Family offices, philanthropists urged to do more on climate
Institutional investors, family offices and philanthropists are being urged to do more to help fill the estimated $3-$5 trillion a year funding gap on climate-related projects in emerging countries.
At the World Economic Forum this month, delegates were told of a new pledge of $1 billion from corporate foundations and philanthropic partnerships towards the goal of net zero by 2050.
The response to this was muted, because as was noted by several delegates, that sum is “a drop in the bucket".
In Asia, the Singapore government, through its various investment agencies (MAS, Temasek, GIC) is most conspicuously active in encouraging greater public and private investor cooperation.
At the WEF earlier this month, Desmond Kuek, CEO of Temasek Trust talked about the setting up of the Asia Centre for Changemakers - "social entrepreneurs, philanthropists, investors, family offices who want to work on nurturing talent and raise competency".
“There is space for us to build a market infrastructure for impact where we can connect up projects with funders, particularly for early stage projects which are not immediately bankable or investable," said Kuek.
"We think that an amount of seed capital going across that ‘valley of death’ would go a long way to making some of these impact projects possible.”
Kuek also spoke about the need to amplify a program where successful entrepreneurs and mentors can help those starting out in the climate challenge find success in the commercial space.
MAS and Temasek have already signed a memorandum of understanding with Allied Climate Partners (ACP) and the International Finance Corporation to deploy blended finance towards a pipeline of investments in sectors such as renewable energy and storage development, electric vehicle infrastructure, sustainable transportation, and water and waste management, with an initial focus on Southeast Asia.
MAKING AN IMPACT
MAS and Temasek are also getting behind family office-backed businesses looking to make a tangible impact amongst communities in Asia Pacific.
One such example is GAIT, or Global Artificial Intelligence Technology. Its CEO, Saurav Bansal is a Singapore-based climate tech entrepreneur backed by his family office. He is working 'at the coal face' of decarbonisation, promoting alternative farming projects in the rainforests of Indonesia, for example.
Backing from the Singapore government agencies has allowed the business to scale up.
What began as a digital tool to capture carbon emissions data and facilitate land mapping has developed into a much wider advisory business in the decarbonisation solutions space, working closely with indigenous communities and NGOs.
"Within Southeast Asia you’ve got huge land masses and the average project is about 100,000 hectares. If you’re talking about physical sampling, that’s months if not years of data collection and millions of dollars," he said.
“Because we are using satellites and AI/ML, it’s less than 1% of the cost. All your carbon data, your species data, your land mapping that would take someone six months to do for a land use classification, we can do it in three weeks,” Bansal explained.
EDUCATING FARMERS
Bansal believes that too often Western decarbonisation advocates fail to acknowledge that an understanding of climate change and climate action is not a high priority for indigenous farmers. Despite that, he says the message is getting across.
“I was in central Kalimantan (Indonesia) talking to a village chief. This is a very rural town, way off the grid. His knowledge of carbon and carbon projects was actually good,” Bansal said. He works closely with the local palm oil companies, aiming to change their mindset when it comes to sustainability, supported by the education initiative being passed down from the central government in Jakarta.
“The local government had actually gone around spreading President Jokowi’s message that slash and burn (in which forests are burned and cleared for planting) is not good. They didn’t realise why it was bad, so they are now learning,” he said.
Still the biggest impediment to progress in emerging Asia is access to financing, he said.