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- 🧭 European climate fintech investment surge & women’s wealth boom
🧭 European climate fintech investment surge & women’s wealth boom
Explore the rise of climate fintech investment in Europe, the potential of women investors adding trillions to markets, and DOE’s $43M decarbonization funding.
Bhuva Shakti
November 07, 2024 • Estimated Reading Time: 14 minutes
Hey there! 👋
Last week, we explored key developments, including the €4.8 billion EU investment for net-zero projects and over 500 companies adopting the TNFD framework for nature risk reporting. This week, we’re diving into substantial climate fintech investments in Europe and opportunities created by untapped female investors.
At the BIG Risk Navigator, we provide insights on the latest sustainability, climate finance, and tech innovation trends, equipping decision-makers with the knowledge to lead resilient, future-ready businesses.
Now let’s get into the news.
European climate fintech start-ups attracted £1.3bn investment in first half of 2024: Investment in climate-related financial technology firms almost matched last year’s total in the first half of 2024.
Verdane raises €700 million for decarbonization-focused growth fund: Decarbonisation and technology-focused private equity firm Verdane has closed its second decarbonisation strategy.
Nextbitt leverages AI to simplify scope 3 emissions tracking: The tool tracks and reports all three emissions, Scope 1, 2, and 3.
Property linked finance could unlock £70bn for energy efficiency upgrades: BT has unveiled an update to its carbon monitoring platform for business customers.
Financial firms invested more in fossil fuels than clean energy in 2023: Investment continues to flow into coal, oil and gas despite some progress on decarbonisation targets and policies.
🎯 DOE allocates $43M+ to advance industrial decarbonization technologies
The U.S. Department of Energy announced about $43.2 million for 21 projects focused on developing technologies deemed essential for reducing energy use and greenhouse gas emissions across industrial subsectors on Oct. 8.
Out of this funding, DOE allocated $38 million for 16 projects targeting cross-sector technologies, while an additional $5.2 million would support five projects chosen in partnership with the Electrified Processes for Industry without Carbon Institute, it said in a news release. The 16 selected projects focus on three topic areas: electrification of industrial heat, efficient energy use in industrial systems and decarbonization of organic wastewater and wet waste treatment, the department said.
Why it matters for climate fintech: Climate fintech startups can capitalize on this opportunity by developing cutting-edge technologies to facilitate green financing, carbon credit trading, and risk assessment for industrial decarbonization initiatives. Moreover, the DOE's investment could trigger regulatory changes and policy incentives that favor sustainable industrial practices. This evolving regulatory landscape will present both challenges and opportunities for climate fintech firms, as they navigate compliance requirements and seek to capitalize on emerging market niches.
Key implications for startups: Climate fintech startups can benefit from the DOE's investment in several ways:
New funding opportunities: The increased focus on industrial decarbonization may lead to new funding opportunities from venture capital firms, impact investors, and government grants. Startups that can demonstrate the potential of their technologies to reduce emissions and improve energy efficiency are likely to attract significant investment.
Potential partnerships: Collaborations with established industrial players can provide startups with valuable insights, access to markets, and opportunities for co-development of innovative solutions. The DOE's funding initiative could facilitate such partnerships by fostering a vibrant ecosystem of cleantech innovators.
Competitive advantage: Early adoption of emerging technologies can give startups a significant competitive advantage. By staying ahead of the curve and developing solutions that address the specific needs of the industrial sector, startups can position themselves as leaders in the climate fintech space.
🎯 Women could add $3.22trn to markets in ‘wealth boom’
Female investors could up financial service revenues by $700bn, but wealth managers are overlooking this untapped demographic. It is common knowledge that women invest less than men, but this untapped demographic could add $3.2trn (£2.5trn) to markets in a “wealth boom” as female investors become “a major force” in wealth management, according to new research by DWS.
If the industry wants to unlock this mass of untapped investment, then its services need to be more targeted at female clients. One major reason for this lack of engagement is the fact that two-thirds of women prefer to speak to a female financial adviser – yet women only represent around 15% of financial advisors in the US and UK.
Why it matters for climate fintech: Climate fintech startups can capitalize on this market gap by developing innovative products and services that cater to women investors. For example, they can create user-friendly platforms that provide easy access to sustainable investment opportunities, offer personalized financial advice, and empower women to make informed decisions about their investments.
Key implications for startups: Climate fintech startups can benefit from the increasing participation of women in the investment market in several ways:
New market opportunities: Women investors represent a significant untapped market for climate fintech startups. Developing digital channels decrease the cost of access to financial services and help bypass constraints imposed by social norms and limited mobility.
Increased funding opportunities: As women become more influential in investment decisions, they can play a crucial role in driving capital flows towards sustainable and impact-driven businesses. This could lead to increased funding opportunities for climate fintech startups from female investors and impact funds.
Enhanced brand reputation: By championing gender equality and empowering women, climate fintech startups can build a strong brand reputation and attract a loyal customer base. This can help them differentiate themselves from competitors and gain a competitive edge.
There is a new financial inclusion gap and that is due to extreme weather events. 398 Natural Disaster events occurred worldwide in 2023, resulting in a loss of USD 380 Bn. Severe tropical storm Kristine in The Philippines generated agricultural losses, which is well over USD 1 Bn. Their forecasted value of rice production is expected to see a decrease from 20.8 Million metric tonnes to around 19.4 Million metric tonnes.
