KANSAS CITY — From advancing battery energy storage to drip irrigation, technology that provides sustainability and climate change mitigation benefits have been part of the investment landscape for decades. More recently, worsening climate change and other forces have accelerated capital flows into so-called climate tech. For grain-based foods, this emerging area of investment should not be viewed as a remote development unfolding in the distance. Changes precipitated by this sector will be felt widely throughout the industrial economy, with notable ramifications inevitable for makers of grain-based foods.
Investors increasingly view climate tech as a financially compelling opportunity amid ever more concrete signs of the disruptive nature of climate change. Sea levels have been rising 0.13 inches a year, and millions of people are displaced by flooding annually. Also making the investment case economically persuasive is a forecast from the Intergovernmental Panel on Climate Change of the United Nations of a 25% per capita loss in per capita global GDP by 2100 based on the current trajectory of climate change.
Evidence of this increased interest was a 45% compound annual increase in climate tech startup investing between 2016 and 2021 with estimates that up to $5 trillion of total investments will be needed annually to reach net-zero carbon emissions over the next 30 years. Climate tech startup investments totaled about $40 billion in 2021, accounting for 6% of all venture capital investing for the year, according to a presentation by Emmanuelle Lipski, a principal with 10D VC, a fund based in Israel. Total climate tech investments in 2021 were estimated at $100 billion. About a third of Fortune 500 companies have established climate-related targets, and consumer demand for sustainable products has been growing.
Laurence D. Fink, chairman and chief executive officer of BlackRock, a financial firm with $10 trillion under management, has been an outspoken advocate for the sector’s future.
“It is my belief that the next 1,000 unicorns won’t be a search engine, won’t be a media company, they’ll be businesses developing green hydrogen, green agriculture, green steel and green cement,” Mr. Fink said.
Another impetus for climate tech investments came in the Inflation Reduction Act of 2022 (IRA), signed into law last August.
The bill includes $370 billion aimed at expanding renewable energy and boosting US manufacturing. The funds will be disbursed as tax incentives, loans and grants aimed at accelerating deployment of clean energy solutions like wind and solar while also encouraging the development and adoption of new technologies.
Ahead of the IRA passage, PriceWaterHouse Coopers urged the business community to analyze its potential impact.
PWC said, “Businesses also should consider potential changes to their manufacturing or operating models consistent not only with the specific tax incentives under consideration but also from the perspective of active stakeholders — both shareholders and customers — increasingly interested in the actions a business may be taking or considering in the environmental area.”
“Climate is like the internet in that it’s going to disrupt every corner of the global economy,” Andrew Beebe, the managing director of Obvious Ventures, recently told Business Insider.
While every corner of the economy may be disrupted, the climate tech issues addressed by startups should capture the attention of grain-based foods executives. Climate-smart agriculture and food loss and waste are two sub-categories in the “food and agri” segment of climate tech attracting venture funding, Ms. Lipski said. Advances in eco-efficient water infrastructure, clean manufacturing, green construction and low carbon buildings also have relevance to baking. Sustainable mobility and transport is another area of investment, one that touches the commercial baking industry directly. Which nascent technologies will emerge as transformational remain to be seen, but the swell in investments suggests disruptive change is coming. The baking sector should keenly monitor climate tech and be careful not to be left behind.
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