The venture, which was started by a firm chaired by former US vice president Al Gore, will use the money to accelerate investment in natural climate solutions.
Just Climate, a specialist investment firm founded by Al Gore’s Generation Investment Management, has secured $175m (€160m) in funding for its natural climate solutions strategy, which is aimed at restoring degraded landscapes and changing the way agricultural commodities are produced.
The California State Teachers’ Retirement System (CalSTRS) joined the strategy as its institutional anchor while Microsoft’s Climate Innovation Fund has become its corporate anchor. As previously reported by Impact Investor, both investors backed Just Climate’s industrial climate solutions strategy, aimed at emissions reduction solutions in industries where they are hard to achieve, in 2023.
Just Climate said its natural climate solutions strategy will support scalable business models that can “transform land use to achieve global net-zero and nature positive goals”. These could include the development of biological fertilisers and pesticides, technologies to verify carbon and diversity outcomes or development models to finance and operate restoration projects, Just Climate said.
“We believe a rapid land transition, with the potential to be as profound as the energy transition, is coming. Our strategy focuses on directing and scaling institutional capital to solutions that can help to transform food systems and drive the expansion of the ecosystem restoration sector,” said Eduardo Mufarej, co-chief investment officer of Just Climate.
Just Climate’s Natural Climate Solutions strategy made its first investment in January, when it led a $25m Series B funding round for NatureMetrics, a UK-based startup whose environmental DNA technology is able to produce data on thousands of species at once.
Greenhouse gas emissions
Agriculture, forestry, and other land use generates just under a quarter of greenhouse gas emissions, mainly from deforestation and agricultural emissions from livestock, soil and nutrient management, according to a 2024 report by the Intergovernmental Panel on Climate Change.
The world spends around $154bn a year on nature-based solutions, which are actions to protect, conserve and restore natural ecosystems, the UN Environment Programme said in a 2022 report. But the UN warned at the time that a doubling of investments into nature-based solutions by 2025 was needed in order to reach climate, biodiversity and land degradation goals.
“This investment with Just Climate is aligned with our long-term outlook and mission to provide a secure retirement for California’s public educators and their beneficiaries. We believe investment opportunities related to the land transition that require specialist expertise create value,” said Kirsty Jenkinson, investment director at CalSTRS.
“Achieving our ambition of being carbon negative by 2030 requires both reducing emissions and scaling high-quality carbon removals,” said Erika Basham, director at Microsoft’s Climate Innovation Fund.
Investors
Landing the likes of CalSTRS and the Climate Innovation Fund as anchor investors may inspire other investors to follow suit, according to a Just Climate spokesman.
As of the end of February, CalSTRS had assets under management of $352.7bn, making it the second-largest pension fund in the US. Software giant Microsoft has committed $1bn to its Climate Innovation Fund, which was launched in 2020, to speed up the development of carbon reduction and removal technologies.
“They are obviously two extremely well-known and important institutions, and getting them over the line hopefully gives confidence to the whole sector that there is sufficient desire to move these sorts of solutions forward,” the Just Climate spokesman told Impact Investor.
The spokesman declined to comment on the strategy’s fundraising target and also declined to disclose the names of any other investors.
“Recent geopolitical events remind us just how much we rely on visionary organisations prepared to make bold investments in change for good. Just Climate not only understand the urgent need to invest now to drive systems change but also has the reach and ability to convene the diverse stakeholders required to turn ambition into action,” said Dimple Patel, CEO of NatureMetrics.
