"The next 1,000 unicorns won't be search engines or social media companies," according to Larry Fink, CEO of the world's largest asset manager BlackRock, they'll be "startups that help the world decarbonize and make the energy transition affordable for all consumers."
BlackRock is just 1 out of 220 firms representing $57T in AUM that have committed to the Net Zero Asset Managers Initiative. To put that in perspective, only 6 years after the Paris Climate Agreement, 60% of the world's total managed assets are committed toward achieving the goal of net-zero emissions by 2050 or sooner.
In order to meet the net zero mandates of these institutional investors, every major public company must begin a path toward decarbonization. It makes sense that 38% of the Fortune 500 has already committed to a major climate milestone by 2030 given this driver alone – although altruistic, strategic, political, and consumer driven motives, as well as the imminent EU Carbon Boarder Tax, are contributing to this trend, too. As of 2022, BlackRock will specifically require "companies to set short-, medium-, and long-term targets for greenhouse gas reductions," because "these targets, and the quality of plans to meet them, are critical to the long-term economic interests of your shareholders."
Insight believes the transition to a net zero economy is one of the largest private investment opportunities of the 21st century. Until climate change has halted, enterprises across all industries, ranging from automotive to CPG to agriculture, need to both 1) purchase carbon offsets and 2) reduce the carbon footprint of their operations. The carbon offset market is estimated to reach $100B by 2030 to accommodate this rapidly growing demand. For further context on the scale of these investments today, Shell is putting $100M into nature-based carbon offsets every year. Delta has committed $1B toward reaching carbon neutrality by 2030, which will be split between removal and reduction. Alphabet, Disney, GM, Microsoft, and PG&E, to name a few, are also major purchasers of carbon offsets.
After mapping the sector and analyzing opportunities for over a year, we are proud to announce our first climatetech investment in Sylvera, the leading carbon credit ratings and intelligence provider, which has rapidly cemented itself as the go-to solution for diligencing and managing Fortune 500's carbon offset portfolios. With independent, in-depth and up-to-date assessments of nature-based projects, Sylvera is enabling customers like Delta Air Lines, Bain & Company, and Cargill to invest in high quality credits by providing a data infrastructure layer that drives credibility and transparency in carbon markets. In addition, by shining an unbiased light on all projects and revealing those that perform best, Sylvera is helping optimize for maximum offset carbon across the full breadth of options available to buyers.
Sylvera gained the reputation for being the best benchmark for quality by working with leading collaborators including NASA, UCLA, and University College London to create a uniquely rigorous, quantitative, repeatable, and auditable rating process. Unlike some of its competitors, Sylvera also is and has always been an independent third party that does not itself sell offsets on a marketplace, ensuring data integrity. Network effects are rapidly making Sylvera ratings the standard; today, greater than 50% of nature-based offsets are traded on a venue, by a trader, or bought by a buyer where Sylvera data is displayed or accessed.
We could not be more thrilled to be co-leading Sylvera's $32.6M Series A with existing investor Index Ventures and participation from Salesforce Ventures, LocalGlobe and angel investors. It is an honor to partner with the brilliant Sylvera co-founders Allister (CEO) and Sam (COO) as they build off long careers in energy, climate, and finance to help enterprises and financial institutions mitigate climate change. Keep your eye out for more climatetech investing coming out of Insight – we're more inspired than ever by the Sylvera team and just getting started.