Sovereign wealth funds and other state-backed institutions are investing across the spectrum of climate-focused impact funds, according to the New Private Markets database.
Sovereign wealth funds are major investors in private markets, and 41 percent of them believe impact investing will be a greater part of their mandate going forward, according to a report from Invesco released last year. The same report found that, of the funds that have already invested in impact, three-quarters increased their allocations compared to the previous year.
A significant amount of known SWF activity has been focused on the energy transition, in particular infrastructure funds. For example, New Mexico State Investment Council, a $47 billion fund, committed $150 million to transition manager Copenhagen Infrastructure Partners’ fifth flagship fund. Previously, it made a $75 million allocation to Brookfield Infrastructure Fund IV Renewable Power Sidecar Fund. Brookfield also received a commitment from GIC Private Limited, which manages Singapore’s foreign reserves, to its Global Transition Fund in March. US investor Alaska Permanent Fund is another to focus heavily on infrastructure, and is a regular LP in Actis clean energy funds.
New Zealand Superannuation Fund, an AU$65 billion (€39 billion; $41 billion) state-owned pension fund, also counts Copenhagen Infrastructure Partners among its GPs, having committed €125 million to its Energy Transition Fund in 2021. It has also committed to Wellington Management’s Climate Innovation Fund and Generation IM’s sustainable solutions funds.
Tech-enabled climate solutions
Ireland’s Strategic Investment Fund has committed to investing €1 billion in technology-enabled climate funds over a five-year period. This has led to a €68 million commitment across two decarbonisation funds managed by Energy Impact Partners in 2023: the European Fund, which focuses on €10 million to €25 million growth equity investments, and the Deep Decarbonisation Frontier Fund, which targets early-stage companies in the climate space. Other commitments under the strategy include: €20 million to Solas Capital’s sustainability energy fund, and €50 million to Temporis’s Aurora fund, which seeks to invest Ireland’s wind and solar sectors.
The Norwegian state has also sought to invest in climate tech via a specialist state-backed investment company. Nysnø Climate Investments controls assets totalling approximately €300 million and targets earlier-stage climate solutions funds. Its fund commitments include a €17 million allocation to Verdane’s Idun growth fund, which invests in tech-enabled businesses addressing sustainable development goals, and €15 million to Energy Impact Partner’s Europe fund.
EIP’s Europe fund has also attracted attention from other sovereign investors: Abu Dhabi Investment Authority became an LP in September last year.
Beyond climate, a handful of sovereign investors are known to have allocated to funds targeting other environmental issues. In particular, some European investors are backing nature-focused strategies. BPI France, a domestic joint venture between two state-owned enterprises and a keen impact allocator, has committed to SWEN Capital Partners’s Blue Ocean Fund. Fonds de Réserve Constitutionnel, Monaco’s sovereign wealth fund, allocated $10 million to marine impact manager Ocean 14 Capital’s debut fund, as well as $20 million to Lombard Odier’s Plastic Circularity strategy earlier this year.