IEN WEBINAREquity Investing in Climate Solutions
May 5, 2021
The webinar will begin shortly
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THE INTENTIONAL ENDOWMENTS NETWORK
A Peer-Learning Network for Higher Education, Philanthropic & Non-Profit Endowments
Aligning Investment Portfolios with Institutional Mission, Values, & Sustainability Goals
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Networks
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Networking
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Endowments
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CLIMATE ACTION PURSUIT
www.intentionalendowments.org
Second Nature and the Intentional
Endowments Network is leading a virtual year
long programing of learning, planning, acting,
and leading on equity and climate on our
campuses, in our communities, and across
our society and economy.
Online programming dates:
• February 24-26, 2021
• June 10-11, 2021
• October 7-8, 2021
• December 9-10, 2021
https://secondnature.org/climateactionpursuit/
LOGISTICS
• Webinar is being recorded
• Use “Chat” menu or “Q&A” to add questions or comments at any time
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Thank you!For more information, visit
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UN-CONVENED NET-ZEROASSET OWNER ALLIANCE
United Nations-convened Net-Zero Asset Owner Alliance
United Nations-convened Net-Zero Asset Owner Alliance
as of 23rd of April
Illustrative model – Path
to limit global warming
to 1.5°C
Negative emissions
8
HUMANITY’S CHALLENGE –
LONG-TERM INVESTORS CAN CONTRIBUTE TO SOLUTIONS
Maximum total annual CO2 emissions in 2050 and
beyond, coupled with negative emission technologies~4 Gt
Source: IPCC SR1.5 – Summary for Policy Makers, figure 3a
Global total net CO2 emissions
(in billion tons of CO2/year)
Climate change mitigation means addressing
risk. The transformation to resilient economies
will spur economic gains through innovation.
Long-term investors leverage investment
opportunities in new technologies and
innovation to also to contribute to the solutions.
Estimated investment needs respectively investment opportunities in new
power and heat generation and bio- and synthetic fuel production
of ~US$2tn annually or ~1.5% of global GDP.
420 Gt cumulative CO2 emissions left (“CO2
budget”) for a 2/3 chance of limiting global
warming to a max. 1.5°C temp. increase.
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37 ASSET OWNERS WITH OVER $5.7 TRILLION ASSETS AS STRONG SIGNAL
OF SUPPORT TO POLICYMAKERS AND A CALL TO ACTION FOR THE
ECONOMY
Commit to transitioning investment portfolios to net-zero GHG emissions by 2050 consistent with a maximum temperature rise of
1.5C degrees above pre-industrial temperatures, taking into account the best available scientific knowledge including the findings of
the IPCC, and regularly reporting on progress, including establishing intermediate targets every five years in line with Paris
Agreement Article 4.9.
In order to meet fiduciary duty to manage risks and achieve target investment returns, this Commitment must be embedded in a
holistic ESG approach, incorporating but not limited to, climate change, and must emphasize GHG emissions reduction outcomes
in the real economy.
Seek to reach this Commitment, especially through advocating for, and engaging on, corporate and industry action, as well as
public policies, for a low-carbon transition of economic sectors in line with science and under consideration of associated social
impacts.
This Commitment is made in the expectation that governments will follow through on their own commitments to ensure the
objectives of the Paris Agreement are met.
THE COMMITMENT
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NET ZERO ASSET OWNER ALLIANCE - “THEORY OF CHANGE”
Investors with influence via
engagement and policy advocacy
Decarbonization of companies
of the real economy
Best in class strategy
Reallocation within one sector
Integration of climate mitigation into
Strategic Asset Allocation (SAA)
Sector weighting, reallocation
across sectors
Investments in economic activities
that contribute to climate change
mitigation
Investing in climate solution
investments
Real World
Impact
Capital Allocation
Strategies
Capital Allocation
Strategies
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ALLIANCE TARGET SETTING - 5 YEAR ROAD MAP
https://www.unepfi.org/net-zero-
alliance/resources/
STRONG CLIMATE TECH RETURNS FROM 2013 TO 2019
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"We know that climate risk is investment
