Creating and nurturing investments that have a meaningful impact on society and the environment is a new year’s resolution that more investors will be making as the world comes together to achieve net-zero.
The commitment to sustainable impact investments will be integral to the growth of new transformative industries and climate technologies.
My interest in this emerging area of sustainability stems from my personal experience. During my time in the Singapore military, I witnessed the potential of technologies such as manned and unmanned field sensors.
Unmanned aerial vehicle (UAV) operations at the time were used for strategic purposes such as defence operations that tracked an enemy’s activities via surveillance, real-time imagery, and surveys.
But beyond their military application, these sensors can be used to monitor, report, and verify what corporations are doing to contribute towards climate action positively.
Fighting for nature
As an ex-soldier who used to train and fight in nature, I like to think that I’m now fighting for nature through the investments we are making that positively impact the environment.
It’s been encouraging to witness the rise of a growing number of successful startups providing solutions for things like tree-tracking and forestry conservation by leveraging technologies such as geospatial data services.
Many of these solutions use specialised drones and UAVs. They are now part of the fast-growing ecosystem called ‘climate tech’, a term encompassing a broad set of sectors tackling the challenge of decarbonising the global economy.
The goal is to meet climate goals agreed by the international community at conferences such as the recent COP26 – climate tech represented just 6 per cent of global annual venture capital funding in 2019 but has grown more than 3,750 per cent in absolute terms since 2013, according to PwC.
The question arises of how climate tech investing can be scaled up, a significant challenge my partners and I are helping corporations solve: we know delivering real environmental change over the long term will require massive action by both government and the private sector.
By working hand-in-hand with forward-thinking companies and being committed to operating more sustainably and responsibly, we are more likely to save the wonders of nature from being lost forever to future generations.
Helping corporates succeed in sustainability
When we founded Gunung Capital, we were frustrated by the lack of climate-conscious investment options in the market and wanted to leverage our own experiences to guide companies on their sustainability journeys.
Also Read: Why is impact investing suddenly so hot?
Gunung means “mountain”, and we chose the name because it reflects our commitment to helping others ‘climb mountains’ to reach new heights on their ascent towards sustainability.
An essential part of this sustainability journey for most companies will involve carbon markets (and specifically carbon credits), which we believe will emerge as an established asset class in the decades to come.
As corporations transition their operations away from fossil fuels and towards clean energy sources, voluntary carbon credit markets will increasingly play a role in their transition plans.
Hence, carbon markets will grow in importance and gain momentum despite being relatively small at present.
The important role of carbon markets
Factors including limited liquidity, insufficient market size, non-standard transaction processes, and a lack of transparent price mechanisms mean that voluntary carbon markets have not been viable for institutional investment at scale, but that is starting to change.
Another challenge is that there are still very few startups focused on solving the challenges infrastructure developers must overcome to grow the supply of high-quality carbon removal projects.
Investing in high-quality carbon markets should be top of mind for investors in the coming years ahead who want to support and finance new technologies, innovative businesses, and much-needed carbon offset projects here in Southeast Asia and internationally.
We’re excited to be offering services across the carbon value chain with a focus on decarbonisation and conservation of natural resources and developing, implementing, and investing in comprehensive emission reduction projects, strategies, and technologies.
Our carbon offset procurement and trading have been launched to build a carbon credit portfolio through a mix of opportunistic spot purchases and forward contracts.
Also Read: A wave of change: What sets impact investing apart from traditional investing
For example, we recently bought our first batch of carbon credits in partnership with the global carbon credit exchange and marketplace Climate Impact X (CIX). We’re also building an investment portfolio of private equity funds and exploring opportunities with a strong focus on environmental, social, and governance (ESG);.
At the same time, we are actively seeking entrepreneurs and startup founders with an intrepid spirit and grit who are building the next generation of innovative climate tech.
Finally, we are evaluating entering the carbon offset project development space to develop projects with a visible impact on the environment and generate high-quality carbon offsets to be traded on voluntary carbon markets.
As we close off one year and begin another, safeguarding and growing value for our stakeholders through ESG and impact investments is our top priority: as the planet changes, so must the responsibilities and actions of the private equity world.
We will all be held accountable for the state of the environmental and social impacts we leave behind to the next generation, so we encourage all corporates and institutional investors to make the environment central to their new year’s resolution in 2022.
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