Hi and welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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Treasurers bite back
Fourteen State Treasurers, managing the pensions for millions of people, hit back against the far-right’s anti-ESG efforts in a letter last week, calling recent bans on considering climate risk in investing “a backlash response on behalf of political and corporate interests.” They go on to state that these bans increases potential risks, which ultimately will be “borne by the taxpayers.”
Oregon State Treasurer Tobias Read went a step further, blasting these efforts in a New York Times op-ed: “For people in my position to actively avoid information about such profound risks is a breach of their duty as a fiduciary.”
Highlighting the risks, S&P noted last week that over 90% of the world’s big companies will see an asset take a loss due to climate change – and for a third of those companies, that loss will exceed 20% of the asset’s value.
Perhaps not wanting to stick its head in the sand any longer, asset manager Federated Hermes is backing out of the State Financial Officers Foundation, which championed many of the anti-ESG rules at the state level. The move comes after huge pressure from campaigners, pension funds, and regular people.
A superstar and a scorecard
Big news last week in private equity land. Kim Kardashian launched a private equity firm with an ex-Carlyle partner! Even bigger news, the industry is flunking on climate risk. Private equity firms invested over $1 trillion in energy since 2010, with the lion’s share in fossil fuels, according to the Private Equity Stakeholder Project and Americans for Financial Reform.
The big guns are doing badly – Carlyle got an F, Warburg Pincus and KKR both got a D. These firms are still investing billions in dirty energy despite their climate commitments – and they’re not planning to break up with fossil fuels anytime soon.
The failing grades are part of a new initiative from non-profits and think tanks analyzing the industry, with more reports, analysis, and exposés to follow. Reach out if you’d like to know more.
Magical creatures
Terawatt Infrastructure, a company which makes charging stations for commercial electric vehicles, raised over $900 million in new funding. The firm is the latest of nearly 50 climate tech companies since 2015 to reach “unicorn” status by raising over a billion dollars.
Biden’s Inflation Reduction Act – with its $369 billion in new climate spending – is no doubt helping juice the deals, demonstrated by Goldman Sachs recently taking a majority stake in storage and inverter maker Cleanhill Partners.
Elsewhere, Energy Impact Partners raised nearly $400 million for a new European-focused VC fund. The group specializes in drawing investors from legacy, high-emitting industries like the utility and oil sector, and is a way for these firms to get in on next-gen technology, theoretically helping them transition to a lower-carbon economy.
Committee Republicans threatened lawsuits and claimed that small businesses and farmers would be unfairly affected by climate disclosure. Gensler correctly noted that only publicly-traded companies would be responsible for emissions reporting and small businesses and farmers would “not have any obligation” under the proposed disclosure rule.
Beyond the SEC, the Sierra Club has a new roundup describing what other US financial regulators – including an acronym soup of agencies and the Fed are doing – and what they should be doing on climate.
Fossils firing inflation
Recent analysis from TransitionZero, Roosevelt, and Oxford shows the role of fossil fuel energy in driving inflation and how renewable energy is getting cheaper and deploying faster than anticipated. The groups are holding a press conference this Thursday, with a focus on how policymakers can tackle the energy crisis and bring inflation under control. Reach out for details.
Confused about the energy loan programs in the Inflation Reduction Act? Jigar Shah explains.
Selected NYC Climate Week events
Sep 20:
Green Banking at Scale: Reps from four state green banks join Sen. Markey and Rep. Dingell for a talk on implementing the $27 billion in new IRA funding. Part of Climate Week. Register here.
