Overshoots and scores!
If you’re like us, it can be depressing reading headline after headline about how dire the climate crisis is. Fires, floods, feedback loops … ffffff. Well, there are also some big things going in the right direction and we want to share some optimism. Last month the US and Europe put forward bold policy plans with legal teeth and strong economic incentives that, if ratified, can make a real difference. At nearly the same time, two new mega-funds were announced that are the largest ever climate-focused investment vehicles. Carrot and stick — funding and regulation — unrelated but intrinsically complementary.
Not to dismiss the seriousness of the situation. These funds and policy changes aren't a magic wand. July 29 was Earth Overshoot Day, marking the date ‘when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that year.’ But progress is good and hope is necessary, so let’s lean into the good for a moment.
Policy and incentive structures help companies gain market traction and later stage capital provides the resources to execute at a large scale (Active Impact sits between these two forces). In the US, the bipartisan infrastructure bill contains the largest ever energy, climate and mass transit provisions at roughly $127B. In Europe, the carbon border adjustment system will price the carbon emissions on selected imported products to prevent ‘carbon leakage’ and encourage the proliferation of carbon reduction incentives outside the EU. The regulatory tailwinds will spark innovation in climate tech, which will then be supported and stimulated by the massive available growth capital now coming online. TPG’s Rise Climate Fund just held a first close of $5.4 BILLION ($7B target) and Brookfield Asset Management held an initial closing of $7 BILLION ($12.5B target) for their Global Transition net-zero carbon economy fund.
While we know there’s so much more that can (and must) be done, these commitments build more momentum, and that’s welcome news.