A group of entrepreneurs and international investors have launched a “climate endowment” as an urgent response to the global climate change crisis.

The aim of the climate endowment, which will be launched in autumn 2019, is to enable institutional investors to allocate more of their huge capital stock in renewable energy, new mobility, and related cleantech assets.

Its founders plan to get commitments from the public and private sector to achieve a size comparable to the large US endowments with approximately €20-40bn of assets under management (AUM).

The climate endowment will focus on illiquid investments in sustainable and commercially viable technologies and business models resulting in strong reduction in global CO2 emissions.

It will invest in the champions of the “Green Industrial Revolution”, capturing global market forces at the intersection of the energy, transport, finance, agricultural, artificial intelligence (AI), IT, education and health, economic transition.

“The shifting tide of public opinion on climate protection has reached a critical mass – the recent EU elections, as well as unprecedented ‘Friday for Future’ protests, has signalled a clear demand for a green revolution”, said Jochen Wermuth, founder of Wermuth Asset Management GmbH and initiator of the climate endowment.

“I believe there has never been a better time than now for the investment community to step forward and initiate this change.”

Dr Mariana Bozesan, co-founder and board member AQAL AG, full member International Club of Rome says “AQAL’s mission is the implementation of the UN SDGs within Planetary Boundaries. We only have eleven years left to fulfill the Agenda 2030, and we are convinced that transformation is feasible. The climate endowment is the most significant stepping stone at this point in time.

Will others follow suit?

With plans announced by the government on June 12, to cut UK carbon emissions to almost zero by 2050, climate change is an issue too big to ignore.

In a series of interviews with the Association of Investment Companies (AIC), investment company managers told the AIC what they were planning to do with their clients about the issue of climate change and how in general it is shaping investor opinion.

Mark Whitehead, portfolio manager of Securities Trust of Scotland, says: “Whether we like it or not, every investment decision we now make needs to account for the effects of climate-related change. For long-term investors like us, modelling climate-related impact becomes even more relevant considering the multi-decade trajectory of global warming.

“Widespread scientific consensus acknowledges that within the next 30 years global temperatures will be higher than human beings have ever experienced. Meanwhile, CO2 concentrations are at levels last seen over three million years ago and it is currently possible that by the end of the century the world will be 4°C warmer than pre-industrial levels.”

Paul Niven, Fund Manager of F&C Investment Trust, says: “Of all the ESG issues we consider, climate change is one of the most important, both in terms of the scale of potential impact and in how widespread this impact could be across sectors and regions.

“In 2018 F&C Investment Trust disclosed its carbon footprint, in line with the recommendations of the Task Force on Climate-related Financial Disclosures. This measures the amount of greenhouse gas emissions produced by each investee company, per US$1m of revenue they generate.

“This is then aggregated for the trust as a whole, using the portfolio weights of the companies, and compared with the benchmark. The carbon footprint is a measure of the carbon intensity of the companies we invest in. Whilst it does not provide a full picture of climate risks, it is a valuable starting point both for analysis and for shareholder dialogue.”

Further reading on this topic:

How financial services must ‘go green’