Bill Green, founder of Climate Adaptive Infrastructure, looks back on the first half of 2023 and reflects on the firm’s impact investing priorities as part of our mid-year impact Q&A series.
Has the political backlash against ESG affected your business?
Climate Adaptive Infrastructure has largely side-stepped the “tempest in the teapot” around ESG. We view this debate as a distraction from the critical importance of addressing the climate crisis. Sadly, the term ESG has always had a Tower of Babel problem – ask 10 fund managers what it means, and you will get 11 different opinions! This is unhelpful and lends itself to the current politicisation of the topic.
At CAI, we focus on investments that can meaningfully impact the trajectory of the climate crisis. Our investments seek to support the day-to-day needs of large, growing populations while addressing the risks and opportunities of the accelerating climate crisis. As nearly everyone now appreciates after the hottest July ever recorded on our planet, our work has nothing to do with ‘being woke’ – this is an urgent matter of common-sense investing.
The impact investing market is scaling up and going mainstream. How is this affecting your business?
The challenges we address at CAI have never been more urgent and we welcome newer investors entering the energy, water and urban infrastructure sectors. However, CAI is in a unique competitive position given our decades of experience in these sectors. Thanks to our deep relationships, 80 percent of our pipeline is bilateral. We rarely bid in a banker-led process. Our proprietary dealflow allows us to pick and choose from unique opportunities that meet the bespoke criteria of our firm and our co-investors.
Which impact themes, sectors or strategies do you see as most exciting and untapped?
We are excited about waste-to-value opportunities that touch the water and urban infrastructure subsectors. We are invested in various forms of green molecule production and use – to be specific, those involving green hydrogen, ammonia and methanol.
Which impact themes, sectors or strategies do you plan to avoid because they are overcapitalised?
Across the board, contracted solar and wind are overcapitalised today. However, there are unique ways to invest in the ongoing deployment of solar and wind projects, and CAI has invested in several of them.
Do you use benchmarks to evaluate your impact?
CAI has developed a comprehensive, custom climate-adaptive infrastructure evaluation system, and we deploy it in every investment situation that advances past the early stages of consideration. This system consists of significant pre-investment analysis and ongoing reporting, all of which is clearly documented and shared with our LPs.
How will the development of generative AI affect your business? Are you using or planning to use it?
We have not introduced AI into our process at this time. However, we are following this nascent field, as it relates to our energy, water and urban infrastructure transition investing.