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Navigating the Climate Crisis: Sourcing Global Impact Through Venture Capital

Emerging technologies for the Climate Crisis

Preqin’s report ESG in Alternatives: Navigating the Climate Crisis explores some of the key issues around incorporating environmental, social and governance (ESG) investing into investment practices.

The events of 2020 and 2021 introduced new threats to the world and exacerbated others. The COVID-19 pandemic exposed preexisting social inequalities and vulnerabilities, and against this backdrop the issues of racial injustice and climate change also came to a head.

As a result, private capital managers need to balance their efforts between making financial gains while addressing the ESG-related concerns of their clients. However, Preqin data shows that less than half (43%) of the $950 billion in total capital raised so far in 2021 was secured by ESG-committed managers, evidence that the management community isn’t in total alignment.

For this report, First Republic interviewed Michaela Edwards, Partner at Capricorn Investment Group, about the firm’s mission to show that impact and superior risk-adjusted returns aren't mutually exclusive outcomes. Here’s an excerpt from her commentary on “Sourcing Global Impact Through Venture Capital.”

First Republic: Capricorn Investment Group was started almost 20 years ago. What sets your approach to impact investing apart from others?

Michaela Edwards: The short answer is experience, innovation and amplification. Since our inception, our focus has been to deploy capital into effective solutions with the broader mission of proving that outsized returns can be achieved by investing in assets that address the most pressing global problems.

Our philosophy involves combining the growth and innovation of a capitalist society with the desire to solve problems and improve our world. If we as investors collectively set our mandate to be both profitable and impactful, entrepreneurs will respond by innovating, and those ideas best positioned for impact will win out.

With this philosophy in mind, we look to be a catalyst, enabling the flow of institutional capital toward sustainability-driven investments. By providing venture capital to clean technology companies, and by seeding and anchoring asset managers with a sustainability focus, we hope to prove to the broader industry that investments that aim to do good can also perform well.

Read the full interview here.

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