ClimateTech 2023 predictions and the Q1 2023 female founder watchlist
2022 has been filled with mass change. Changes in the macroeconomic and political climates have both impacted ESG and the types of challenges startups in the ClimateTech space encounter.
The Ukranian crisis is at the forefront of energy consumption predictions, whilst corporate greenwashing has initiated a double-down on government regulation. Additionally, the spiralling global cost-of-living crisis and popularisation of ‘green investing’ has led the average ClimateTech investor to take a more conservative approach.
MSCI has highlighted a few climate trend predictions for 2023 which we will discuss below to make the net-zero investment road as smooth to navigate as possible.
1. The energy crisis and the global political landscape
The Russia-Ukraine conflict has compounded the consumption of fossil fuel and may reduce the prioritisation of greenhouse-gas emission reduction as energy security and affordability are placed at a higher level of importance.
The ongoing war in Ukraine and high-inflationary environment may limit near-term pressure to reduce global greenhouse-gas emissions as governments prioritize energy security and affordability. But for power companies, swapping coal and oil for natural gas may not be the only practical option.
What to look out for in 2023: the types of companies that are keeping their eyes on longer-term decarbonization and increasing their consumption of renewables
2. Deforestation regulation
In 2021 we witnessed a loss of 25.3 million hectares of forestland globally. To put that into context, that is greater than the total area of the UK combined.
We also saw a rise in global wildfires which further contributed to the deforestation. The European Parliament introduced regulation legislation which demanded products sold in the EU to be deforestation-free ie in their supply chains.
The legislation is built on the recognition of the EU contributing to global deforestation through domestic consumption and on the following three pillars:
A focus on relevant commodities and products;
A mandatory due diligence procedure coupled with strict traceability; and
A risk benchmarking system for countries and/or regions.
What to look out for in 2023: which companies exposed to deforestation can improve due diligence and supply-chain monitoring as they seek to maintain access to key markets
3. An eagle-eye on ESG funds
In 2022 we have witnessed the rise of ESG-focused VC funds, aiming to fund the most innovative ClimateTech startups and have since been operating with limited regulatory guidance.
With the rise of corporate greenwashing, there has been an increase in regulatory interest surrounding fund’s classification and disclosure obligations which has been sparked by the EU’s Sustainable Finance Disclosure Regulation, demanding more transparent reporting for ESG funds.
What to look out for in 2023: changes in ESG fund names and labels
4. Recycling old electronics to fuel new energy tech
In recent years, China and the EU have doubled down on policies and guidelines on the circular treatment of materials and waste, including electronic waste.
In September 2022, the US passed a bill on recycling electric-vehicle batteries. Efficiently extracting metals from e-waste could reduce dependency on mining and emissions.
What to look out for in 2023: we’ll be watching which companies up their efforts to mine secondary metals from e-waste to harness clean-energy technologies
5. Cotton’s environmental impacts and the future of fiber
25% of the clothes we wear consist of cotton materials, but it is our consumption of cotton garments that has caused a detrimental impact on the environment eg, soil degradation and water consumption, and has spurred higher demand for more environmentally friendly options.
Apparel retailers have responded by working with third-party certifiers for sustainable cotton and exploring alternatives.
However, catastrophic flooding in Pakistan and the withdrawal of some certifications from China have created supply issues
What to look out for in 2023: we’ll be watching to see which retailers can navigate these near-term shortages and which will be switching to new, alternative fibers
Alongside all these predictions, we are also stepping into the first quarter of 2023 with a flurry of ClimateTech startups.
I’ve rounded a few that have caught my eye and are all female-founded:
Solar Sister
Founded by Katherine Lucey, Solar Sister is a social enterprise that empowers women in Africa to sell clean energy products and bring electricity to their communities.
They are currently raising via crowdfunding and have reached 92% of their 100k goal.
Kiverdi
Founded by Lisa Dyson, Kiverdi is remaking how things are made with carbon transformation. This involves breaking down carbon materials into their fundamental elements and building them back up into a range of bio-based products that are friendlier to our planet.
M-KOPA
Founded by Elizabeth Schweitzer, Nick Hughes, and Jesse Moore, M-KOPA is a Kenyan company that provides pay-as-you-go solar energy to off-grid households. The company is raising funds to expand its operations and bring affordable solar energy to more customers.
Pavegen
This start-up, founded by Laurence Kemball-Cook and Naomi Matthewman, is a global leader in developing technology that captures energy from footsteps and converts it into electricity.
CarbonCure Technologies
This company, founded by Jennifer Wagner, developed a technology that captures and reuses waste carbon dioxide to make concrete production more sustainable.
Bowery Farming
Founded by Irina Aleksander, Bowery Farming is focused on building indoor vertical farms to produce fresh produce year-round. They are currently raising funds to expand their operations. It uses vision systems, automation technology, and machine learning to monitor plants and their growth.
