Insights from climate fund leaders

Last month, I talked to 40+ finance professionals working across the climate capital stack. Here are the most pressing challenges, opportunities, and insights that emerged: ⚙️ Hard Problems - Even proven tech struggles to scale: EV chargers and energy storage are mature technologies, but their merchant risk makes traditional project finance models break down. - First-of-kind (FOAK) projects remain fundamentally hard: LPO funding is likely ending, and few alternatives exist. The good news? Several new funds are targeting this gap - worth watching closely. 💬 Communication Challenges - The climate finance ecosystem speaks multiple languages: VCs talk TAM and dreams, project finance talks DSCR, insurers talk actuarial risk. Getting deals done requires translating between all of them. - Risk/reward misalignment plagues deals: Startups and VCs chase upside, but deployment partners bear downside risk. This fundamental tension delays scaling. - Climate still fights for credibility: "Senior stakeholders don't even understand Scope 1, 2, and 3," one banker shared. "Anything labeled climate gets immediately written off as concessionary." 📚 Knowledge Gaps - Deal structures remain bespoke: While startups have SAFEs and mature sectors have established project finance precedents, new climate technologies lack standardized financing models. Knowledge sharing between successful deals is almost non-existent. - The "finance-ready" paradox: Capital exists, but most projects aren't structured to receive it. Companies often start thinking about project finance years too late. 🌡️ Climate Risk - Insurance is the canary: Companies are pulling out of high-risk regions and wildly hiking rates. - Markets haven't caught up: This risk repricing isn't reflected in broader valuations...yet. - This disconnect is both terrifying and the biggest opportunity in the space. 🔥 Hot Topics - Nature & Biodiversity: Hard to quantify but drawing serious LP interest - Resilience & Adaptation: Finding new momentum as climate impacts accelerate and we prepare for a "don't-say-climate" presidency - Data Centers: Energy use + AI boom = unavoidable focus - Geothermal: Rising star for baseload power, especially post-Fervo - Global Standards: EU's CSRD and Carbon Border Adjustment Mechanism will reshape supply chains regardless of US policy, with real ramifications for manufacturers in Asia and beyond. These conversations revealed just how hard—but also how essential—it is to align incentives, build trust, and bridge knowledge gaps across the climate finance ecosystem. As Eugene Kirpichov just wrote—we need systems thinking if we're going to tackle these wider problems. Anything missing here? What's on the top of your mind for 2025?

From Peru to private equity: Lessons from Fernando’s path into climate tech investing with $50M+ per company... In my "Climate Tech STartups and Investors" course at Duke University, we recently heard from Fernando Saavedra, CFA, a VP at Decarbonization Partners — a $1.4B joint venture between BlackRock and Temasek focused on scaling late-stage climate tech companies. Decarb’s strategy is to lead $25M–$75M checks in growth-stage climate companies with proven tech and serious traction—helping them scale and, ideally, exit within 4–6 years. -- His career journey and investing insights were 🔥. Here are 5 insights that stuck with me: ☑️ Your path won’t be linear—and that’s okay. Fernando started in microfinance in Peru, moved into pension fund investing, then pivoted through an MBA at Duke University - The Fuqua School of Business and investment banking at Evercore before landing in climate tech VC. Translation: “Zigs and zags” are normal. Play the long game and stay adaptable. ☑️ Diligence ≠ just tech, it’s about execution. Decarb Partners doesn’t take tech risk—they invest when a company is ready to scale, not still proving it works. Instead, they evaluate execution risk: revenue traction, customer contracts, and team capability. If no one’s buying your “breakthrough,” it’s not investable—yet. ☑️ Impact and returns aren’t tradeoffs—they’re dual gates. Each investment must clear both hurdles—financial return AND climate impact. Decarb quantifies GHG reduction potential through lifecycle assessments (LCAs) and brings in third parties to verify the math. As Fernando put it: “We’ve passed on great return profiles with weak climate impact—and vice versa.” ☑️ Relationships matter more than pitch decks. Some of Decarb’s portfolio companies were known to the team for years before investment. Why? “You don’t get married on the first date.” Founders who build trust over time have an edge. ☑️ A mature founder mindset is a green flag. Startups that oversell timelines or chase the highest valuations get passed on. Those who embrace realistic execution plans, understand that hardware takes time, and prioritize partnership over price stand out. -- Huge thanks to Fernando for pulling back the curtain on what real-world late-stage climate investing looks like. 🙌 #ClimateTech #PrivateEquity #EnergyTransition #Decarbonization #StartupInvesting #ClimateVC

