflections from Davos 2025: Collaboration, Capital, and Building a Nature-Positive Future Returning from Davos this year, one theme stood out clearly: we’re not lacking solutions to the climate and biodiversity crises—what we’re missing is collaboration, coordination, and the capital required to accelerate change. 🚨 The Collaboration Gap: A critical issue that came up repeatedly was the siloed approach still dominating the investment and environmental sectors. Too many investors continue to operate as if nature, biodiversity, and climate can be addressed independently, but the truth is that nature will always hold us accountable—whether today, tomorrow, or for future generations. Another major challenge is the persistent funding gap, often referred to as the "valley of death." Climate and nature-based solutions that now exist, are struggling to secure the capital needed to scale beyond the early stages of venture funding. Companies that have progressed past Series A or B encounter a critical shortfall in investment required to transition from growth-stage innovation to large-scale deployment. This funding bottleneck remains one of the greatest barriers to achieving impact at scale. 🌱 Nature Positive: A Global Goal The concept of “Nature Positive”—halting and reversing biodiversity loss—has emerged as the equivalent of the Paris Agreement for nature. While we’ve made technical progress, the larger barriers lie in people-centered challenges: governance, compliance, monitoring, and unlocking innovative financing models. The question isn’t what needs to be done—we know that. The challenge is how we build the systems to make it possible socially, economically, and at scale. 💡 Key Takeaways from Davos: 1️⃣ Collaboration is essential. We must move beyond working in silos to unlock the full potential of climate and nature-based solutions. 2️⃣ Addressing the "valley of death" of funding is critical to bridging the gap and enabling solutions to reach the scale needed to drive meaningful impact. 3️⃣ Governance, compliance, and financing must evolve to support a Nature-Positive future. Davos 2025 was a powerful reminder that the ambition and ideas already exist. Now it’s about building trust, forming partnerships, and committing to collective action. How are you addressing these gaps in your work? I’d love to hear your thoughts. 🌊 #Davos2025 #NaturePositive #CollaborationForAction

More than 90% of #ClimateFinance is directed toward mitigation, while frontline communities, especially women, remain dangerously exposed to escalating climate shocks — without the tools to prepare for them or bounce back once they've hit. In Economist Impact, I wrote about the critical link between climate resilience and financial resilience, particularly for women. It’s time to rebalance the conversation around climate finance. Consider this: 1. Less than 10% of total climate finance supports resilience, and far less reaches women. 2. Women are 14 times more likely than men to die in climate-related disasters. 3. 880 million women lack access to digital payments, cutting them off from emergency relief when they need it most. Access to basic #FinancialServices — payments, savings, credit and insurance — are no longer a "nice to have." They are a strategic imperative. If we are serious about climate adaptation and economic stability, we must put women’s financial access at the center of the conversation. Read more: https://lnkd.in/eBFtY6VE

What would you do if your business's financial health depended on the weather? That’s not just a hypothetical. Increasingly, climate risks are reshaping how lenders assess the creditworthiness of businesses. Here’s why that matters and what it could mean for your bottom line. Let’s start with a simple truth: Not all loans are created equal. Loans backed by physical assets like commercial real estate tend to have higher recovery rates in case of default. Why? Because there’s a tangible asset something with value to recover, compare that to unsecured loans, where lenders are often left empty-handed if things go south. Now, Layer climate risk onto this equation. Imagine A factory located in a region prone to floods or hurricanes. The more vulnerable the location, the greater the risk that the physical asset could be damaged or even wiped out by extreme weather. That could significantly lower the recovery rate for lenders, turning what might have been a manageable risk into a major financial headache. This is where ESG (Environmental, Social, and Governance) maturity comes into play. Companies with robust climate risk strategies those proactively safeguarding their operations and assets are better positioned to weather the storm. But here’s the kicker: those that aren’t? They might face higher borrowing costs or even find themselves cut off from certain financial institutions altogether. According to the Global Risk Report 2024, climate-related risks are now among the top global risks over the next decade. And in finance, these risks translate directly into higher LGD (Loss Given Default) estimates. For borrowers, this means two things: 1) You’ll pay more to access capital if your ESG profile isn’t up to scratch, 2) You might need to rethink your climate strategy not just for the planet, but for your financial survival. From my perspective, this isn’t just about risk mitigation. It’s about staying competitive in an evolving market. Financial institutions are becoming more selective, and businesses need to adapt. By improving ESG maturity, companies can not only secure better loan terms but also position themselves as resilient players in a world where climate risk is no longer a distant threat but a present reality. The bottom line? Climate risk isn’t just an environmental issue it’s a business issue. And how you respond could make all the difference. What steps is your business taking to adapt to this new financial landscape? Let’s discuss this in the comments. ⬇️

