Tycoon Tree-Huggers: The Rapid Rise of Green Investment
Niamh Walsh examines the dramatic rise in investment in Green Technology and the wealth that follows.
Despite the disastrous effects the COVID-19 pandemic has had on the global economy, the market for green and renewable energy has only grown. Elon Musk, the CEO of Tesla (also the second richest man in the world), owes his fortune to creating technology that reduces carbon emissions in the atmosphere; with $180.7 billion of Musk’s $199.2 billion net worth deemed “green net worth” by Bloomberg Green. A worrying paradox: as the planet’s climate crisis accelerates at an alarming rate, the fastest-growing fortunes in the world are billionaire magnates accumulating wealth in the clean energy boom. Tesla Inc.’s stock surged 695% in 2020 as investor optimism grew rapidly. However, this increasing awareness of the catastrophic risks posed by global warming and the importance of creating technology to help reduce greenhouse gas emissions and slow the effects of global warming is a step in the right direction.
Since the Paris Agreement has come into effect, more and more countries, regions, cities and companies are establishing carbon neutrality targets. Zero-carbon solutions are becoming competitive across economic sectors representing 25% of emissions and globally, hundreds of companies have promised to neutralize their carbon output by mid-century or sooner, galvanised by mega-shareholders such as BlackRock Inc. BlackRock currently manages $50bn in funds and other products that support the transition to a low-carbon economy, with CEO Larry Fink encouraging long-term investments with a focus on climate change.
A worrying paradox: as the planet’s climate crisis accelerates at an alarming rate, the fastest-growing fortunes in the world are billionaire magnates accumulating wealth in the clean energy boom.
BlackRock are planning to put in place measures to ensure that environmental, social and governmental (ESG) risk is considered by its portfolio managers with the “same rigour” against which traditional risk measures, such as credit and liquidity, are measured. As part of continued evaluation, in both its public and private investment portfolios, of high-risk sectors that are exposed to a reallocation of capital, BlackRock is committed to exiting thermal coal producers. In addition, BlackRock’s alternatives business will make no future direct investments in companies that generate more than 25% of their revenues from thermal coal production.
Chinese business magnate, Li Zhenguo, CEO of LONGi Green Energy, has a green net worth of $16.1 billion as one of China’s largest manufacturers of solar wafers. In fact, China in general is a front-runner in the development and sale of technology to build clean energy economies, with four out of the five richest climate billionaires hailing from China. Furthermore, China’s already booming green industries are expected to be turbocharged after President Xi Jinping’s vow in September to achieve carbon neutrality by 2060.
Climate tech making new, green fortunes is unlikely to slow down as a report released in September from PwC found investment into the space is accelerating. In 2013, early-stage venture capital funding for climate tech funding was $418 million and in 2019, venture funding in climate tech was $16.1 billion, according to the report. In essence, demand for climate tech is only going to accelerate as more and more global corporations, investors, and governments pledge to transition to net zero value chains, portfolios and jurisdictions. They are all “betting on climate technology breakthroughs to be found, scaled and to transform industries and society,” co-authors Celine Herweijer and Azeem Azhar wrote in the PwC report. “Demand is not yet at a stampede but the market is heating up and it’s time for all stakeholders to help back the innovations the world really needs.”