The flip side of the rising risks and escalating damage from a changing climate is the huge opportunity to help industries and ecosystems adapt.
This “Age of Adaptation” is defined by both “volatility and extraordinary opportunity,” Chicago-based fund manager S2G Investments declares in its first annual report since spinning out of Builders Vision, the family office of Walmart heir Lukas Walton.
The firm, which has reached $2.5 billion in committed capital across a half-dozen funds, has become one of the most active climate investors backing companies positioned to lead the transitions required in food, agriculture, energy and ocean-based resources.
“Resilience and resource productivity will define the next era of alpha generation,” S2G’s Heather McPherson told ImpactAlpha.
Climate adaptation is rapidly moving from the margins of climate investing to the center. Singapore-based Temasek, the $324 billion state-owned global investment company, this year called climate adaptation and resilience “one of the defining markets of the future,” and estimated that $1.3 trillion a year is needed annually to adapt to climate change.
A separate report from GIC, Singapore’s sovereign wealth fund, tallied the adaptation investment opportunity across public and private debt and equity at $2 trillion today, growing to $9 trillion by 2050. Jay Koh of Lightsmith Group, which in 2019 raised one of the first adaptation-focused VC funds, calls adaptation the “unavoidable opportunity.”
“Climate adaptation is forcing investors and companies to confront the rising costs of a warming planet,” S2G’s Aaron Rudberg, Chuck Templeton, Sanjeev Krishnan, along with McPherson, write in the report. “This is a moment of massive reallocation of resources, and we see significant opportunity for those willing to lean in.”
Portfolio performance
S2G has come fast out the gate as an independent fund manager. The firm now manages 106 portfolio companies, including 65 in food and agriculture, 23 in energy, and 18 in oceans.
This year, it invested $40 million in Sojo Industries, which uses robotics to streamline packaging, eliminating millions of freight miles and reducing waste. “As complexity grows, brands need more agility,” said S2G’s Matthew Walker.
In June, S2G led the $16 million financing round for Washington DC-based Mealogic, which partners with healthcare providers to deliver medically tailored meals to patients with chronic conditions. “Food and healthcare have traditionally operated as separate systems, yet they are deeply intertwined, ” Walker told ImpactAlpha.
Earlier, S2G’s $100 million Oceans and Seafood Fund was one of the largest funds backing technologies to decarbonize shipping and make seafood more sustainable. Purus Marine operates a fleet of hybrid-electric vessels that lower emissions from maritime transport, and Wildtype became the first company to earn FDA approval to sell cultivated salmon grown from fish cells instead of wild catch.
In energy, S2G portfolio companies are helping utilities modernize the grid and reduce fossil fuel use. LineVision installs sensors that let utilities move more clean energy through existing transmission lines, while Nevada-based ANA’s hybrid battery generators replace diesel units for backup and mobile power, cutting fuel use and emissions by as much as 75%.
On an Agents of Impact call last year, Rudberg described how the firm helped launch Clear Frontier, a Nebraska-based farmland fund that helps farmers transition to sustainable farming practices. The firm knew that major consumer packaged goods distributors were having trouble sourcing organic grains for new consumer brands.
“We said, ‘What are your problems?’” Rudberg recounted. “And foolishly we said, ‘Well, what if we solve that problem for you?’”
S2G secured an offtake agreement, hired a CEO, provided operating capital, warehoused the first few farmland acquisitions, became a limited partners and introduced the Clear Frontier to other investors.
Last year, S2G invested in Exacto to address inefficiencies in agricultural inputs. The company says its advanced formulation technologies help farmers save 30% in water use and improve herbicide performance by 90% on more than 130 million US acres.
All told, the firm reports more than 1.3 million active customers of portfolio company products, 13,000 metric tons of waste reduced, and over 550 million metric tons of water savings from solutions deployed across its portfolio.
“Near-term, company-level results ladder up to broader system change,” says McPherson, “reducing resource intensity, strengthening resilience, and advancing productivity.”
Theory of change
S2G’s annual report champions a “systems-based” approach that examines entire value chains to understand how investments can drive long-term transformation.
“We believe the companies best positioned to thrive will be capable of embracing system-level shifts and equipped to deliver solutions that outperform traditional alternatives,” the report says. “The most durable among them will build antifragile models with limited downside risk and asymmetric upside potential, driving long-term value for people and the planet.”
The strategy, the report explains, involves “deeply understanding the complex processes, infrastructure, and organizations involved at each stage of the supply chain across our sectors.” S2G says it seeks to “look beyond the immediate investment opportunity to consider broader and long-term consequences and how they fit into the context of these value chains.”
“In practice,” McPherson told ImpactAlpha, “this means mapping system frictions, such as inefficient energy access or unsustainable input use, and aligning each investment’s value creation pathway to measurable changes in productivity, resilience, and resource efficiency.”
The firm invests across different stages of venture capital, from early innovation to infrastructure-scale deployment.
S2G’s partners say the decade ahead will require capital that is adaptive and catalytic. “The next 30 years will look nothing like the last,” they wrote. “This era will demand bold ideas, adaptive strategies, fit-for-purpose capital, and collective action. It is both a test of resilience and a catalyst for reinvention.”
