Impact investing at your fingertips

Duncan Grierson, Founder of Clim8, joins Eva Cairns on the podcast to discuss how his cleantech app allows investors to invest in companies making a positive impact on climate change. 

Transcript

Eva Cairns: Hi everyone. I'm Eva Cairns, your host for today and you're listening to the abrdn Sustainable Investing podcast, discussing all things relating to sustainable and responsible investing. 

I'm delighted to introduce our guest for today, Duncan Grierson. Duncan is a passionate clean tech entrepreneur and venture investor with over 20 years of experience. He is now building a company with a big mission  - Clim8 - a FinTech focused on investing into companies making a positive impact on climate change. 

As founder and CEO, he raised over 100 million in venture capital from large investors, built several clean tech companies in waste, biofuel, plastics, recycling, solar battery storage, wind turbine composites, and invested in many others, especially in digital solutions for the energy transition. 

He started in venture capital with top tier venture fund TCVC in London, Silicon Valley and Paris. Duncan founded Clim8 in 2019, to empower everyone to make a tangible difference on climate change, by investing in great companies with real environmental impact. 

He has spent the last 20 years building sustainable businesses before sustainability became mainstream. Duncan is an EY Entrepreneur of the Year Clean Tech Award winner and has an MBA and a law degree from Cambridge University. A father of two boys, age six and 10, he's inspired by their curiosity to preserve and build a fairer world. So Duncan, what an inspiring bio and list of achievements, it's such a pleasure to have you with us, welcome.

Duncan Grierson: Hi, it's great to be here. Thank thanks for inviting me.

Eva: So Duncan, you've got an impressive career in clean tech and climate impact investing, can you tell us a bit more about how your journey started? And got you to where you are today? Was there anything that inspired you to take this route?

Duncan: Yeah, I guess, I mean, I guess if I roll back here almost 20 years, I started working on a, on a business to make a difference on climate change. And before that, I’d been an investor and I, I guess my journey really started, perhaps, you know, focused on the financial side of things. So I, you know, I could see there's an opportunity in the environmental space as an investor and I was looking at building a platform around environmental technology consulting. 

And the thing is, I got so interested in the whole topic that I kind of went down the bunny hole, and, and did all sorts of research and got very, very interested in our space. And, you know, I've been in it ever since. And, you know, I've built a sort of range of different companies, and I've invested in a lot of others, particularly last few years around, kind of click clean energy, and the clean energy transition, but yeh inspired really, just by, by the potential to have an impact on this massive, massive problem that we all face. You know, this the biggest problem that we faced on the planet, ever, and you know, if we can have a little dent in it with with, you know, with a newish platform Clim8, that's got to be a good thing.

Eva: So can you tell us a bit more about Clim8 then and really the core concept, how it works, what's the purpose of that business?

Duncan: So Clim8 it's a, it's a smartphone app, it's a, it's a fintech. So we make it super easy for anyone to invest in the companies that are already having a positive impact on climate change. So we focus on six core themes. And we curate a portfolio of companies and specialist funds that are making a difference. 

So good examples are kind of clean energy, clean technology, electric mobility, and sustainable food - those are some of our kind of our core themes. And so we're, we're quite unusual platform, we are very focused, as the name suggests, on climate change. And so we're quite different from kind of ESG investing, which some of your listeners might have, might have read or might know quite a lot about. 

And so, where we go much further than ESG - which is really a set of screening tools to remove, if you like the worst, the worst offenders in environmental, social and governance. We go much further, we are positively looking out for companies that are making a positive impact and so they have a core product, which is making a difference. 

So you know, clean energy is a is a clear example of that. So we have quite a lot of our portfolio invest in clean energy. And another one is, is smart mobility, which is largely right now electric mobility. And so yeah, we just we make it super easy for anyone to invest, our minimum is £25. But we also have much larger investors who have, who have, you know, taken I guess, a small leap of faith with a relatively new entrant but I, you know, we’ve built a team now, we’re 38 people, we've raised quite a lot of venture capital funding, we’ve brought some incredible people into our, into our business, to our team and as advisors as well, so we're we're, we're growing fast and we seem to be you know, resonating with a, with a lot of people and obviously COP26, you know, a few weeks ago has even further raised the profile of climate change and the need for sustainable investing.

