January 4th, 2022 — Addressing the climate crisis requires an immediate and unprecedented mobilization of capital: achieving net-zero emissions by 2050 requires $50 trillion in investment, according to BNEF. In turn, a tide of investor interest in ESG (Environmental, Social, and Governance) investing has mobilized trillions in pursuit of a more sustainable future, with ESG assets under management totalling $37 trillion and expected to grow to a whopping $53 trillion by 2025.
But these trillions of dollars have not translated into rapid decarbonization. ESG investing options such as exchange traded funds (ETFs) tend to reflect more of a shuffling of existing portfolios than a deployment of new capital, maintaining high correlation to the overall financial market and often lacking a direct path to additional emissions reductions.
Finite is a platform built to simplify the sustainable investment process, enabling everyone to invest in sustainable assets through a family of public funds. By financing real assets such as rooftop solar, Finite’s platform empowers investors to drive measurable and additional impact with as little as $500 and without sacrificing returns.
Investor interest in addressing the climate crisis is at an all-time high—and growing every day.
85% of American individual investors, including 95% of Millennials, are interested in sustainable investing, according to research by Morgan Stanley.
Four out of five investment advisors have said their clients want more sustainable investing opportunities, and 69% of retail investors plan to actively increase their ESG investments.
In its growth to $53 trillion, the global market for ESG is on track to represent more than a third of total assets under management by 2025, according to Bloomberg.
But sustainable investing is broken.
850 of the 1,000 ESG ETFs added in the second quarter of 2021 are not new funds, but existing funds re-labelled as “ESG”, highlighting the industry’s marketing ploy.
In 2020, only 2 of the top 10 largest sustainable ETF portfolios included renewable energy development among their top five holdings, instead investing in companies like Google and Amazon. Collectively, these 10 “sustainable” ETFs held $2.52 billion in fossil fuel investments.
Even with the right holdings, ETFs are structurally unable to drive change, as they are designed to be traded. This results in dollars exchanging investor hands instead of going into companies and projects to create additional and compounding impact.
Meanwhile, there is a large and growing capital gap in sustainable infrastructure.
Most renewable energy and sustainable infrastructure projects rely on ‘legacy’ approaches to capital formation which have supported clean energy to date, but remain slow, expensive, exclusive, and overly rigid.
Individual investors and family offices, representing $113T of U.S. household net worth, have been largely excluded from accessing these private and value-aligned investment opportunities.
This exclusion leads to higher financing and transaction costs as well as greater uncertainty for project developers, resulting in slower deployment of renewable technologies.
Finite enables the seamless deployment of capital from both individual and institutional investors into real sustainable infrastructure assets.
Finite spent two years working with the SEC to achieve approval to build sustainable funds investing in illiquid assets. This means that investors can build wealth while financing the development, purchase, and installation of new sustainable assets.
Their inaugural fund, SOLRX, invests in loans made to homeowners and businesses who have elected to go solar—opportunities that were previously reserved for large institutional investors. SOLRX enables everyone to participate in the financial benefits of sustainable development.
Finite’s technology platform removes the barriers for individuals and institutions to make long-term sustainable investments, enabling anyone to invest in as little as 2 minutes. Finite plans to offer a series of equity and debt funds each focused on a specific area of sustainability such as transportation, buildings, and agriculture.
Powerhouse Ventures is proud to back Finite and participate in its oversubscribed seed round, and support an industry leading team. We look forward to working with Founder & President Kevin Conroy and Finite’s industry-leading team to reimagine sustainable investing and direct billions of dollars towards clean energy development.
Special thanks to Ry Storey-Fisher, Marie Thompson, and Alexandra Harbour.
To read more about Powerhouse Ventures’ other publicly-announced investments, visit our Insights page.