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Climate-focused investor Decarbonization Partners, a tie-up between BlackRock and Singaporean state investment firm Temasek, said on Thursday it had raised a higher-than-targeted $1.4 billion for its first fund.
Others to back the venture and late-stage growth equity fund, which will focus on companies that can help accelerate the transition to a low-carbon economy, include U.S. insurer Allstate, Spanish lender BBVA, and energy firm TotalEnergies.
More than 30 institutional investors from 18 countries invested in the fund, the firm said in a statement, including public and private pension funds, sovereign wealth funds, and family offices, helping it pass a $1 billion target. The fund, Decarbonization Partners Fund I, has already invested in seven companies including low-carbon hydrogen firm Monolith, biotechnology firm MycoWorks, and electric battery material firm Group14.
The raise comes at a time when climate tech investment is expected to ramp back up after a deceleration in 2023.
"There is enormous demand for energy infrastructure as many countries seek to transition to lower-carbon sources of power while also achieving energy security," said BlackRock chief executive Larry Fink.
Decarbonization Partners would identify "generational investment opportunities in climate technology" to lower their cost to "enable a more affordable energy transition, and generate long-term financial returns for our clients," he said.
As a so-called "dual purpose" fund, it aims to achieve good returns as well as "intentional, material, and measurable decarbonization outcomes," and aims to provide portfolio companies with strategic, technical, and other help, it added.
"Addressing the climate crisis requires innovation at scale, as well as significant and sustained financial resources to enable that. No single entity can do it on their own," said Temasek chief executive Dilhan Pillay.
As world leaders get serious about combating climate change, researchers at BlackRock are keeping a close eye on the global energy transition and the "massive reallocation of capital" that it will likely require. The company released a report in April estimating that the global sustainable energy transition will require $4 trillion in annual investment by the middle of the next decade, CNBC reported.
Macroeconomic conditions including rising interest rates, inflation, and geopolitical turmoil made 2023 a difficult year for startups in need of funds across various industries -- and climate tech was no exception. VC and growth capital for climate tech fell 30 percent year-over-year and deal activity declined for the first time since 2020, according to market intelligence platform Sightline Climate. But there are some indications that investment may be picking back up in 2024. An April report from Sightline noted 31 new funds and $28.2 billion in new assets under management since the beginning of 2024, which is almost double the number of new funds formed during the same period in 2023.
BlackRock, the world's biggest asset manager, has a mixed record on climate. Despite a very public endorsement of including environmental, social, and governance (ESG) considerations in its investment strategy, the firm distanced itself from $68 trillion investment group Climate Action 100+ by transferring its membership to a smaller, international division and in 2023 appointed the CEO of the world's largest oil company, Saudi Aramco, to its board. As of 2022, the firm had an estimated $260 billion invested in global fossil fuel companies, CBS News reported.
Reuters contributed reporting to this article. Reporting by Simon Jessop; editing by David Evans.
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BlackRock-Backed $1.4 Billion Fund Proves There's Cash to Make in Climate Tech
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How Van Leeuwen Ice Cream's Laura O'Neill and Other Growth-Minded Entrepreneurs Keep Their North Star
What's Behind Reid Hoffman's AI-Focused Charm Offensive
3 Ways to Master Your Email Inbox, According to Mark Cuban
Relationship Guru Esther Perel's 7 Ideas for Keeping Calm and Staying Inspired
Is Matthew Kenney the Adam Neumann of Vegetables?
Climate-focused investor Decarbonization Partners, a tie-up between BlackRock and Singaporean state investment firm Temasek, said on Thursday it had raised a higher-than-targeted $1.4 billion for its first fund.
Others to back the venture and late-stage growth equity fund, which will focus on companies that can help accelerate the transition to a low-carbon economy, include U.S. insurer Allstate, Spanish lender BBVA, and energy firm TotalEnergies.
More than 30 institutional investors from 18 countries invested in the fund, the firm said in a statement, including public and private pension funds, sovereign wealth funds, and family offices, helping it pass a........
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