Climate Risk in VC Portfolios: Are You Prepared?
With the world dealing with the considerable realities of climate change, venture capital (VC) portfolios are increasingly exposed to climate-related risks. Climate risks are a combination of environmental threats, and, importantly, financial risks impacting potential returns. Are you ready to assess risk exposure stemming from climate threats and consider sustainable investing opportunities?
Climate risk is a complex issue affecting VC portfolios in myriad ways. Physical risks, which may stem from extreme events, can disrupt operations and supply chains; transition risks, based on regulatory changes and demand changes for lower carbon economies, can obsolete otherwise healthy high-emission businesses. These risks can be further enhanced by lack of universal reporting and the complexities of measuring the climate impact across industries.
To successfully address climate risk, a multi-faceted approach is required for VCs. The components of this approach include his three:
Risk Assessment: The use of tools such as Climate VaR allows VCs to assess climate risk quantitatively, combined with and assess its impact on portfolio companies. This helps to identify weaknesses in the portfolio and potential losses of value across the portfolio if climate risk were to be realized.
Due Diligence: Ensure thorough climate impact assessments are done during the investment process to ensure startups have strong sustainability plans.
Portfolio Diversification: Ensure a diversified investment portfolio across a number of companies which are either climate risk resilient, or working to provide climate solutions.
Depth Understanding
The shift to a low-carbon economy is an inevitability, and VCs must adapt their strategy accordingly. This means not only avoiding the risks of high-cost investments, but proactively taking advantage of climate tech opportunities and sustainable innovation. For example, Evolve Venture Capital's focus on hard tech innovations, such as advanced batteries or carbon capture and other products that provide measurable climate returns, not only reduces carbon emissions, but also alters liveable aspects of future climate change.
How Evolve Venture Capital Will Help
Evolve Venture Capital recognizes the challenges associated with climate risk and strives to help our investors with their climate risk journeys. Our investor support reflects that commitment in three ways:
Expertise: Our team will provide specific assistance as you look to integrate climate within your own decision making process.
Intelligent Investment: We focus our investment funds on transformative climate technologies that will have meaningful impact, providing sustainable growth options within your portfolio.
Personalization: We craft funding solutions and growth strategies that take climate risk into account, ensuring you can invest with maximum returns.
A partnership with Evolve Venture Capital will give you the opportunity to take advantage of the changing world and develop a resilient and thriving portfolio. Contact us today about how we can help your investments prepare for climate changes and opportunities.