Few have insights into the global adaptation finance landscape like Jo Puri, Ph.D — economist, climate finance expert, and now Director of Policy and Programs at the UN Environment Programme. With a career spanning the Green Climate Fund, International Fund for Agricultural Development (IFAD), and Center for Strategic and International Studies (CSIS), Jo offers a rare insider’s look at how multilateral institutions are grappling with climate adaptation — and why so many are falling short. In the latest episode of the Climate Proof podcast, we talk about how she led IFAD to adopt an adaptation-first agenda, what she learned from years as the inaugural head of the Independent Evaluation Unit at the GCF, and how adaptation finance can be mainstreamed across public and private financial institutions. We then dig into Jo’s concept for “resilience credits” — a system that could create investable, measurable adaptation outcomes in the Global South. She’s also unsparing in her critique of current global financial rules, from capital adequacy ratios for banks to loan-loss provisions, that penalize investment in vulnerable communities. It’s a must-listen episode for all those working at the intersection of climate finance, development, and institutional reform. 🎧 Check out the full episode over on Climate Proof: https://lnkd.in/gQpApKYv ▶️ Or by searching for 'Climate Proofers' on Spotify or Apple Podcasts #ClimateFinance #ClimateChange #Resilience #Adaptation #Basel #IFRS

Al Gore's Just Climate fund raises $175M from Microsoft and CalSTRS to back climate startups #JustClimate, the climate-focused #VC firm backed by Al Gore’s Generation Investment Management, has raised $175 million from Microsoft’s Climate Innovation Fund and CalSTRS to accelerate nature-based climate investments. While climate finance has historically prioritized energy and transportation, Just Climate is shifting focus to natural solutions such as reforestation, biological fertilizers, and biodiversity protection technologies—critical areas that remain underfunded despite their potential to reverse emissions and restore ecosystems. This #fund expands Just Climate’s investment strategy beyond industrial climate solutions to include agriculture, forestry, and land-use change, which contribute to 15% of global emissions. The firm has already made its first investment, leading the Series B round for NatureMetrics, a company using eDNA technology to assess biodiversity. By directing capital towards restoration finance platforms and carbon verification technologies, Just Climate aims to bridge the gap in funding for nature-based solutions while delivering measurable climate impact. With major backing from institutional investors like Microsoft and CalSTRS, this fund signals a growing recognition that nature is a powerful—and investable—tool in the fight against climate change. The article on TechCrunch in the first comment.

Equitable Climate Finance Must Be Country-Led – Lessons from the Frontlines As the global community builds out the operational architecture for the Fund for Responding to Loss and Damage (FRLD), we must resist the temptation to replicate old models of climate finance that overburden frontline states with bureaucracy and underdeliver on justice. Having spent the last two decades working with civil society, governments, and multilateral partners across Africa and globally, I’ve seen firsthand what works: ✅ When national actors are engaged early — not as implementers, but as co-designers. ✅ When readiness support is tailored, long-term, and not treated as a checkbox. ✅ When governance frameworks value lived experience as much as technical reporting. We MUST prioritize bottom-up, country-owned pathways to climate and debt resilience. We are learning from countries innovating under constraint — and creating space for them to lead. As FRLD takes shape, we need a system that listens, flexes, and builds trust — especially for those who did the least to cause climate impacts but bear the most. 👉🏾 What principles should guide country engagement under FRLD or similar vertical climate funds? Let’s elevate this dialogue ahead of COP29. #LossAndDamage #ClimateFinance #EquitableDevelopment #ClimateJustice #CountryOwnership #WorldBank #UNFCCC #GCF #AdaptationFinance #GlobalSouthVoices