Cycle Capital Pioneers Impact & ESG Reporting in Venture Capital
As an impact investor and leading cleantech venture capital investment platform, we’re excited to share our 2020–2021 Impact and ESG report. This first report, which measures Cycle Capital portfolio companies’ impact, is a pivotal data asset in our mission to empower entrepreneurs, investors, and companies to find innovative solutions to the major ecological challenges facing humanity.
COP26 ended with the Glasgow Climate Pact aimed at operationalizing the Paris Agreement which should mean an acceleration to a net-zero scenario. In this context, we now need to define the role of private capital — including venture capital and private equity — in the net-zero transition.
Economists refer to climate change as the greatest market failure in human history because it will affect the well-being, economic development, and financial stability of current and future generations. But these ecological challenges also represent a never-before-seen opportunity and attempt to reshape the global economy. And the scale of this major disruption will affect every country and market sector.
As a matter of fact, there’s never been a better time to invest in clean technologies and green energies & infrastructures. Governments have made bold commitments over the past few years, and during the recent COP26, set ambitious targets and policies to shape a nurturing ecosystem for enabling climate investments. Investors are actively discussing and exploring opportunities that this industrial and environmental transition will create. Boston Consulting Group estimates that the transition to a net-zero economy presents a historic investment opportunity requiring an estimated $100–150 trillion USD over the next 30 years — roughly $3–5 trillion annually. As this capital will not come strictly from public institutions, and private investors have a key role to play.
As incumbent technologies are insufficient to reach the emissions reduction targets that need to occur post-2030, we absolutely need to validate and scale emerging innovative technologies in this decade to deploy them at scale between 2025–2030. This bodes a bright future for our industry, given venture capital and private equity firms’ ability to discover, back, and scale innovative solutions, but also to support founders, de-risk, and close the technology gap, in the global decarbonization of the energy, mobility and industry sectors. It is up to us to seize the opportunity and move from vision and ambition to action and execution.
At Cycle Capital, we strongly believe that public and private investors need to work side by side to effectively finance the transition to a decarbonized economy. Sustainable finance needs to become the new norm, and in doing that, a common language and recognized standards must emerge in order to measure, track, and reduce greenhouse gas (GHG) emissions in private investments. We are seeing regulations on climate disclosures slowly evolving in North America, but unfortunately not at a fast enough pace, putting our industry at risk of missing out on opportunities. While Europe is actively deploying sustainable finance disclosure regulations that are contingent on access to capital, North America and Canada need to adopt global standards, deploy tools, and adopt methodologies that will support this transformation, including in our asset class. Right now, even though there’s a lot of ambition, not a lot of private VCs and PE funds are able to quantify the carbon footprint and impact of their portfolio.
With that in mind, we are excited to present our first impact and ESG report. Our efforts are a work in progress, but we hope that this report will have a snowball effect on our industry.
To consult our Impact and ESG Report on our impact page: https://lnkd.in/e3eJX4YH