Capital and the Climate Revolution: Jim Coulter on the Scale, Scope, and Complexity of Climate Investing

In our latest edition of The TPG Take, we sit down with Jim Coulter, TPG Co-Founder, Executive Chairman, and Managing Partner of TPG Rise Climate, to discuss his perspectives on the climate investing market, the challenges and opportunities that the growing investing landscape presents, and the important role that he sees capital playing in combating climate change.

On the Climate Investing Journey: "This is arguably the largest collective human undertaking within a 30-year period that we've ever seen. We're essentially rewiring major parts of our economy and our lifestyles to recognize that we had all been playing with an externality that we just didn't know was there. We need to fix that. We need to fix that now. And the scale, scope, and timing of that will be huge and extended.

One thing that's abundantly clear is, as complicated as you think this is, it's more complicated. There is no silver bullet. There's silver buckshot. There's an entirely new set of business models and technologies that need to be deployed. They need to be deployed at a scale we haven't seen before. And we're in the very early steps of what is going to be an important, complicated, and truly interesting journey."

On the Scale and Scope of the Climate Opportunity: "The scale and scope of this opportunity and the scale and scope of the issues that we need to address as a society are even larger than we expected. This only makes me more excited about the role we can play in wiring up the feedstock of this revolution. The feedstock of the climate revolution will be capital.

I think our minds have been trained on the technological revolution. The technological revolution was dominated by software and capital played a much smaller role. If you had an idea, the Internet had already been built and it was delivered to you for free. It's very different to build scale plants with steel in the ground, with physical goods delivered on a physical infrastructure. We're rewinding the entire industrialization of the country under a carbon-based economy. The capital needs of that are substantially larger than people have come to understand.

We think the number is about $6.5 trillion per year that will be spent on energy transition over the next 10 to 15 years, every year. And if you think about that, if 20% of it happens in the private market, the private market spending on energy transition will be bigger than the entire private equity industry is today."

On the Complexity of the Climate Question: "I feel the market has greatly underestimated the complexity of the climate question. We often look to solar and wind. That's one small piece of the climate equation. We track over 80 different subsectors at TPG Rise Climate, each of which interact with the other in a way that helps to build climate solutions. We've met with hundreds of companies attempting to deliver those solutions in any number of situations. That complexity is an enormous challenge for investors. It's also an enormous opportunity because if you can sort your way through it, if you can build the knowledge base, and build the experience, you can differentiate yourself for your investors and you can lead the market towards the solutions we really need."

On the Power of And: "In the midst of the complexity of the climate crisis, we've found our grounding in two concepts. The first is, 'and not or,' which is this idea of focusing on great investment returns that also take carbon out of the atmosphere and doing that with a rigor and an excellence that will drive future opportunities by having driven historic returns. And the second, which is really important to the TPG culture, is that it's about show, not tell. There's a lot of telling going on around the world of climate because it's such an important issue that people feel the need to talk about it. We want to encourage that need. But while that discussion is going on, our focus is on action: making sure that we deliver for our investors, that we deliver for our companies, and that we build a portfolio that will show the world that you can deliver 'and not or.'"

In Other News & Views...

We also want to "circle back" to share other recent insights from our ecosystem, senior leaders, and investing professionals that you might have missed.

In our series Partnerships in Focus, we hear directly from leaders across the TPG portfolio and ecosystem. We recently caught up with Razat Gaurav, CEO of Planview, to discuss the massive change organizations are facing today, and the ways in which we’re partnering to drive innovation-based growth.

Watch TPG GP Solutions Co-Managing Partners Michael Woolhouse and Matt Jones share their perspectives on the state of the GP-led secondaries market, what makes it an attractive market for investors, and where they see it heading in the future.

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