Climate Finance: Investors Joining Greta's Call for Action

Sheridan Tatsuno, co-founder, OneReality.com, Climate Games?

February 26, 2020 update

Greta Thunberg's criticism of climate inaction at the UN raises questions for all of us in business and government. Why aren't funds shifting to renewables and clean technologies? Why are we using the same old thinking and technologies to address climate action? Why aren't we using the latest exponential technologies -- VR/AR, IoT, AI, blockchain, cloud, etc. -- to leapfrog, accelerate and achieve exponential results in climate monitoring and solutions? We landed on the moon in ten years using rudimentary computers. Why can't we slow global warming by 2030 using improved policies, geoengineering and exponential technologies? Will big funds invest in these long-term ventures?

Silicon Valley is waking up to the calls for dramatic climate action. Silently on the sidelines after losing money on cleantech a decade ago due to the fracking boom, Silicon Valley companies are adding sustainability to their smart cities investments. They see huge funding opportunities being created by large pension funds, corporations and sovereign funds divesting from fossil fuels and actively seeking places to invest into renewable energies, smart grids, batteries, water management, farm tech, e-mobility and a host of new climate markets. In the last few months, the pace has picked up momentum:

2/26/20: JPMorgan Chase becomes the second major US bank to drop Arctic oil financing

• 2/26/20: JPMorgan becomes 2nd major US bank to drop Arctic oil financing. https://www.arctictoday.com/jpmorgan-chase-becomes-the-second-major-us-bank-to-drop-arctic-oil-financing/ via @ArcticToday
• 2/17/20: Jeff Bezos Starts $10B Fund to Fight Climate Change: https://www.hollywoodreporter.com/news/jeff-bezos-starts-10b-fund-fight-climate-change-1279654
• 2/12/20: Cash is flooding into ESG funds focused on responsible investing. Inflows to sustainable exchange traded funds (ETFs) rose 111% last week to $1.73 billion, the fifth week in a row after a slight post-holiday drop. https://www.bloomberg.com/news/articles/2020-02-12/the-cost-of-switching-in-an-esg-world
• 2/5/20: #Sustainability #CFOs and #accounting are the hot new careers for #climate #fund #management. https://hbr.org/2020/01/your-companys-next-leader-on-climate-is-the-cfo
• 2/4/20: Financial Times article on potential $900 billion cost of "stranded energy assets", which could evaporate if energy buyers, especially cities, which consume 80% of energy, switch to renewables. Will the energy transition be a soft landing or a hard crash like OPEC's 1973 oil shock? https://www.ft.com/content/95efca74-4299-11ea-a43a-c4b328d9061c?sharetype=blocked
• 1/29/20: The U.S. Federal Reserve announces plans to join other green central banks: https://www.bloomberg.com/news/articles/2020-01-29/powell-says-fed-is-likely-to-join-group-of-green-central-banks
• 1/28/20: Investors last year put $20.6 billion into funds focused on environmental, social and governance — or ESG — issues, according to Morningstar data, almost quadruple the record the year prior. Bank of America also estimates that in the next two decades, there will be over $20 trillion of asset growth in ESG funds, in which climate change investment is a major component. https://www.cnbc.com/2020/01/24/climate-crisis-investors-putting-money-towards-sustainable-future.html
• 1/27/20: ￡30bn pension fund: we'll sack asset managers that ignore climate crisis. Brunel Pension Partnership sets 2022 deadline for investment firms to reduce exposure. https://www.theguardian.com/business/2020/jan/27/30bn-pension-fund-well-sack-asset-managers-that-ignore-climate-crisis
• 1/21/20: Davos financial players pump US$1.4 trillion into fossil fuels, but they're under growing pressure to reinvest into renewables and EVs. https://www.greenpeace.org/international/press-release/28243/greenpeace-report-davos-financial-players-pump-us1-4-trillion-into-fossil-fuels/?fbclid=IwAR1qZuIEE1g5p6taq3GoxjllJt4PMlAtSXeglti_EuUNd_u0lwtIuRvMJps
• 1/21/20: #EU #climate #finance: EU unveils plan to dedicate a quarter of its budget fighting climate change with €1 trillion 'green deal'. https://www.independent.co.uk/news/world/europe/eu-climate-change-green-new-deal-zero-carbon-emissions-a9283501.html?fbclid=IwAR15lzTc3DSLbhzyxFhIKmX-d-CKkAU2mfgvyNe4ln3t3_zSW7b5ZT4lfNc
• 1/19/20: "Germany launched an 86 billion euro ($95 billion) plan to modernize and expand its creaky railway system, a move billed as an effort to make transportation greener. The 10-year plan is not only to upgrade rails, bridges and carriages but also build out capacity and electrify more routes so as to lure passengers from cars and planes." https://www.bloomberg.com/news/articles/2020-01-14/germany-goes-greener-with-95-billion-push-for-train-over-plane?fbclid=IwAR3efdcGTi4gyTrF4XL3tBoNP1mu9JtrHPZAQaCj6nH-q6M5YC1cLOF_6nA
