Investments in climate technologies have been on the rise since 2019, thanks to the consistent global effort to bring down carbon emissions. Private equity investments are particularly high, with over 300 new environmentally friendly, green initiatives making their mark in the US. There is a threefold growth in the climate fund, from $90 billion in 2018 to $270 billion in 2022. This amount is exclusive of the corporate fund allocations meant to fight climate change, as per Mckensy’s study.
According to “Pitchbook Database private-market deals," the global volume of equity investments grew 2.5 times from $75 billion in 2019 to about $196 billion in 2022, marking a 40% average annual growth. Investments in climate solutions did not stop there, as they grew further to reach $183 billion in 2021. This is a complete contrast to the 24% decline in market investments in general. These developments happened against the backdrop of severe geopolitical and economic headwinds globally.
Key factors that shaped investors' interest in Green Technology
Global Energy Crisis
The Russo-Ukrainian War resulted in a shortage of global energy supplies and compelled leaders across the world toward green initiatives.
Increased Policy support
Since 2019, governments and major economies around the globe have enacted laws to encourage green technologies. Most European and North American governments have passed legislation to support eSignatures, the best electronic signature software platform that discourages paper usage.
Attractive Incentives Encouraged Investments in Climate Funds
Policymakers rose to the occasion with decisive policy changes in lending rates, where green initiatives could get attractive incentives and a reduction in lending rates when compared to investments based on fossil fuel burning.
Alignment of Financial Institutions with Net Zero Initiatives
Major financial institutes have rallied in favor of investing in ‘green initiatives". Glasgow Financial Alliance alone, for example, could pool $180 trillion for Net Zero investments.
Building a Suitable Ecosystem to Sustain Green Initiatives
Governments and public and private sector entities have started catering to funds to build an ecosystem to nurture green initiatives. The World Economic Forum funded a ‘Clean Skies of Tomorrow initiative’ to provide sustainable aviation fuel to aviation industries. Several companies across the globe have started building digital ecosystems to create a paperless work environment. The market for digital signature software is $5.90 billion in 2023, and it is expected to mount to $129.82 billion by 2030 with a CAGR of 40.98%.
Accelerated Innovation in Clean and Green Technologies
Technologies aimed at reducing carbon emissions or absorption have invested time and money to build innovative solutions to attract a mass audience. They could reduce the time, money, and effort spent on legacy technologies while unlocking the employee potential to remain quick, competitive, and agile in volatile market conditions.
Overcoming Resource Constraints
A low-code digital workspace, for example, could help organizations overcome the shortage of expert and trained developers by empowering employees to create documents and templates without writing code. They have simplified the complex needs of organizational documents with features to create custom documents to sign business deals.
Affordable and cost-effective
Climate-friendly technologies exhibited a competitive edge over conventional technologies with unique features, including economies of scale and improved capabilities. The cloud-based SaaS platforms with electronic document management systems could offer custom designs to suit a wide range of manufacturing and service sector industries.
Unprecedented Government Support
Governments across Europe and North America have started flooding funds to bolster climate-tech initiatives. While the US’s Inflation Reduction Act (IRA) allocated $370 billion, the EU Green Deal pledged more than €1 trillion in public and private funds to encourage clean technology innovations. According to a McKinsey estimation, $9 trillion to $12 trillion will be pooled to bolster green-tech innovations by 2030.
Simplified the process throughout the value chain.
Technologies that drive digital automation and a paperless work atmosphere could drive complete automation of the business process with simplified and powerful workflows. This could enhance organizational abilities by democratizing resource allocations. Citizen developers and users could create and manage businesses without going through the hectic manual process, which happened to be expensive and time-consuming.
Key Takeaways
In the wake of rising global temperatures, public-private initiatives augmented funding to buy climate-friendly technologies are accelerating at a scale with the hope that they could transform business with speed and efficiency without spending fossil fuels. Green technologies are a valuable addition to the entire supply chain process.
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