Eva: And I think it's great that it's so accessible when you say, you know, it's on your phone, £25 starting point, anyone who wants to have this kind of positive impact through finance, can use Clim8, which is fantastic. 

And on the topic of, you know, you talk about investing in companies that have a positive impact. And I know when we do our analysis of, you know, for our impact investing strategies of companies that would fit into that, one of the challenges is really measuring that impact, to be sure that you can show credibly, that the company has a positive impact on climate change. So how are you doing that? What would you say is the approach to take there?

Duncan: Yeah, it's all about data. So we, we’re building a large data set and we have three data providers, so specialist, technology investment platforms that provide us with data, and we aggregate all that and we filter it and clean it. And we're also add to our own data. So we, I guess, we're a little different from most, FinTech, most, you know, app based platforms. We have an in house investment team, full time of six people. And our chief investment officer was the former Global Head of Utilities researcher at Credit Suisse, 30 years experience in the capital markets. And so we've got this in house deep expertise. And with that, we dig deep, we do a lot of diligence on the companies and then there's some specialist funds we also have in our portfolio. And we yeah, we look at all the different metrics. And so, how we..

Eva: …can I just ask what kind of metrics you look at?  

Duncan: Yeah, so like the two key ones that we look for and in fact, we share with our users in the app, are carbon abated - so we drill into the numbers from the companies about how much carbon is abated through them, through their products, and also clean energy generated. So those are kind of our two current core metrics. And we will look at how much, you know, how much carbon is abated through these companies, and how much clean energy is generated. And that's, you know, we believe that's those are the two key metrics you'd be looking at. But we're also looking at providing more information to our users also around other metrics like water, you know, water saved - water is obviously a key resource and will come even more so in the in the coming decades, especially with climate change.

Eva: Fantastic. And as you say this carbon abated, I think, is you know, the kind of avoided emissions that in industry also starting to be called ‘Scope 4’ and there's quite a challenge to calculate, so that's quite interesting that you pull that together for people. 

And on the topic of innovation, when it comes to clean tech and some of the companies you've looked at, some of the things you've invested in, have you seen any really exciting innovations that you think will really help transform the transition to net zero and the planet? Anything that you would want to share there that you think this is really exciting? In terms of innovation?

Duncan: Yeah, we, we have a large portfolio so that there's over 400 stocks across our portfolio. And so it's very diversified. So we don't typically go, we don't typically over index on one particular stock, we try to provide a balanced portfolio. But there's clearly a lot of interest in some of the newer energy technologies, for example, hydrogen, there's a lot of interest in that right now. Hydrogen, for sure will have a place in the energy system, I think there's probably a little bit too much excitement in certain use cases - but there will definitely be the use cases for hydrogen. And around electric mobility as well, I think, you know, as we move towards, you know, a truly kind of decarbonized system whereby all vehicles will be electric, there's lots of interesting companies coming through. And that's just not, that's not just hardware, that's also software. So software digitalization of a lot of companies and their products is a very big part I think of the move we need, systemic we need around the world. 

But I would also say, that we shouldn't over index on kind of new core technologies. We already have, most of the technologies we need today, that are already proven, we just need to scale them further. So we need to invest at scale into rolling out solar, and wind, and energy storage technologies. You know, these are technologies that have already gone down the cost curve over the last 20,30,40 years. And now, you know, at parity or even cheaper in some parts of the world. You know, it's cheaper now in some parts of the world to install solar, than it is to build a new coal fired power plant. And so we need to be investing in these and not just you know, in the in the developed world, we also need to be helping finance these kinds of technologies, solar and wind, also in you know, emerging parts of the world where it's perhaps not so easy to get access to finance. 

So, you know, I read some research quite recently that, that it's believed that 75% of what we need to get to net zero by 2050 are from proven technologies already today - that’s solar, wind and storage. But we do need to be investing also in some of these newer technologies as well, we need to get them down the cost curve, and so they can fill out the last, the last piece of the jigsaw puzzle.

Eva: Yeah, absolutely. And similarly, I've seen stat just before COP that the IEA published, which was around 50% of the technologies needed in 2050 are at demonstration stage at the moment or development stage. And so therefore need a lot more investment to kind of support as you say, scaling up some of these and commercialising them. So I think that's really important. Do you think countries and companies are spending enough on R&D for example, to get some of the innovation we need off the ground?

