US$19.4 billion
That’s how much money two new investment funds are committing to fighting the climate crisis. On Tuesday, Brookfield Asset Management announced that it raised US$7 billion for its venture capital fund meant to fuel the shift to a carbon-free economy. The Global Transition Fund—co-managed by Brookfield CEO Connor Teskey and Mark Carney, the firm’s vice-chair and head of transition investing—is now the largest fund aiming to cut global emissions. U.S. firm TPG announced US$5.4 billion for its Rise Climate fund, co-founded by U2 frontman Bono and the second-largest pool of private capital in the space, second only to Brookfield’s.
Brookfield and TPG are eyeing final closes of US$12.5 billion and US$7 billion, respectively. Both funds plan to raise the remaining money by the end of the year.
Who’s paying? Ontario Teachers’ Pension Plan Board (OTPPB) and Singapore’s sovereign wealth fund Temasek committed “significant capital” to Brookfield’s fund. (The asset manager didn’t break down the contribution amounts from limited partners.) Other backers include Canadian pension funds PSP Investments and Investment Management Corporation of Ontario. OTPPB and PSP also contributed to TPG’s fund, along with a spate of private corporations, including Alphabet, Apple, 3M, FedEx, Boeing and General Motors.
Where’s the money going? Brookfield plans to fund companies working to reduce greenhouse gas emissions and energy use, and those “increasing low-carbon energy capacity.” It offered little additional detail on how it would select portfolio firms. TPG, meanwhile, said it is seeking firms that “can enable carbon aversion in a quantifiable way,” including looking at how many tons of greenhouse-gas emissions are avoided per dollar invested.
Why now? Carney—who’s also the UN special envoy on climate and finance—has called the Paris Agreement goal to reach net zero the “greatest commercial opportunity of our time.” In a release, he said capital fuelling the transition is “expanding faster than originally expected.” Public money is also wading into the space, but has been less focused on potential returns. Canada’s Environment Minister Jonathan Wilkinson and German state secretary Jochen Flasbarth are helping lead a global initiative to deliver US$100 billion a year in climate financing for developing countries. In Canada, the BDC Capital, a federal Crown corporation, has committed to invest $600 million by 2022 through its Cleantech Practice, a fund meant to boost an industry that private investors had deemed too risky. The new Brookfield TPG funds, however, point to a growing appetite among private firms to take on the climate crisis.
