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Climate tech investors focus on energy, transport
Rising interest in asset class as last World Economic Forum focuses on its importance
Bayani S. Cruz 15 Apr 2024

Large publicly traded corporates have been investing more actively in climate technology, with a preference for companies in the energy and transport sectors over those in the build and land-use and industry sectors, according to a recent study.

Public corporates have been the most active acquirers of climate tech companies since 2020, accounting for 41% of all acquisitions in the sector, finds the study published in April by investment bank Jeffries. The corporates that invest in climate tech companies come predominantly from the energy sector (20%) and the consumer discretionary and industrial sectors (15%).

The preferred investment areas of corporate investors are climate tech companies in the energy (28%) and transport (23%) sectors, over those in the build and land-use (14%) and industry (13%) sectors.

There are four main routes by which public corporates are investing in climate tech companies – corporate vehicle companies (CVCs), individual direct investments, strategic partnerships or joint ventures, and limited partnerships (LPs).

Many firms have established CVCs, often by setting up an independent fund structure, while large-listed companies have also made direct (one-off) investments from their own balance sheets (outside of any fund structure) to private climate tech companies.

Some companies have formed strategic partnerships and joint ventures with climate tech companies providing capital and market direction on an ongoing basis, while other corporates are also able to invest as an LP into various independent climate tech funds.

Public corporates currently represent about 11% of all investors in climate tech, according to Jefferies, participating in about 45% of all climate tech deals.

In 2023 alone, large corporates participated in about 60% of all climate tech deals, across 1,200 different start-ups, totalling more than US$200 billion. About 50% of these corporates are from North America and 40%, Europe.

Climate tech  defined as technologies that are explicitly focused on reducing green gas emissions or are addressing the impact of global warming  has been gaining investor interest in recent years, and was a highlight of discussions during the last World Economic Forum where the importance and urgency of investing in climate tech was a focus.

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