Recent news regarding investor reactions to climate change may seem discouraging.
The rise of AI has dominated financial sector interest and investment, while the Trump Administration’s rollback of climate policies has led some investors to abandon climate-focused ventures.
If these developments are disheartening, Tom Steyer’s perspective might offer encouragement.
Steyer, previously a 2020 presidential candidate, has returned to finance, now concentrating on climate change investments. During a recent interview in San Francisco, he dismissed concerns about the impact of the Trump Administration and the broader climate pullback on his business. He emphasizes the strong economic fundamentals.
“The financial prospects for this transition are better than anticipated,” he stated, citing the ongoing expansion of clean energy technologies. “While rhetoric fluctuates, the facts ultimately demonstrate reality.”
His firm, Galvanize Climate Solutions, focuses on equities, real estate, and venture and growth investments. Galvanize seeks opportunities that both advance climate goals and generate above-market returns, independently of government policy support. “This will succeed if we win in the marketplace,” he insists. “We don’t rely on subsidies, government funding, or altruism.”
Consider real estate, for example. Galvanize combines real estate expertise with insights into the financial benefits of decarbonizing properties, such as cost reductions from energy efficiency and on-site renewables. This, in turn, increases the property’s value. “It’s about understanding technology, costs, buildings, and real estate markets,” he explains.
Steyer is not alone in his commitment to climate investment, although few are as vocal or resolute. Some major financial institutions maintain their commitment to climate-friendly deals when economically viable.
However, the widespread enthusiasm for climate-related investments has diminished, even before the Trump Administration took office in January. A from PitchBook indicated a third consecutive year of decline in venture funding for climate tech, down over 17% from the previous year. Morningstar reported that U.S. ESG funds experienced outflows in every quarter of the past year.
Steyer contends that this shift in sentiment presents a favorable environment for climate investors. His argument centers on the supply and demand of capital. He believes that there are currently more investment-worthy opportunities in climate and decarbonization than available capital. This translates to a wider selection of opportunities and improved deal terms for investors willing to commit. “From an investor’s perspective, this is positive,” he notes. “However, it may not be ideal for the country or the world.”
I’ve spoken with Steyer on numerous occasions, particularly during his political career. Yet, this endeavor seems to be his most significant environmental contribution. He believes that “success is the most persuasive argument” for encouraging private sector climate action.
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