Duncan: I think there's a lot of, I think there's a lot of investment moving the right direction right now. But it's not I think, still not just companies, I think we also need more direction from governments, you know, COP26, was, you know, there was a step forward, but it was ultimately a partial failure, you know, we didn't end up with a price - the true price on carbon. So carbon right now is not being priced correctly. And, you know, that has to be done. And I think that's where we need, you know, we can I think, we can overly focus on ourselves, you know, users as citizens making a difference, we definitely need to be, you know, doing what we can, companies also need to be doing as much as they can, but I think you know, that one of the biggest levers we’ve got are, you know, what governments can do, and so the carbon tax, or the lack of carbon price, I think, was something that could have, should have, would have come out of Glasgow. I don't think many people were surprised that it didn't. But I think now, with a positive hat on the there's a, there's a big momentum now behind all the changes we need to make. And I, you know, I'm hopeful that at the next COP, there will be you know, a bigger step towards having a proper, a proper price on carbon. You know, carbon is in everything, you know, carbon is embedded in everything we do, from the moment we wake up in the morning, from what we eat for breakfast, for the clothes we put on for, you know, the homes we live in to the you know, the transportation we take to work when we could travel to work - it's just everywhere. And so having a true, a correctly priced carbon is a very important lever that we need to be focusing on.

Eva: Yeah, no, I would fully agree it's, you know, providing the right incentives to allow all the different areas, and all different industries to decarbonize. And without the right carbon price, certainly for some, it's a lot more difficult than for others. And I did want to ask you about overall COP26 outcomes, given that, you know, this was a big conference, a lot of focus on finance, and the role of finance and keeping the 1.5 degree goal alive, which as you say, that hasn't been achieved yet, when we look at what the pledges add up to at the moment, and more importantly, the credibility and really putting some of the promises into practice. 

So you mentioned the carbon price there, is there anything else you would highlight from COP26 things that, you know, were positive, but also other things that have definitely not delivered, but are needed to enable investment in climate solutions at scale?

Duncan: I mean, I guess I’d highlight the announcement that Mark Carney, the former Bank of England made around mobilising $130 trillion by the largest 400 financial services and insurance companies around the world, you know that is a huge sum of money. And if, if that can happen, then that will obviously have a, you know, a big part to play in, in this, this big investment we require. So I'm hopeful. But obviously the you know, the proof is in the pudding if that money will actually get mobilised in time. And there's, you know, there's clearly a significant amount of greenwashing going on right now from various different companies with kind of jumping on the green bandwagon but aren't necessarily investing their money in the right places - there's still far too much back funding of fossil fuel plants. You know, not necessarily in Europe, but sort of in other parts of the world. And that needs to stop, you know, the, we really should not be funding new coal fired power plants anywhere in the world. I mean, it's just, it's kind of suicidal, that we were doing that, you know, the planet is just gonna be just fine without us on it. But you know, this is, this is humanity that needs to wake up and, you know, make many systemic changes and putting our money into the right kinds of companies and projects.

Eva: Yeah, absolutely. And as you say, I think everybody needs to really shift and the systemic changes needed in you know how we look at short term versus long term and how we look at really, when we talk about return, you know that it's not just the financial return, but also the planet that you're ultimately going to enjoy this return in – and that's also part of the equation. So I think a lot needs to change to really embed that into the thinking. And we'll look forward to COP next year, I think it was good to see that actually, normally, it would be a five year mechanism to come back and update pledges. And I think from our perspective, it was quite nice to see that next year, everybody has to come back and actually give it another chance to update pledges so they align with 1.5 degrees, so we'll see what will happen, I think, over the next few months.

Maybe thinking a bit about your own personal journey and how you know, you mentioned earlier, you'd said you've got two boys and they inspire you and I know how that feels, I've got two girls, and they start asking about climate change. And it's just interesting to see the kind of question they ask , and I just want to explore a bit how the aspect of climate change is reflected in your personal life? And the kind of discussions you have with your kids about that?