risk. But we also believe the climate
transition presents a historic investment
opportunity.” Larry Fink, BlackRock
2021 Investor LetterSource: Cambridge Associates, 2020.
19.5%
POOLED
IRR
Late-Stage Climate
Tech
22.1%
POOLED
IRR
Early-Stage Climate
Tech
CONFIDENTIAL
TACKLING CLIMATE CHANGE IS A MASSIVE ECONOMIC OPPORTUNITY
CONFIDENTIAL 13
120 1,541National
governments
committed to net-
zero by 2050
Global companies
pledged to net-zero
targets
https://www.forbes.com/sites/sergeiklebnikov/2019/10/24/stopping-global-warming-will-cost-50-trillion-morgan-stanley-report/
http://datadrivenlab.org/featured/press-release-momentum-towards-zero-emissions-accelerates-alongside-climate-week/
http://datadrivenlab.org/wp-content/uploads/2020/09/Accelerating_Net_Zero_Report_Sept2020.pdf
$50T
Global investment
needed to address
climate change
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STRONG DEMAND SIGNALS IN A WIDE RANGE OF SECTORS
Major
Corporations
Pledged to be
Net-Zero By 2050
CONFIDENTIAL
Fin
ancia
l in
vestm
ent
Government
Grants
Industry
Funding
Angels
Growth
Capital
CONFIDENTIAL 15
THE CHASM
Pre-Commercialization Growth StageEarly Commercialization
FUNDING GAP
SCALING INNOVATIVE CLIMATE TECH
MISALIGNED TIMEFRAMES – TEAM VS. ASSET OWNER
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
Ye
ar
6
Ye
ar
7
Ye
ar
8
Ye
ar
9
Ye
ar
10
Ye
ar
11
Ye
ar
12
Ye
ar
13
Ye
ar
14
Ye
ar
15
Investment
Duration
Career
Duration
Compensation
DurationY
ear
0
Source: SCIE Framework, Temple Fennell, 2017
17
GEOS Investment Philosophy
FIRM OVERVIEW
Our world is facing the greatest environmental challenges in history. We believe these challengesprovide significant long-term investment opportunities. GEOS invests in companies solving thesechallenges, seeking to provide attractive financial and social impact returns.
“Wherever we look upon this earth, the opportunities take shape within the problems.” - Nelson A. Rockefeller
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Commitments: Moving the Needle
Global
• 53% of global GDP is covered by actual or intended net-zero emissions targets set by nations, regions and cities (ECIU)
Government
• The EU plans to cut GHG emissions by 55% in 2030 in reference to 1990, up from previous commitment of 40% (Bloomberg)
• The American Jobs Plan proposed by the Biden administration includes funding to support clean energy infrastructure, including $174 billion in spending to boost electric cars (CNBC)
Corporations
• Over 300 companies achieved an “A score” by the CDP for environmental transparency and action, a 45% increase from 2019 (CDP) Source: Bloomberg NEF
19
Agricultural Productivity & Clean Fuels-Precision agriculture-Field computing
Clean Tech & Efficiency-Industrial internet of things-Clean tech materials
Efficient Transport-Electric vehicle systems
-Autonomous driving
Low Carbon Commerce-Renewable products-Bioingredients
Environmental Finance-Energy efficiency project finance-Renewable energy development
Power Technology-Power storage-Electric utility systems management
Renewable Energy-Solar power development-Residential solar systems
Clean Water-Energy recovery-Water filtration
Power Merchants & Generation-Offshore wind development
A framework for assessing optimal solutions
GEOS Themes
20
Current SDG Alignment
21
Current SDG Alignment cont.
22
Holdings Example: Aspen Aerogels
Description: Aspen Aerogels (ticker: ASPN) produces highly efficient insulation materials.
GEOS Theme: Clean Tech & Efficiency
Investment Thesis: Designs and develops thermal management solutions that are up to five times more effective than traditional materials. Focused on three end markets: EV battery thermal barriers which mitigate thermal runaways, advanced battery and building materials, and energy infrastructure. We project more than 30% compound annual growth over the next decade with significant valuation upside.
SDG Solutions:
Social Impact: Improving EV safety and range – technology will extend EV range by 20-40%. Improve fire safety and efficiency of buildings.
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This presentation is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. The opinions and analyses expressed in this presentation commentary are based on Essex Investment Management LLC’s (“Essex”) research and professional experience and are expressed as of the date of its release. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future results, nor is intended to speak to any future periods. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.
This does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product, nor does it constitute a recommendation to invest in any particular security. An investment in securities is speculative and involves a highdegree of risk and could result in the loss of all or a substantial portion of the amount invested. There can be no assurance that the strategy described herein will meet its objectives generally or avoid losses. Essex makes no warranty or representation, expressed or implied; nor does Essex accept any liability, with respect to the information and data set forth herein, and Essex specifically disclaims any duty to update any of the information and data contained in the commentary. This information and data does not constitute legal, tax, account, investment or other professional advice. Essex being registered by the SEC does not imply a certain level of skill or training.
Disclosures