Generation IM raises $1.5bn from pension funds for Just Climate net-zero strategy

Just Climate, a net-zero investment business established by Generation Investment Management, has raised $1.5bn (€1.4bn) for its debut fund, 50% above its $1bn target.

Investors in Climate Assets Fund I include California State Teachers’ Retirement System, Canada’s PSP Investments, Swedish pension funds AP4 and AP2, Australia’s Colonial First State Investments, and Chicago-based impact investor Builders Asset Management.

The fund is designed to invest in companies and projects that can “radically reduce or remove” carbon emissions, while “generating attractive risk-adjusted financial returns”.

It has already invested in Swiss-based electric-vehicle-charging company ABB E-mobility, Swedish industrial start-up H2 Green Steel and Swedish gasification technology specialist Meva Energy.

Just Climate was launched in 2021 by Generation Investment Management, the fund management business established by former US vice-president Al Gore and former head of Goldman Sachs Asset Management David Flood.

The fund’s founding investor group included Microsoft’s Climate Innovation Fund, which anchored the vehicle, IMAS Foundation, Ireland Strategic Investment Fund, Harvard Management Company, the Imprint Group of Goldman Sachs and Hall Capital Partners.

Subsequent investors include pension funds, sovereign wealth funds, insurers, financial institutions, endowments, foundations and family offices from North America, Europe and Asia-Pacific.

Clara Barby, senior partner at Just Climate, said: “Establishing climate-led investing as a capital allocation imperative is core to our mission. We start with climate impact, identify solutions that will make the biggest difference, and then direct and scale institutional capital to those solutions that we believe can generate attractive risk-adjusted returns.

“We’re grateful that many of the world’s most significant institutional investors see the opportunity that climate-led investing represents – for capital markets, for the planet and for people everywhere.”

Just Climate said the fund’s performance fee was fully linked to the achievement of its greenhouse-gas abatement goals.

The fund is targeting industries that are responsible for the highest carbon emissions and those that pose the biggest challenges in emissions reductions, including energy, mobility, industry and buildings.

Shaun Kingsbury, CIO of Just Climate, said: “More than 50% of the world’s emissions come from the hard-to-abate industries. Without radical and urgent changes to the way that the financial sector approaches the decarbonisation challenge in these industries, which are the building blocks of our economy, there will be no net zero by 2050.

“Proven, transformational climate solutions are being developed to decarbonise the industrial sectors. With the right investment support, we believe they can scale rapidly to achieve better gross margins, a lower cost of capital and widespread market adoption.”

To read the latest edition of the latest IPE Real Assets magazine click here.