In brief: Just Climate nears $400m for natural climate solutions – New Private Markets

Investment Report: Just Climate’s Natural Climate Solutions Strategy and Alignment with Sustainable Development Goals

Fundraising and Capital Allocation

Just Climate, the dedicated climate investment division of Generation Investment Management, has successfully raised $375 million for its Natural Climate Solutions strategy. The fund, titled Just Climate Natural Climate Solutions, was initiated in 2023 and achieved an initial close of $175 million in the same year. The capital is designated for equity investments aimed at achieving significant environmental impact and advancing key United Nations Sustainable Development Goals (SDGs).

Strategic Focus on Sustainable Development Goals

The core mission of the fund is to deploy capital into ventures that decarbonize high-emitting sectors and mitigate emissions through nature-based models. This strategy directly contributes to several critical SDGs:

• SDG 13: Climate Action: The fund’s primary objective is to finance solutions that directly abate greenhouse gas emissions, representing a targeted effort to combat climate change and its impacts.
• SDG 15: Life on Land: By investing in “natural climate solutions,” the strategy inherently supports the protection, restoration, and sustainable use of terrestrial ecosystems.
• SDG 2: Zero Hunger: A significant focus is placed on transforming the agricultural sector, promoting sustainable farming practices that are essential for long-term food security and ending hunger.
• SDG 12: Responsible Consumption and Production: The investments aim to overhaul production patterns within the agricultural industry, fostering sustainability and resource efficiency.

Stakeholder Engagement and Partnerships for the Goals (SDG 17)

The successful fundraising highlights a powerful collaboration between various institutional actors, embodying the principles of SDG 17. The partnership brings together specialized asset managers with forward-thinking institutional investors to channel capital towards global sustainability targets. Key Limited Partners (LPs) in this initiative include:

1. California State Teachers’ Retirement System (CalSTRS)
2. Microsoft

Market Perspective and Systemic Change

According to Clara Barby, a senior partner at Just Climate, there is an observable shift among asset owners towards adopting a “system way of thinking” in their climate investment approaches. This holistic perspective is crucial for addressing the interconnected challenges outlined by the SDGs and indicates a maturing market where financial allocation is increasingly aligned with systemic environmental and social outcomes. This trend suggests a growing recognition that achieving climate targets requires integrated strategies that span multiple sectors and goals.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 13: Climate Action: The article’s central theme is climate investing. It discusses a “$375 million” fund specifically for a “natural climate solutions strategy” aimed at decarbonizing high-emitting sectors and abating emissions, which directly aligns with taking urgent action to combat climate change.
• SDG 15: Life on Land: The strategy focuses on “natural climate solutions” and “nature-based business models,” particularly within the “agricultural sector.” This directly relates to protecting, restoring, and promoting the sustainable use of terrestrial ecosystems.
• SDG 17: Partnerships for the Goals: The article highlights a partnership between the investment firm “Just Climate” and its limited partners (LPs), including institutional investors like “CalSTRS” and corporations like “Microsoft.” This mobilization of private capital for a common sustainable goal is a core aspect of SDG 17.
• SDG 2: Zero Hunger: By targeting the “high-emitting agricultural sector” for decarbonization, the strategy implicitly addresses the need for sustainable food production systems, which is a key component of achieving zero hunger.

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 13: Climate Action

  • Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article describes a private sector strategy (“Just Climate Natural Climate Solutions”) that integrates climate change measures directly into investment and business planning, reflecting the spirit of this target at a corporate and financial level.

• SDG 15: Life on Land

  • Target 15.3: By 2030, combat desertification, restore degraded land and soil… and strive to achieve a land degradation-neutral world. The fund’s focus on decarbonizing the “agricultural sector” through “nature-based business models” implies investments in practices that restore and improve land and soil quality.
  • Target 15.9: By 2020, integrate ecosystem and biodiversity values into national and local planning, development processes, poverty reduction strategies and accounts. The investment strategy is an example of integrating ecosystem values (“natural climate solutions”) into financial planning and private sector development processes.

• SDG 17: Partnerships for the Goals

  • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources. The article provides a clear example of mobilizing significant private financial resources (“$375 million”) for sustainable development goals, specifically climate action.
  • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships. The collaboration between Just Climate, CalSTRS, and Microsoft exemplifies a private-private partnership aimed at achieving a sustainable objective.

• SDG 2: Zero Hunger

  • Target 2.4: By 2030, ensure sustainable food production systems and implement resilient agricultural practices… that help maintain ecosystems… and that progressively improve land and soil quality. The investment goal to “decarbonise the high-emitting agricultural sector” directly supports the transition to more sustainable agricultural practices as outlined in this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Explicit Indicator: The article explicitly mentions a financial figure that can serve as an indicator for Target 17.3.
  • Total funds mobilized: The article states that “$375 million” has been raised. This is a direct measure of financial resources mobilized for climate solutions.
• Implied Indicators: The article’s description of the fund’s objectives implies several non-financial indicators that would be used to measure its success.
  • Greenhouse gas emissions reduction: The goal to “decarbonise the high-emitting agricultural sector and abate emissions” implies that a key performance indicator will be the amount of CO2 (or equivalent) emissions reduced or avoided.
  • Adoption of sustainable practices: The focus on “nature-based business models” in agriculture implies that progress could be measured by the number of businesses or the area of land adopting these new, sustainable models.

4. SDGs, Targets and Indicators Table

Source: newprivatemarkets.com