“From January through November 2020, investors in mutual funds and ETFs invested $288 billion globally in sustainable assets, a 96% increase over the whole of 2019. I believe that this is the beginning of a long but rapidly accelerating transition – one that will unfold over many years and reshape asset prices of every type. We know that climate risk is investment risk. But we also believe the climate transition presents a historic investment opportunity.”2021 letter to CEOs, Larry Fink, Chairman and CEO BlackRock Investments, Jan 2021
There is no company or individual anywhere which will not be profoundly impacted by the transition to a net zero emissions economy. Today, investors have finally gotten comfortable with that fact. The pace of sustainable investments has accelerated dramatically, and so has the pace of adoption of sustainable products.2020 hit multiple new records for global investment in energy transition, despite the existence of a global pandemic.
For the first time ever, annual investment in decarbonization passed a half a trillion dollars as companies and governments put record sums of money into everything from renewable energy capacity ($303B) to electric vehicles and charge infrastructure ($139B), energy efficient heat pumps ($50B), storage technologies ($3B) and more.
On June 10th, 2021, Bloomberg reported that a cumulative $3T in sustainable debt has been issued. It had taken 12 years for the first trillion to be issued, two years for the second, and just 8 months for the third. This is significant because debt is typically used to finance infrastructure.
In 2019, $16B was invested in climate-tech companies, representing 6% of the VC pie that year and growing at an annual rate of 84%. $60B has been invested cumulative since 2013, growing 3,750% since then. Investors have been richly rewarded. Today, there are 43 climate-tech unicorn companies.
Similarly, this month the number of passenger EVs on the road hit 12 million, globally. 1% of the vehicles on the roads on planet Earth are now electric. 70% of those vehicles were sold in the last three years. EVs have hit the “hockey stick” curve, as the number of vehicles on the road is now doubling every 18 months.
Businesses in many markets are approaching the climate transition inflection point now. Sustainability has become a business opportunity, and not just an ESG “speed-bump” that must be managed.
There is still much to be done. But what’s happening is encouraging.