Cities produce 70% of carbon emissions and consume 80% of energy. But most still can’t get a loan to build climate infrastructure. Because the global financial system — created in 1944 to govern the post-WWII order, when less than a billion people lived in cities — wasn’t designed for them. Today, that number is over 4.4 billion. More than half the world's population now lives in cities, and that share keeps growing. Mauricio Rodas knows this firsthand. As mayor of Quito, Ecuador, he had to fight for national approval just to fund a subway. He built it anyway. On time. On budget. In three years. And now he’s working to change the system that made it so hard in the first place. Mauricio co-founded the SDSN Global Commission for Urban SDG Finance to help tackle that challenge by convening mayors, development banks, and private investors to shape a financial system that cities can access to scale climate solutions. Here’s the playbook he’s helping shape: ✅ Engage Multilateral Development Banks (MDBs): These institutions must create instruments designed for cities, not just countries. That means guarantees, concessional financing, and technical tools that cities can actually access. ✅ Partner with Private Sector Banks and Investors: Cities must become investable by building trust, showing strong project pipelines, and using de-risking tools like the proposed Green Cities Guarantee Fund. ✅ Change the Global Rules: The financial system was built for nations. It must evolve to reflect the reality that cities are central partners in the climate challenge — and ensure they can access capital on their own terms. The question mayors everywhere are wrestling with is: How can cities lead the climate transition if they still have to ask for permission to fund it? On the latest episode of Supercool, Mauricio joins me to talk subways, public luxury goods, institutional entrepreneurship, and what it will take to unlock capital so cities can scale real climate solutions. We created this episode in partnership with the Penn Institute for Urban Research at the University of Pennsylvania, which serves as the Secretariat for the Global Commission. 🌐 Listen here: https://lnkd.in/guCEZwky

🌱 Climate Tech Trends of 2024: A Pivotal Year of Transformation and Resilience 🌍 As 2024 comes to a close, the climate tech ecosystem reveals a more reserved venture landscape. This was particularly felt in the "Valley of Death," the relative lack of funding available for Series A/B rounds (especially for first-of-a-kind, "FOAK" technologies) -- tech often too expensive and high-risk for VCs but also too experimental (and too high-risk) for PE. The Valley of Death intensified this year, with only 10% of deals at Series B stage. (That being said, there are great funds uniquely dedicated to climate tech at these critical stages, and CVCs like Woven Capital, Toyota's Growth Fund tend to fund later stages, so hope remains!) 1. The Climate Tech Funding Landscape According to PwC's State of Climate Tech 2024 report, global climate tech investments decreased by $23 billion globally, shrinking from $79 billion in late 2023 to $56 billion by Q3 2024. This decline in venture funding reflects the broader VC trend of decreased capital flowing into startups across all industries, a steady decrease since the 2021 peak. 2. Financing Dynamics The PwC Climate Tech Report highlights the following critical transformation in funding structures: - Hybrid capital models now constitute 42% of climate tech financing -- reflecting increased diversification in capital stacks. - Non-dilutive funding (grants, government incentives) increased to 23% of total investments. - Longer times between rounds: median funding rounds extended to 22 months between raises, compared to 16 months in 2022. 3. Tech Trends Renewable Energy Innovations - Energy tech remained strong (the most-invested-in climate tech vertical), increasing to 35% of total funding - Solar efficiency reached 30.2% in commercial panels (National Renewable Energy Laboratory) - Long-duration energy storage costs decreased by 37% year-over-year (International Energy Agency (IEA) Global Energy Report) Industrial Decarbonization Milestones - Green hydrogen production costs dropped to $1.87/kg in select markets (International Hydrogen Council) Carbon capture technologies now achieve 92% capture rates at commercial scale (Global CCS Institute) Impacts of AI - AI climate tech saw and increase of >2x -- rising to 14.6% in 2024 from 7.5% in 2023. Top verticals include autonomous vehicles, smart energy systems, and agricultural innovations. - Key areas to watch in 2025 are AI applications to EVs -- and EV venture funding, given the uncertainty of the IRA as we head into the new U.S. political administration -- as well as power grid stability in the global south. 4. Climate Tech Investment Sector Breakdown by Geography North America: 45% ($35.3B) Europe: 32% ($25.1B) Asia-Pacific: 20% ($15.7B) Rest of World: 3% ($2.3B) Check out the PwC report here: https://lnkd.in/dYVY-K9s. #ClimateTech #VentureCapital #Sustainability #ClimateInnovation

