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Generation: Climate Solutions Fund

Economic disruptions — such as a changing climate — can create opportunities for forward-thinking companies. Generation’s Climate Solutions Fund II invests in businesses that are contributing to the transition to a low carbon, sustainable economy.

Investment

$7.5 million; originated in 2014

Rationale

Fund that invests in growth stage private companies and small publicly traded firms providing solutions to climate change. Generation’s strategy seeks to invest in businesses that create value by enhancing resource productivity while reducing pollution, waste, and emissions.

Returns

Financial Returns: Fund is off to a good financial start having already exited its investment in Seventh Generation via an acquisition by Unilever.

Social & Environmental Impact: McKnight reviewed impact performance for 2016 but Generation considers its data confidential, however impacts are impressive. For example Generation recently led a $55 million fundraising round into California electric bus company, Proterra, along with BMW i Ventures. These buses eradicate diesel air pollution and, when combined with renewable electricity generation, provide a roadmap for more sustainable cities.

Lessons Learned

Providing transparency around private equity portfolio holdings and impact is challenging. These companies often strive to be quiet actors in dynamic markets.

Generation’s approach to measuring impact is ambitious, measuring key environmental, social and governance factors for all companies in the fund. Generation quantified “Scope 3” emissions — greenhouse gas emissions or savings from a company’s operations and its products. This is a gold standard for reporting, but it makes apples to apples comparisons with other investments difficult.

As of November 2017

Photo Credits: (Top) photo by Georgina Goodwin, courtesy of M-KOPA Solar

Disclaimer of Endorsement: The McKnight Foundation does not endorse or recommend any commercial products, processes, or service providers.