And why a comprensive investment platform like Urban Partners needs to exist
Much has been written about the trillions of dollars that will be required to fund our net zero ambitions. McKinsey estimates $4.5 trillion per year through 2035 in infrastructure alone. Real estate firm Savill’s believes £330 billion would be required to improve the energy efficiency of the housing stock of the UK alone by 2035. In a recently released report the Climate Crisis Advisory Group (CCAG) stated that there is a $630 billion per year financing gap to support cities’ transition to net zero. A World Economic Forum working group calculated that the investment required for adapatation (should we not achieve mitigation targets) could rise to $560 billion by 2050 in emerging markets alone.
Generating 70% of worldwide greenhouse gas emissions and consuming 3/4 of energy use, influencing the pathways for cities in the highest leverage vector of attack in our battle against climate change and global resilience. In the words of the UN Secretary General:
“Cities Are Where the Climate Battle Will Largely Be Won or Lost” — António Guterres
As evidenced above, however, the urban opportunity requires many forms of capital, much of it private, to help identify and deploy sustainable solutions at scale and with the greatest speed possible. That requires a breadth of capital from Venture Capital to Private Equity to private and public loans to Infrastructure and public/private partnerships. These exist, but not in a coordinated, mission-aligned fashion.
This is why, earlier this year, we unveiled Urban Partners, a €20 billion investment platform of mission-aligned investment strategies focused on making our cities efficient, resilient and sustainable.
We seek to deploy capital to fund innovative technologies through our technology fund 2150. Acquire and scale urban solutions through Luma Equity, our Private Equity firm. Influencing the brown-to-green retrofit of real estate in cities through private credit with Velo Capital and leading the way in developing sustainable neighbourhoods and urban development with PERE firm Nrep. While we invest independently, we benefit from the knowledge and access each strategy contributes.
A recent McKinsey report identified 22 levers commercially available which if deployed at scale could reduce emissions of the built environment by 75%. Our job as Urban Partners is to identify and evaluate the various solutions within each of those levers that can be scaled, to deploy insightful capital into these technologies and to help create the playbook for others to emulate to can have the greatest and fastest impact.
While the only climate OKR from John Doerr ‘s Speed and Scale that is marked as “achieved” is Venture Capital, to turn many of the others from “Code Red” to “Achieved” much more capital of different guises is still required.
As the CTVC Climate Tech Stack report highlighted , $121 billion of climate-focused AuM across VC, Growth, PE and Infra has been raised since 2021. It fails to account, however, for the Trillions in loans and grants also needed to fund assets and projects and the $4 Trillion of AUM deployable in real estate. To this we must add government funding, be it the $400 billion the United States DoE Loan Office is deploying with haste or the multiplier effect of public/private urban development initiatives like London’s Urban Development Fund.
Given the magnitude of private capital required, we see Urban Partners as an an active investor on this mission, but just as importantly as an educator and an agitator:
- An educator sharing our knowledge, be that deep dives into problem areas like concrete, sharing the knowledge acquired in urban development projects like Nordhavn or convening or amplifying our global reach through partnerships such as the one with C40 Cities.
- An agitator seeking to influence policy makers and peers in a common direction. Be that through launching Leaders of the Urban Future in partnership with Systemiq, bringing together some of the world’s largest owners of real assets with government officials and innovators. Or through or continued presence at forums such as COP, WEF, Climate Week, evagelising the opportunity (both financial and sustainable) to others.
While early in our voyage, the opportunity ahead to create a new category of investment across the full Urban Capital Stack is immense. But this is not a voyage we plan to make alone. We hope, expect and encourage others to emulate and partner with us to make our cities better and improve the lives of billions of their inhabitants.