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Low Carbon Patient Capital
Low Carbon Patient Capital
We are a Single Family Office investing solely on our own account since 2012. Low Carbon principles and a strict long-term orientation are hard to come by with traditional external asset managers or Multi-FOs. So we decided to structure our investments into the following asset classes by ourselves.
There is a huge pile of learnings that Torben was lucky enough to take away from his seven years as part of the exceptional Signavio family. As an operating Angel, he enjoys passing on some of that experience to other great entrepreneurs in exciting Startups (both in Climate Tech and in more traditional tech).
We invest as an LP into a set of carefully selected Venture Capital funds of top-tier Managers all the way from Pre-Seed to Later Stage. Additionally, Torben is an operational Partner at Extantia Capital - a Deep Decarbonization Climate Tech VC Fund with focus on Early Stage and European ventures.
Two long-term long-only quantitative stock picking strategies complement the illiquid/private asset classes. We obtain professional fundamental data from one of the market leading financial data providers and perform intensive market research and portfolio backtesting.
It is our strong belief that capital does not come along without considerable responsibility. With the Carbon Clock ticking at brutal speed, any rational decision making process in asset management needs to factor in a substantial portion of climate risk into its long-term results. Consequently, portfolios aligned with long-term goals are deemed to reflect upcoming and inevitable climate legislation and the resulting shifts in supply and demand dynamics.
We apply low carbon principles across all of our relevant asset classes. Basically, there are a variety of climate challenges, many of which capital allocators have substantial influence on. Investment decisions have the power to shift market and management attention towards relevant climate action. Different asset classes, however, require different approaches.
In public/listed markets, we see two promising approaches to make capital allocations effectively low carbon. The first is known as fossil fuel divestment, meaning capital shall not be allocated to any large carbon emitters as carbon pricing and - worse - the future market demand situations likely affect profitability of these legacy business models. One aim of divestment strategies is to try to avoid stranded assets or assets following a secular downward trend. Interestingly, in light of irreversible and large scale decarbonization, divestment efforts could be considered as an approach aiming at quite conservative investor downside protection rather than being progressive and risky at all. We have published the divestment-oriented quantitative listed equities portfolio strategies originating from our own research as investable Wikifolios.
The second approach towards public equities that can possibly have a positive effect on decarbonization are activist strategies targeting big polluters in order to create pressure and influence their management towards more effective climate action (i.e. resulting in a sooner and larger climate impact). The idea is that those companies representing a large chunk of GHG emissions also represent a significant lever onto the total emissions. Influencing their decarbonization pathways can have a notable effect on the total global emissions. There are both non-profits (e.g. Follow this) and capital managers (e.g. Engine No 1) following activist approaches, which we back.
Quite generally, as part of the economies' efforts to decarbonize, we will be observing literally any of the existing companies' managements to develop climate action plans to reasonably eliminate GHG emissions from their operations (Scope 1-2) and their supply chain (Scope 3). Some of them more ambitious, others not so much. In its essence, organizations with an inherent concentration of their direct value generation on actual fossil fuels (most notably upstream O&G), will have the hardest time to develop viable pathways towards net zero. To quote a friend: "Hydrocarbon businesses are not necessarily against climate action, they are against going out of business. Kind of a basic principle of capitalism."
Substantial parts of the current global supply chain either inseparably depend on fossil fuels or they emit GHG systemically (e.g. chemicals, cement, food). If we intend to keep our lifestyle, which is driven by overconsumption (eliminating which beyond a certain extent will likely be hard to impossible), then new low carbon technologies and business models will inevitably have to replace these legacy processes. Disruptive innovation is needed to reinvent large parts of the value chains. Innovation is seldomly to be expected by the incumbents. As a result, new Climate Tech startups with extremely promising approaches, technologies and teams are attacking this Trillion Dollar Market as we speak. Mostly Climate Tech means Tough Tech (aka Hardware-based) companies commercializing low carbon pathways to replace fossil feedstock in high-emitting verticals such as clean baseload electricity, heavy industry, steel, cement, petrochemicals, food, buildings and carbon removal.
We allocate a significant portion of our total assets to a diversified portfolio of 10+ carefully selected Climate Tech Venture Capital funds and, additionally, commit to a few high-conviction direct investments.
In our opinion, all of the strategies above create a substantial opportunity for investment success. We are convinced that now is the right time to be in the market. Capital inflow to Climate Tech funds of the very recent vintages and the recent hikes of carbon prices both back this thesis. It is not a wild assumption any longer that the early 2020ies will likely be the critical time frame rewarding investment decisions into low carbon strategies overproportionally (Climate Tech in particular) - compared to both past and future periods. Reaching net-zero or net-negative emissions effectively is impossible without new technologies.
Last but not least we take efforts to reduce our corporate and private footprint and have offsetted our own carbon footprint dating back to the origins of our very own professional life at full cost.
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Please bear in mind that the value of a financial investment can fall as well as rise. Investors must therefore be ready and able to accept losses on their invested capital. Past performance is not a reliable indicator of future performance.
The operator of this website is an active investor. It is, therefore, possible that the content provided may refer to shares, bonds, investment funds/ETFs, certificates, warrants, or other financial instruments in which the operator herself holds positions or is otherwise involved. The operator endeavors to disclose any resulting conflicts of interest in an appropriate form. However, the operator cannot guarantee that the disclosure of conflicts of interest is up-to-date, correct, or complete.
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