• 1/14/20: Blockrock joins the climate crowd. The big funds are finally moving to climate action or their investors will walk. "BlackRock, the world’s largest investment manager, signed up to the Climate Action 100+ initiative, a group of 370 fund managers controlling some $35tn of assets." https://www.nytimes.com/2020/01/14/business/dealbook/larry-fink-blackrock-climate-change.html?smid=nytcore-ios-share&fbclid=IwAR3wxx2H8hTZTiJ_BeJS6iZFEjouDKN0RRtjUBrWnddpY0h7Nrr2MSaTHeM
• Half of UK universities have committed to divest from fossil fuel; 78 out of 154 universities joined campaign in blow to big oil’s ‘social licence’. https://www.theguardian.com/environment/2020/jan/13/half-of-uk-universities-have-committed-to-divest-from-fossil-fuel?fbclid=IwAR2DizaQ6uUULFutXz0CUVWWkCa5NQ9ejyBlkpE3w4vmZAhDP9IK3mNYgdc
• 12/12/19: Swiss Banks exploring climate investments: https://www.bloomberg.com/news/articles/2019-12-12/swiss-central-bankers-have-climate-change-on-their-minds
• 11/27/19: Investors managing more than $34 trillion in assets, nearly half the world's invested capital, are demanding urgent action from governments on climate change. https://mobile-reuters-com.cdn.ampproject.org/c/s/mobile.reuters.com/article/amp/idUSKCN1TQ31X?fbclid=IwAR0KNJ7FyRd5kEOcOD3MUnXz2gjM6UOwIsistyD-UHIHrZPZ17ZadB_gnbI
• 11/27/19: Asset Managers and #Climate Change: "Here's their latest insight on the world's biggest 15 asset owners and their (very mixed) commitment tackling the #climatecrisis" https://influencemap.org/report/FinanceMap-Launch-Report-f80b653f6a631cec947a07e44ae4a4a7
• 11/18/19: The European Investment Bank (EIB) will stop investing in fossil fuels and redirect its investments into clean energy innovation, efficiency and renewables. https://www.scientificamerican.com/article/european-investment-bank-will-stop-lending-to-fossil-fuel-projects/
• Investing $1.8 trillion into early warning systems, climate-resilient infrastructure, improved agriculture, mangrove protection and more resilient water resources between 2020 and 2030 could generate $7.1 trillion in total net benefits, according to a report by the Global Commission on Adaptation, headed by Microsoft founder and philanthropist Bill Gates and former U.N. Secretary-General Ban Ki-moon.
• Transforming the way that food is produced, processed, distributed, consumed and disposed of in order to deliver a sustainable food system could yield up to $4.5 trillion a year by 2030 to companies, according to a report from the Food and Land Use Coalition, a group established at the United Nations in 2017.
• Investing in low-carbon cities is projected to be worth “at least $23.9 trillion” by 2050, according to research by the Coalition for Urban Transitions, an initiative of the New Climate Economy, jointly hosted by WRI’s Ross Center for Sustainable Cities and the C40 Cities Climate Leadership Group.
• Renewable electricity from solar and wind costs less than electricity from gas and coal, and can be implemented everywhere at huge scale, giving rise to a trillion-dollar energy windfall, according to Inevitable Policy Response, a project of the UN Principles for Responsible Investing that aims “to prepare investors for the associated portfolio risks." And these don’t include trillions more of banks’ and investors’ money/
• A group of 515 global institutional investors with more than $35 trillion in assets under management last week urged world governments to step up efforts to tackle climate change. The Global Investor Statement to Governments on Climate Change, from a group called the Investor Agenda, said that while investors are taking action on climate change, there is an “ambition gap” with current government commitments to the Paris Agreement.
• A group of 230 institutional investors led by Ceres and PRI, and representing $16.2 trillion in assets under management, called on companies to publicly disclose and implement a commodity-specific “no deforestation” policy with quantifiable, time-bound commitments covering the entire supply chain and sourcing geographies, including establishing a transparent monitoring and verification system for supplier compliance with the company’s “no deforestation” policy.
• More than 1,100 institutions with more than $11 trillion in assets under management have committed to divest from fossil fuels.
• And yesterday, leading banks and the United Nations launched the Principles for Responsible Banking, with 130 banks — collectively holding $47 trillion in assets, or one-third of the global banking sector — committing to strategically align their business with the goals of the Paris Agreement and the Sustainable Development Goals, “and massively scale up their contribution to the achievement of both.”
• And then there’s the U.S. presidential campaign, where the leading Democratic candidates seem to have entered an arms race of climate plans, each invoking the T-word. Bernie Sanders, for example, proposed a staggering $16.3 trillion federal investment over 15 years in renewable energy and public infrastructure. By contrast, Pete Buttigieg’s proposal to invest a measly $1 trillion in climate solutions seems a weak cup of tea.

