The messaging point at Climate Week NYC was clear: The business case for renewable energy and decarbonization will not be derailed by short-term policy disruptions.
The focus, as we previewed in our Climate Week opener, now is on making the ecosystem more efficient to address the many obstacles being thrown in their way.
Solidarity forever
VCs and philanthropic funders huddled in closed door meetings to hammer out collaborative efforts.
“You’re starting to see that ethos of collaboration come back to the fore because of all the headwinds,” Rob Day of Spring Lane Capital told ImpactAlpha at a crowded Climate Week party that Spring Lane threw with other top VC firms. Spring Lane joined the All Aboard Coalition, a prominent example of the new spirit of cooperation (see, “All Aboard Coalition mobilizes co-investments in climate tech as federal funding falls”). “Everybody is like, well, I guess we’ve got to do this for ourselves,” said Day.
The new pragmatism extends to mission-focused community funders. With federal “green bank” funding tied up indefinitely in legal battles, community-focused green lenders are looking to sharpen their models so that they can stand on their own where possible.
“We need to figure out how to do it in the hardest places,” Kresge Foundation’s Aaron Seybert told ImpactAlpha over coffee. That means financing “small, sub-250 kilowatt deals” in states with low-cost conventional energy, high regulatory burdens and no state incentives. “If we make it work for the most difficult, most challenged places, then it will truly be sustainable.”
Many such efforts will need a tranche of catalytic capital. ImpactAssets, backed by philanthropic capital, is rallying family offices and others for an Energy Catalyst Fund, which would provide loans to help stalled community projects get underway.
AI for Good
More than two dozen sessions throughout the week focused on artificial intelligence. Most tackled the surging energy demand and the technology’s potential to reduce emissions through better efficiency.
The two-day “Tech Together” gathering, hosted by the Siegel Family Endowment, Omidyar Network, Heising-Simons Foundation, GitLab Foundation and Patrick J. McGovern Foundation, focused instead on how to shape algorithms for better outcomes for people and the planet and ensure climate justice, economic prosperity, inclusion and democracy in AI systems.
“AI systems that are just and benefit everyone, including future generations, need to be grounded firmly in our universal human rights values and in the law,” said Volker Turk, UN Commissioner for Human Rights, who called for global cooperation around integrating human rights into all new technologies and every stage of their development. “International cooperation is fundamental to governing these technologies.”
The UN last week launched a “global dialogue on artificial intelligence governance,” that will convene a panel of 40 scientific experts to help assess and advise on risks posed by AI.
In addition to regulation and global governance, said Turk, alliances of “philanthropists, investors, technologists and public interest advocates can catalyze bold partnerships that support technology in the public interest,.”
Perils of isolationism
Climate Week NYC, per tradition, took place alongside the meeting of the UN General Assembly, putting the global fault lines on climate action in sharp relief. US President Donald Trump, in his generally poorly received speech at the UN, called climate change “the biggest con job ever perpetuated.”
US Energy Secretary Christopher Wright doubled down on Trump’s message. “This has become a club of people that have lost sight of the interests of their own people,” Wright said, referring to the UN Paris Agreement, from which the US is withdrawing. At The New York Times’ Climate Forward event, Wright defended the administration’s actions to kneecap wind and solar projects, claiming that there is “massive and growing opposition across the country to wind power and, for farmers, for solar power.” Left unsaid was how much of that opposition has been funded and promoted by fossil fuel interests.
Other world leaders are staking their futures instead on “better, cheaper, faster” climate tech and nature-based solutions as the energy transition reorders global capital and trade flows. They also stood up for global cooperation on climate action.
China’s Xi Jinping, who has overseen the country’s massive embrace, and export, of green technologies, announced China would cut its greenhouse gas emissions between 7% and 10% and increase renewables to 30% of its energy mix over the next 10 years.
“Green and low-carbon transition is the trend of our time,” said Xi in his UNGA address. “The international community should stay focused on the right direction.”
“Brazil is emerging as a source of opportunities in a world that is being revolutionized by the energy transition,” Brazil’s Luiz Inácio Lula da Silva declared in a UN speech that also mounted a defense of multilateralism (see, Brazil seizes the climate spotlight to showcase investment opportunities ahead of COP30”). “Our vision of sustainable development is based on the potential of the bioeconomy.”
Emerging markets
Climate Week featured extensive discussions on how to channel capital to green economies across emerging markets. Finance in Motion, which manages $7 billion in impact assets, argued that the bottleneck lies with local banks in emerging markets, where the absence of liquid secondary markets leaves lenders unable to move sustainable assets off their balance sheets.
“The American financial system is able to get capital where it needs to very quickly because there’s a robust asset-backed security market,” said Finance in Motion’s Group’s Luke Franson at an event hosted by the Climate Policy Initiative, referring to the way US mortgages and other smaller loans are bundled and sold off to investors. “That’s generally not the case in any emerging market. If we want to talk about getting capital where it needs to be at scale, we have to address this problem.”
The firm’s solution: build secondary market tools to recycle risk and free up bank balance sheets and allow them to continue supporting small businesses that are the backbone of sustainable economic development.
“We need to be able to get local financial institutions to rebalance their portfolio, because they’re the ones that are best at underwriting,” said Franson. The idea is not to replace local banks, but “take things off their balance sheet so they can continue their good work.”
The Frankfurt-based firm invested $20 million through its LAGreen fund to support Guatemala’s first sustainability bond, issued by Central American bank Banco de América Central. The fund, which has grown to over $200 million, focuses on developing Latin America’s green bond market.
“When you can make something that’s good business for the local bank, good business for the local farm, and good for the environment, then you create lighthouse effects that live beyond the sugar-high of any subsidy.”
Philipp Behrens of Germany’s International Climate Initiative, a government-backed impact investor, reminded the audience that capital will not flow without policy certainty. “Once you have a stable policy environment and regulatory framework underpinning climate targets, you have much more predictability for the private sector to invest,” said Behrens.
The initiative recently committed capital to the Emerging Market Climate Action Fund backed the Green Transition Facility in Jordan, and has financed new projects like sustainable cocoa in Côte d’Ivoire and Kenya’s green finance taxonomy through its IKI Fund with the European Investment Bank.
Diaspora funding
At a separate panel on “Financing the Green Economy for Emerging Markets” hosted by Princeton’s School of Public and International Affairs, speakers explored how to tap diaspora talent and capital and what it takes to build venture ecosystems from the ground up.
“You need a trust player on both sides – both in the countries that you’re raising capital from and on the ground – because they might not know the local context,” said WE&Capital’s Javad Mushtaq.
WE&Capital, a fund manager focused on the Middle East and Africa, helped jumpstart Pakistan’s venture market by first asking Pakistani professionals living abroad to volunteer an hour or two weekly mentoring founders and opening networks — then facilitating co-investment through SPVs once trust and deal flow were established.
In Ecuador, IMPAQTO Capital is showing what that looks like in practice. “They most often say, ‘my grandchildren are never coming back.’ That’s how you get the check – because they want to build the opportunities that will bring them back,” said Michelle Arévalo-Carpenter of the Quito-based fund manager.
IMPAQTO has fully deployed its first Andean revenue-based finance fund and is preparing its next raise to keep capital flowing to the region’s missing-middle enterprises.
