Clean Growth Fund

overall rating:

2.2

planets

Kate Pruden
3/16/2022
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Clean Growth Fund (CGF or “the Firm”) presents a novel capital model marrying public and private investment. CGF targets small companies engaged in solving environmental issues through growth and technology. Although the information provided by CGF is encouraging, especially regarding ESG integration and monitoring within the investment process, the Firm’s products are available only to institutional investors, hence the information available in the public domain is limited. CGF’s alignment with the UN Sustainable Development Goals is nonetheless impressive: its mission and objectives most tangibly address (7) affordable and clean energy, (8) decent work and economic growth, (10) reduced inequalities, (11) sustainable cities and communities, (12) responsible consumption and production, (13) climate action, and (17) partnership for the goals. Accordingly, CGF receives a rating of 2.2 planets.

What it's made of:

2

The Clean Growth Fund was launched by the UK government in May 2020 with a view to investing in innovate young companies finding solutions to the climate crisis. Operating as a venture capital firm, CGF has a stake in various portfolio companies, of which several are UK-based. Although neither the exact number of portfolio companies nor a list of constituent companies is publicly available, CGF shares several case studies on their website. Piclo is one such company, it provides a marketplace for flexible power providers to work with system operators in the procurement of local flexibility services. So far awarded a total GBP 47million flexibility contracts, Piclo has registered over 13.9GW flexibility capacity and procured 667MW capacity since its inception in 2013. 

Above Surveying is another of CGF’s portfolio companies. Above equips asset owners and operators with tools and solutions to optimally manage solar plants, thus facilitating the generation of an increased quantity of green power. Above’s solutions include aerial topographic mapping, construction management, thermographic and HD inspection, and UHD visual inspection. Notably, several UK-based portfolio companies encompass a focus upon regional diversity and are based outside London; the decision to invest in companies across the UK aligns with the UK government’s “levelling up” strategy, which seeks to reduce regional inequalities in the UK through investment in weaker local economies. 

CGF was launched with GBP 40million investment, half of which came from the UK government, and the other half from CCLA Investment Management, one of the UK’s largest charity fund managers. As detailed under How it’s made, CGF operates under a partnership model whereby public and private investors invest in the same funds and companies. At its time of inception, the UK government proposed that CGF could reach GBP 100million in investment by 2021 through additional private sector investment. Whether this figure was met is unconfirmed, although Aviva Investors alone has since invested GBP 50million into CGF.

How it's made:

2.5

CGF is open to institutional investors only, hence the information selected for release into the public domain is limited. CGF seeks to invest in young companies which offer innovative solutions in the clean growth space. CGF is responsible for identifying, evaluating and investing in such companies, and offers commercial expertise and market access to scale them up. CGF states several criteria for potential portfolio companies: substantial addressable markets; scalability with a clear sustainable competitive advantage; led by teams that have proven execution ability; identifiable exist route within the lifetime of CGF; clear and significant contribution to reducing greenhouse gas. Measurement of the latter criterion is factored into CGF’s investment process; potential and actual greenhouse gas saving from the technologies that CGF invests in are measured systematically. Portfolio companies are expected to consider their wider environmental impacts too, for example, through their water usage or waste production. Social and governance factors are equally important in the investment process. CGF highlights its “strong labour standards policy”, although the policy is not shared online. Since it is unlikely to be sensitive information, the policy’s exclusion from CGF’s website seems excessive, although CGF can be acknowledged for favouring a simple website with relatively few, uncomplicated webpages, permitting ease of navigation. Other social factors considered by CGF include health and safety, supply chain management, and anti-corruption. Governance factors are cited as important for providing oversight and preventing any individual from accruing excess power; accordingly, portfolio companies are expected to identify and manage potential conflicts of interest. 

For each portfolio company, a Climate Assessment Report is produced, detailing current and potential future greenhouse gas savings from the company’s technology. The existing ESG policies and performances of potential portfolio companies are considered during the investment process, with the caveat that many such companies are small and may not yet have formal ESG policies or standards. CGF supports these companies to address such omissions. 

Who makes it:

2

CGF is headed by Managing Partner, Beverley Gower Jones, who previously worked as a Vice President at Shell Technology Ventures before co-founding Carbon Limiting Technologies, a consultancy firm specialising in climate change solutions. Although a contentious employer, her prior role at Shell involved supporting the energy transition away from fossil fuels through the innovation, implementation and adoption of new technologies. CGF’s team otherwise comprises an advisory board with five members, and an investment team of seven, all of whom have a background in the technology or energy sectors. Regardless of seniority, team members have a demonstrated commitment to and engagement with the climate technology sector. 

CGF operates under a private partnership model whereby public and private investment is accepted. With the contributions of the CCLA and the Department for Business, Energy and Industrial Strategy’s initial GBP 40million investment, CGF works with Carbon Limiting Technologies and Northstar Ventures. Carbon Limiting Technologies has provided incubation support services on over 350 technologies. Northstar Ventures, a fund manager in its own right, provides governance and investment services to CGF. Based in Newcastle-upon-Tyne, Northstar Ventures has identified companies in entrepreneurially and economically underperforming UK regions.