Public Climate Funds

While the number of climate-related investment funds has surged over the past few years, significant differences in composition between private and public markets climate funds have emerged, according to a new study released by investment data and research provider MSCI, including a major focus by private markets funds on areas within carbon-intensive sectors positioned to benefit from the net zero transition, compared to public funds investing heavily in areas with already-reduced carbon footprints.

The report, “In the Name of Climate: Private vs. Public Funds,” by MSCI Research Vice Presidents Abdulla Zaid and Rumi Mahmood, examined private and public funds with climate-related names, including phrases such as “net zero, cleantech, renewable, and low carbon, among others, assessing each group’s fundraising trends, sector composition and underlying asset classes.

The study found a “green rush” towards climate funds in both the private and public markets over the past few years, with more climate funds launched in private markets between 2020 and Q3 2023 than in the previous nine years combined, and with these new funds representing more than 70% of the $90.5 billion of cumulative capital now encompassed in private markets climate funds. Similarly, there are now over 1,300 public markets climate funds in the market, including more than 70% that were launched from 2020 through Q3 2023, representing nearly 80% of AUM.