🌍 The $14.7B Climate Tech Surge: Why #Investors Are Paying Attention #PEmay be sitting on $3.6T in unsold assets, but #VC is doubling down on #climatetech. The latest PitchBook report shows a 15% YoY increase in climate tech funding, even as the number of new startups declines. Why? Investors are prioritizing scalable solutions with strong returns. 📊 Key insights from the 2024 VC Emerging Opportunities Report: ✅ Carbon Tech, Industry, and Built Environment are leading in startup activity. ✅ Returns remain strong (23.8% expected annualized) — climate tech is no longer just impact-driven; it's a high-growth investment class. ✅ Investor participation is diversifying, signaling bigger institutional bets on sustainability. 💡 Notable Climate Deals: 🔹 Solfácil ($170M) – B2B2C solar fintech scaling sustainable energy access in #LATAM. 🔹 VEMO ($63.7M) – Electric mobility infrastructure in #Mexico. 🔹 Pulpex ($78M) – Sustainable packaging technology disrupting CPG. 🔹 CarbonQuest ($20M) – Distributed carbon capture technology. 🔹 Resynergi ($18M) – Circularity-focused startup leading waste-to-energy innovation. 🔹 Glacier ($7.7M) – AI-powered robotics tackling the recycling crisis. 🔹 Mitico ($4.3M) – Next-gen carbon capture technology. 🔹 Pexapark – Acquired RenewaFi, the fastest-growing clean energy marketplace in Texas. Sustainability isn’t just an #ESG checkbox—it’s a massive market opportunity. The firms that recognize this shift now will be the ones shaping the next decade of investing, especially in #emergingmarkets. 📊 Image: Climate Tech Overview (PitchBook, 2024 VC Emerging Opportunities Report, Page 43) #ClimateTech #VentureCapital #ImpactInvesting #Sustainability #CarbonCapture #CircularEconomy #AIforGood #GreenInnovation #FutureOfInvesting #TechForGood #ESGInvesting #ManosCapital

University of California, Berkeley, Goldman School of Public Policy put out an astounding 200 page report today describing the state of the REDD+ carbon market. It contains some incredible work covering nearly every aspect of Verra's program. The executive summary contains some of the most valuable high-level insights: "considering all evidence together, our overall conclusion is that REDD+ is ill-suited to the generation of carbon credits for use as offsets. The logic of the voluntary carbon market is to create a financial incentive for private actors to find the lowest-cost carbon emissions reductions and removals. But all decision-makers involved in the creation and use of carbon credits benefit financially from excess crediting. The methodologies used to estimate project benefits and credits awarded are developed by companies and organizations that go on to use them to develop projects and sell credits. Developers benefit from selling more credits for doing less, credit buyers seek inexpensive credits, and the auditors tasked with ensuring quality have conflicts of interest because they are hired directly by the project developers. Verra itself competes for market share with the other carbon credit registries. High levels of over-crediting come from the compounding of decisions made throughout the carbon credit lifecycle, all of which lean toward generating more credits." https://lnkd.in/gknavXVh It is important to note though, that this is only one carbon project type, and that these broad strokes don't necessarily correspond to every REDD+ credit. There's nothing in this report to discredit the concept of native reforestation or true forest conservation as a tool to fight climate change. Nevertheless, dramatic changes to Verra's REDD+ system are needed in order for it to be successful in the future. These include: - Fundamental shifts who's getting paid by who (verifiers paid independently and financially incentivized to find flaws) - Who's doing the calculations (maps and models made public and sourced from academic institutions) - Minimums on where money should end up (at LEAST 50% should always end up directly in the pocket the people living in and around these projects). - Genuine transparency (public maps, public disclosure of carbon pricing, public budgets, public project location kmls!) - Truth and Reconciliation about fraudulent past credits and human injustices in existing old projects. A simple redesign of the baseline system as proposed by Verra's new JNR methodology is not going to be sufficient to deal with these systemic issues. The non-specific guidelines of the ICVCM's Core Carbon Principals also don't strike me as being enough to reform the program. They can be interpreted too broadly. Myself and some of the other scientists at Renoster are working on our own little cookbook for how to fix REDD+ for release in a month or two.