It seems that everyone is now in a rush to find and fund climate solutions. Unlike the past, we are now in the opposite situation where organizations want to make major investments soon if we want to slow global warming. No more ponderous studies, but practical, hands-on solutions, but where are the proven solutions? Where is the evidence showing their effectiveness?

As an urban planner and the co-founder of a Swedish startup that has used VR for 20 years for sustainable city planning, I'm delighted by the renewed interest in cleantech. Here are some of the top climate action opportunities emerging today:

VR/AR for Disaster Preparedness and Recovery

Today, the Unreal and Unity VR gaming engines are so powerful that architecture, engineering and construction (AEC) firms are adopting VR/AR for planning. But the real power in VR lies in simulating storms and disasters, such as hurricanes, sea rise, flooding, forest fires, tornadoes, earthquakes, mudslides, etc. In 2016, my team simulated sea rise at one foot per second in the Copenhagen Malmo Port so viewers could stand anywhere in town and watch buildings disappear underwater from any angle. We added 200mph hurricanes to show buildings being destroyed as well as sea rise and flooding. To attract young people, planning and design can be gamified, with the "offense" simulating disasters and the "defense" preparing resilient designs to reduce loss of life and property damage. Today, insurance companies are very interested since they are losing billions of dollars to disasters and need better tools when readjusting their premium rates.

Disasters like Katrina, Santa Rosa, Puerto Rico and the Bahamas have shown that it takes time for governments to rebuild decimated cities and towns. Using VR, city planners can set up a virtual command-and-control (C&C) center shared by city officials, first responders and construction companies so they can quickly inspect damage by block to determine where and how to design smart grids, emergency clinics, utilities, housing, temporary schools, and other urgently needed facilities. Infrastructure designs can be updated daily or weekly with imagery from satellites, drones, street photos, and AR. For details, see possible uses of VR for hurricanes/typhoons and forest fires: https://www.dhirubhai.net/pulse/vr-resilience-planning-disaster-recovery-sheridan-tatsuno/, https://www.dhirubhai.net/pulse/vr-forest-fire-management-recovery-sheridan-tatsuno/

VR/AR, IoT and AI for Green City Design

Cities consume about 80% of energy and emit over 75% of carbon so we will win or lose the carbon battle in the cities over the next few decades. Unlike current cities, which are energy inefficient and suffer from "urban heat islands", future cities must be green to reduce energy use and carbon emissions. With VR/AR, future sustainable communities and transit can be prototyped quickly, as my team did for new housing in Lund, Sweden for 10,000 researchers at the new European Spallation Source (ESS) research city. https://www.facebook.com/groups/263449064157532/, https://europeanspallationsource.se/about

Besides designing totally new communities, VR/AR are useful for showing at the block level how parks, trees, landscaping and other greenery can beautify cities. IoT and AI could be used to predict, measure and analyze reduced CO2 levels at the street, district and city levels.

Electric & Autonomous Vehicles (EVs/AVs)

Transportation emits about 35% to 40% of all carbon globally so replacing combustion engine vehicles with EVs could dramatically reduce CO2 emissions, but private ownership makes mass adoption a slow, tedious transition. Besides vehicle costs, EV charging stations would be required throughout cities.

In addition, I have written a half dozen Linkedin articles on VR/AR, IoT, AI and blockchain for smart sustainable cities, enterprise training, retail, STEAM education, and storytelling: https://www.dhirubhai.net/in/statsuno/detail/recent-activity/posts/

So we are now in the position where climate action urgency, funding, and exponential technology suppliers are all searching for practical, effective climate solutions. Does your company have them and the data to prove it? If so, please share them in Linkedin articles so funders can find you.

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