Duncan: Oh, yeah, crikey, it's a difficult one, isn't it, because you don't want to scare them. But you also want to inspire them to, you know, maybe do their own thing in their own little way. So I mean I guess we try to, we try to focus on action. So we talked a lot about recycling and that's, those are kind of simple actions that everybody can make to make sure you're, you're putting your plastic bottles in the, in the right recycling bins and making sure, you know, you're, you're not over buying things, you know, so we're, you know, we try to be a little careful. But, um, yeah, I try to inspire them, you know, try to get them thinking about, perhaps, you know, what is, what is the positive, we can, we can take from all of this, and you're looking back at COVID, last couple of years, you know, what has been tremendously positive is that people, you know, very quickly got behind it. And, you know, and we were able to get onto this kind of crisis footing. And so, you know, it's that it's that kind of thinking, I'm trying to sort of encourage within that, you know, always look at things with a positive head that you can make a difference, you know, if you're, if you're smart, and you try and find solutions.

Eva: And so, if we think about that, and looking maybe, three years into the future, with the developments we're seeing across the investment industry, and governments and companies - where would you like to see the investment industry when it comes to tackling climate change and enabling net zero through their investments in three years time?

Duncan: So three years time? Yeah, I mean, hopefully before that, but what would be, what would be great would be to have some proper definitions around - quote, unquote - ‘sustainable investing’. I mean, right now we have we have ESG. And there are no, there's no real definitions of what that is. So, you know, one fund manager is calling one group of companies sustainable than another fund manager in a different group. So I think that's really unhelpful. You know, there are, you know, ESG, generally started with a, with a positive kind of outlook, if you like, a positive reason, you know, risk based analysis, but unfortunately, it has become a kind of a marketing tool. And so I think what would be really helpful is if we had some profit definitions around what is truly sustainable investing, and that may mean, we end up with a couple of different types. So, you know, we're very much of the kind of pure play ‘super green’ end of end of the spectrum, we're only putting people's money into companies that are having a positive impact. But it could be that we have different shades of green, so you have kind of a ‘super green’ and perhaps a slightly, you know, ‘browner green’, where you're investing in companies, which are on a transition, you know, there are a lot of companies out there, which are trying hard to move their products or services into having a reduced carbon impact. And that's good. But there are also a whole bunch of companies that, you know, you know, I touched on earlier who are just basically greenwashing. And so, having proper topography standardisation of what you can describe as in your portfolio, I think, you know, that would be a massive step forward. And, and, you know, for example, The Economist, you know, just a few months ago, so that the top 20 ESG funds in the world hold on average 17 fossil fuel companies in their portfolio, which is just mind boggling. If as a, as an investor, as a retail investor, you think you're investing into companies that are making an impact, have you put money into, you know, one or more of those ESG funds? Well, that's not really happening. So I think that better, better standardisation, better definitions. I think that will be a big step forward.

Eva: Fantastic. So as a final question, it'd be great to leave listeners with something that inspires you and maybe keeps you motivated and hopeful. Is there a person that inspires you like that or any books or podcasts that you would recommend?

Duncan: I guess, you know, I would look at I mean, you know, the obvious sort of figures in the world of sustainability, but perhaps slightly less obvious or less well known. I probably pick up Christiana Figueres who was the Executive Secretary of the UN. And basically, she pushed, you know, the Paris Agreement back into 2015. So, you know, amazing woman and amazing work. And I think, you know, she's quite inspirational, super smart. And she managed to, you know, motivate and pull together a lot of people back then and I think we owe her a big, you know, big amount of credit. And, you know, and if you want to podcast, she does run a podcast, actually, which is excellent called Outrage and Optimism, which...

Eva: …you must have listened to my episode, because it's exactly what I said when I did the podcast with Amanda

Duncan: Wow – no I didn’t…

Eva: Christiana was my inspiration and her podcast and books as well. So I totally agree. She's absolutely brilliant.

Duncan: She is brilliant, yeah – so people go away and listen to her and that podcast. It's excellent.

Eva: Yeah. Fantastic. That's great to hear we’re on the same page with that. So that's, that was really inspirational. We've come to the end of our podcast, and it's been such a pleasure to have you with us, so thanks again for your time and your great contributions.

Duncan: Many thanks Eva, thank you so much.

Eva: You have been listening to the abrdn Sustainable Investing podcast, a podcast relating to all things responsible and sustainable investing, and today a special episode with Duncan Grierson on climate impact investing. Thank you all for tuning in. You can find all our episodes on various podcast channels such as Spotify and Apple, as well as on the abrdn website. Until our next podcast, good bye for now.