Beyond agriculture, lending itself is likely to get impacted over time as uncertainty and severity of storms and precipitation increase. Edinburgh using a dataset of 70,000 mortgages and 3.5 Million single payments to model the impact of tropical cyclones and heavy flooding on mortgage payments in Florida. Their research found that the relationship between default risk and intensity of cyclones is statistically significant. The stronger the storm, the more the chances of defaulting.
Why it matters for climate fintech: Extreme weather events are increasingly disrupting financial systems, leading to a new wave of financial exclusion. To address this challenge, climate fintech can play a crucial role by developing innovative solutions that build resilience and support recovery in vulnerable communities. By providing anticipatory financing, investing in capacity building, and redefining vulnerability to encompass both the poor and the wealthy, fintech can help mitigate the impact of climate change and promote inclusive growth.
Key implications for startups: Climate fintech startups have a unique role to play in addressing this emerging crisis:
New market demand: The need for financial tools to mitigate disaster risk and support post-disaster recovery creates a new market space. Startups can develop solutions like anticipatory community financing, parametric insurance products, and data-driven risk assessment tools tailored to climate-vulnerable regions.
Shifting risk assessment: Traditional risk models are failing to capture the growing impact of extreme weather. Climate fintech can develop new frameworks that integrate data on weather patterns, climate hazards, and community vulnerability to provide a more accurate picture of risk.
Building resilience: Fintech solutions themselves need to be resilient to extreme weather. Data storage, communication platforms, and financial services need to function even in the aftermath of disasters.
🎯 European climate fintech start-ups attracted £1.3bn investment in first half of 2024
✅ Key Insights
Climate FinTech Report 2024 report tracks investments in more than 600 start-ups.
Climate fintech start-ups in Europe and the US raised $2.1bn in the first six months of 2024.
European firms outperformed American counterparts by raising 1.5 times more venture capital funding.
Climate fintech start-ups in Europe and the US raised $2.1bn in the first six months of 2024, almost equalling funding for the entirety of the previous year, according to new research from CommerzVentures..
🎯 Verdane raises €700 million for decarbonization-focused growth fund
✅ Key Insights
Verdane’s Idun funds generally invest between €20 and €100 million into sustainable businesses.
The majority of Idun II commitments come from non-profit organizations and investors.
Each portfolio company must have a carbon avoidance target of a minimum of 5,000 tonnes of carbon dioxide avoided per €1 million invested.
Verdane’s Idun funds generally invest between €20 and €100 million into sustainable businesses. All investments made from Idun II pass strict sustainability criteria to measure their positive environmental impact, such as a carbon avoidance target of a minimum of 5,000 tons of CO2 avoided per €1 million invested, the firm said, adding that its criteria allow investments only in businesses positioned to succeed in a sustainable economy. Since 2003, Verdane has backed 42 sustainable businesses via its funds, and over the past 12 months has backed 16 European businesses with €600 million in capital..
🎯 Nextbitt leverages AI to simplify scope 3 emissions tracking
✅ Key Insights
Nextbitt's carbon tracking tool reads supplier documents and invoices to collect data.
The tool tracks and reports all three emissions, Scope 1, 2, and 3.
Only 16% of companies are capable of fully tracking Scope 3 emissions.
Nextbitt’s new tool uses artificial intelligence (AI) to help enterprises track their Scope 3 emissions. It automates the process by reading documents and supplier invoices, making the data collection quicker and more accurate. This will also help companies meet their sustainability and ESG regulations
🎯 Property linked finance could unlock £70bn for energy efficiency upgrades
✅ Key Insights
The carbon dashboard platform allows businesses to track how apps and AI impact network and data centre emissions.
The firm has pledged to help its customers reduce CO2 emissions by 60 million tonnes by 2030.
ChatGPT queries require energy equivalent to that used by 33,000 US households.
BT has unveiled an update to its carbon monitoring platform for business customers that give firms' more insight around how their use of artificial intelligence (AI) is impacting electricity consumption and emissions.
🎯 Financial firms invested more in fossil fuels than clean energy in 2023
✅ Key Insights
Climate Policy Initiative (CPI) analysis across the global finance sector warns investment continues to flow into coal, oil and gas.
Assessed the direct investments in clean energy and fossil fuel capacity made by more than 1,000 institutions.
New fossil fuel also continued to grow along a similar rate of 6.3 per cent over the four-year period.
In an analysis published by the Climate Policy Initiative (CPI) late last week, the non-profit research group said it assessed the direct investments in clean energy and fossil fuel capacity made by more than 1,000 institutions worldwide representing around $100tr in combined owned and managed assets.
What is AI’s double materiality assessment role?
Sol Salinas, Capgemini’s Global Executive VP, has written a LinkedIn blog explaining double materiality – and revealing how artificial intelligence can help businesses to make the process smoother.
✅ Highlights
What is double materiality?
Does AI have a role to play?
How double materiality affects companies
Sol sets the scene by explaining: “A double materiality assessment evaluates the opportunities and risks that organizations are exposed to or that they can benefit from and there’s no sign of it slowing down.
The state of greenwashing around the world
✅ Highlights
Greenwashing around the world in 2024
The energy industry and greenwashing
Private companies represent 70% of greenwashing cases in Europe and North America, where incidents are higher than elsewhere around the world. RepRisk’s report shows the oil and gas sector is most frequently associated with greenwashing, accounting for 14% of 2024 incidents. The South African advertising regulator ruled that TotalEnergies was “misleading” in claims in some of its advertisements about sustainability. These cases highlight the growing accountability and scrutiny facing the oil and gas sector, signaling a potential shift towards greater transparency and integrity in corporate environmental claims.
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