Research shows that climate funds have boomed in the last four years in both private and public capital.
However, there are clear differences in terms of the assets involved and the exposure sought.
According to the report from index provider MSCI, more than 70% of the cumulative capitalisation of climate funds can be attributed to those launched since 2020.
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The number of private capital climate funds launched between 2020 and 2023 outnumbers those launched in the previous nine years combined.
In total there are 173 private-capital funds with climate-related names, accounting for US$90.5 billion in capitalisation, as of Q3 2023, and prior to the COP28 climate conference.
The study, titled In the Name of Climate: Private vs Public Funds, found that renewable electricity accounted for more than 40% of private climate funds net asset value while public climate funds were more focused on climate tech.
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There was also a greater concentration of private funds in high-emitting sectors are private investors sought exposure to companies in sub-industries looking to benefit from energy transition in otherwise carbon-intensive sectors.
The study also found that the private climate fund market has been driven more by real assets such as infrastructure while equity has been more prominent in public sector funds.
