At a recent panel discussion moderated by Marieke Spence of Impact Capital Managers, industry experts from Argos Wityu, Just Climate, IMAS Foundation, and Resonance Asset Management shared their insights on investment strategies with the greatest potential to decarbonise industry and achieve climate positive impact at scale.
While some clean technology companies face reduced valuations, suggesting an overestimation of climate transition opportunities in the venture capital space, a growing opportunity set lies in hard-to-decarbonise industries. However, industry cannot achieve net-zero targets without substantial capital expenditure support.
Nick Wood, CEO of Resonance Asset Management, outlined a bottom-up approach. This involves enabling large industrial players to reduce their environmental footprint through retrofits and on-site asset investments that decarbonise and increase production efficiencies. This proactive strategy aims to future-proof industrial producers against tightening regulations – a pressing issue threatening continuity of production.
The panel acknowledged the challenge in bridging the gap between intention and action. Argos Wityu stated that currently, 7 out of 10 industrial producers agree on the need for an embedded ESG focus, but only 1 in 9 are actively pursuing it. However, climate change and restrictive policies threaten security of supply. Nick Wood suggested that this issue is driving industry towards acting on energy transition and efficiency solutions.
The discussion highlighted other risks of this sector. One of these is an over-reliance on subsidies, which artificially supports uncompetitive technologies and invites disproportionate investment from managers seeking enhanced returns. Closely related is the risk that rapidly scaling down subsidies could decelerate progress on key technologies essential for the transition.
As the climate transition accelerates, investors are exploring diverse strategies to drive impactful change at scale, navigating challenges, and capitalising on overlooked opportunities in the pursuit of a sustainable future.
