Businesses focused on sustainability and mitigating climate change now have a big new pool of money to draw from as the private equity giant TPG said it raised an initial $5.4 billion for its latest climate-focused fund.
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The massive investment firm is now using the same tools that propelled it to a $93 billion investment giant to back businesses focused on reducing the emissions it had helped to generate.
Capped at $7 billion, the TPG Rise Climate fund will be among the largest private equity vehicles focused on climate change in the world.
In all the bigtime investment firm now manages over $11 billion across its TPG Rise platform, which has a focus on impact investing aligned with sustainable development goals.
It’s a massive number for a fund that was only launched near the beginning of the year.
Managing the investment vehicle are two longtime investment pros — Jim Coulter, a founding partner and the executive chairman of TPG, and former US Treasury Secretary Hank Paulson.
In a statement, the firm said it would focus on infrastructure, clean energy, decarbonized transportation, industrial decarbonization and sustainability, and agriculture and natural solutions.
“It’s a time of both peril and possibility. Climate change is a societal risk but also a generational investment opportunity,” said Coulter. “Leveraging our deep experience in impact investing, we believe TPG Rise Climate can play a positive role in catalyzing capital to combat climate change.”
Some of the biggest money managers and pension funds in the world, including Allstate, AXA, The Hartford, Ontario Teachers’ Pension Plan Board, managing more than $3 trillion in global assets, committed to the ew fund.
The new fund also includes support from some of the world’s biggest industrial companies.
These businesses, including 3M, ADM, Allianz, Allstate, Alphabet, Apple, AXA, Bank of America, Boeing, Dow, Exor, FedEx, GE, General Motors, Honeywell, NIKE, Smithfield Foods, and Sumitomo Mitsui are forming a new “Climate Coalition” that will meet regularly to share best practices and collaborate on investment opportunities.
“From environmental goals to reduce water use, improve water quality, and achieve carbon neutrality, to our ongoing investments in emerging technologies that advance sustainability, 3M is committed to making a difference in the trajectory of climate change,” said Gayle Schueller, Senior Vice President and Chief Sustainability Officer, 3M, in a statement. “We continually build and add to our external partnerships to bring together people, ideas, and science, reimagine what’s possible and help solve the world’s greatest challenges.”
These commitments are a drop in the bucket compared to the scale of the problem, but any step forward is just that… a step forward. In all, the world will need to mobilize roughly $6 trillion in investment capital annually between now and 2050 to adequately address the energy transition and greenhouse gas removal initiatives that are required to stave off the worst effects of climate change.
For the investors in the climate fund, these aren’t just social concerns, but issues that have a clear effect on businesses’ bottom line. Insurance companies like Allstate lose money when they have to pay out because of a natural disaster. And natural disasters effect everything from food supply chains to the ability to manufacture semiconductors because of water shortages.
“TPG Rise Climate includes a unique group of global institutional and corporate investors that are united by capital, innovation, and accountability,” said Paulson. “This new blend of capital and broad commitment to action is a meaningful acknowledgment of the opportunity to make a difference in the trajectory of climate change.”
The Rise fund has already invested in Matrix Renewables, which develops renewable solar energy projects; Element Markets, a developer of renewable natural gas infrastructure; Green Monday, which makes and sells a variety of meat alternatives and plant-based meals across Asia; Rad Power Bikes, the largest e-bike manufacturer in the U.S., and Wilderness Holdings, an eco-tourism company and preserve in Botswana.