🧭 Record-breaking sustainable funds & carbon auctions reshape VCM

Hey there! 👋

Last week, we highlighted Canada’s introduction of a sustainable investment taxonomy, Japan’s surge in ESG investments, and Greece’s bold renewable energy targets. We also covered significant updates on the partnership between ESG Book and Zfolio to simplify financed emissions calculations.

At the BIG Risk Navigator, we keep you informed on the latest developments in sustainability, climate finance, and cutting-edge tech innovations. Our goal is to provide decision-makers with the insights they need to stay ahead of the curve in building resilient, forward-thinking businesses.

But first, community updates!

We’re excited to announce the wrap-up of the Emerald Summit, which brought together climate tech innovators and executive women leading the charge in sustainable business. Stay tuned for key takeaways and insights from the summit that will help you leverage climate tech and drive sustainable growth within your business.

Now let’s get into the news.

• Sustainable funds reach record $3.5 Trillion AUM in 2024: Morgan Stanley Report: Sustainable funds modestly outperformed traditional peers during the first half of 2024.

• Amazon’s Climate Pledge Fund leads $500M investment in X-energy’s nuclear reactor technology: The investment will help accelerate the deployment of X-energy’s small modular reactors.

• 79% of agrifood executives report revenue growth from sustainability investments: Deloitte Survey: Companies that co-invested in sustainability efforts with other organizations often saw stronger financial performance.

• America’s first nature-based carbon credit auction could reshape the VCM in 2025: Carbon Auction aims to bridge the funding gap by providing upfront payments.

• Germany allocates $3 Billion to help industries cut carbon emissions: The government’s subsidies will support industrial companies in transitioning to greener production methods.

🎯 Sustainable funds reach record $3.5 Trillion AUM in 2024: Morgan Stanley Report

✅ Key Insights

• Sustainable funds hit $3.5 trillion in assets under management (AUM) in 2024, despite slowing inflows.

• Sustainable funds posted a 1.7% median return, outperforming traditional funds’ 1.1%.

• Over the past five years, sustainable funds have outperformed traditional peers by 4.7%.

Sustainable funds have surged to $3.5 trillion in AUM, even as inflows slow. The $20 billion in inflows recorded in the first half of 2024 marks a slower pace compared to previous periods, but sustainable funds still outperformed traditional peers by 0.6 percentage points. The growing focus on sustainability is helping funds stay resilient and continue attracting capital despite market fluctuations.

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🎯 Amazon’s Climate Pledge Fund leads $500M investment in X-energy’s nuclear reactor technology

✅ Key Insights

• Amazon, Ken Griffin, Ares, NGP, and the University of Michigan invest $500 million in X-energy’s Series C-1 financing round.

• X-energy and Amazon aim to bring over 5 gigawatts of small modular reactor (SMR) capacity online in the U.S. by 2039.

• Amazon commits to supporting a 320-megawatt project with Energy Northwest in Washington state.

X-energy, a leader in advanced nuclear technology, secured $500 million in Series C-1 funding, anchored by Amazon. The investment will help accelerate the deployment of X-energy’s small modular reactors (SMRs) to meet growing energy demands, while driving forward Amazon’s Climate Pledge to achieve net-zero emissions by 2040.

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🎯 79% of agrifood executives report revenue growth from sustainability investments: Deloitte Survey

✅ Key Insights

• 79% of executives reported at least 2% revenue growth from sustainability strategies.

• 74% achieved at least 2% cost reductions through sustainability investments.

• 60% of executives expect the value from sustainability strategies to increase over the next two years.

Nearly all of the 350 food and agriculture executives surveyed by Deloitte and NYU Stern Center for Sustainable Business (CSB) acknowledged the financial value of sustainability investments. With agrifood systems responsible for one-third of global greenhouse gas emissions and 70% of freshwater usage globally, the need for sustainability is urgent.

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🎯 America’s first nature-based carbon credit auction could reshape the VCM in 2025

✅ Key Insights

• American Forest Foundation (AFF) is set to launch a groundbreaking carbon auction in February 2025.

• The carbon auction would be focusing on carbon credits generated through its Family Forest Carbon Program (FFCP).

• Currently, only 1.2% of the annual potential of these solutions has been tapped through the voluntary carbon market (VCM).

The AFF Carbon Auction aims to bridge the funding gap by providing upfront payments. This approach enables project developers to kickstart their initiatives, ensuring a steady supply of high-quality carbon credits that contribute to climate resilience. By linking payments to the progress of projects, the auction model will align corporate investments with tangible climate impacts.

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🎯 Germany allocates $3 Billion to help industries cut carbon emissions

✅ Key Insights

• Germany allocates $3.1 billion to support 15 industrial companies in decarbonization efforts.

• The subsidies target sectors like glass, paper, and chemicals, aiming to reduce 17 million metric tons of emissions.

• The 15-year contracts will compensate companies for the extra costs of climate-friendly production.

Germany, aiming to become climate-neutral by 2045, is taking bold steps to decarbonize its industries. The government’s $3.1 billion subsidies will support industrial companies in transitioning to greener production methods, reducing emissions in energy-intensive sectors like chemicals, glass, and paper.

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How AI is transforming climate risk management in developing countries

Galit Palzur —an economist and a board member at Forum Dvorah, explores how AI can help alleviate climate risks especially in developing countries, addressing existing bottlenecks and opening new pathways toward climate resilience. 

✅ Highlights 

• AI: a game changer for climate risk management

• Bottlenecks in climate risk assessments in developing countries

• How AI helps overcome these bottlenecks

In recent years, the introduction of AI and ML has opened new opportunities for resilience-building, allowing risk managers to use more accurate climate models that utilize early warning systems, sensor data and satellite imagery. Despite the promises of these innovations, developing countries encounter significant challenges that obstruct effective climate risk assessment in general, let alone conduct these assessments with the use of AI and ML.

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AI transforms ESG monitoring: Empowering SMEs and combating greenwashing

✅ Highlights 

• The rise of ESG scoring

• The challenge of greenwashing

• The solution

In today’s world, sustainability is a top priority, and the financial sector is crucial in driving positive change. With investors and stakeholders focusing more on ESG factors, accurate ESG monitoring is essential. However, small and medium-sized enterprises (SMEs) often struggle with complex ESG reporting, and greenwashing remains a concern. In this success story explore how Omdena and VOY Finance partnered to transform ESG monitoring through AI-driven solutions leveraging advanced AI and NLP technologies.

Read more.

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