The Investment Gap that Threatens the Planet

By Scott P. Burger, Fiona Murray, Sarah Kearney & Liqian Ma, Stanford Social Innovation Review / Winter2018

The authors argue that investments in early- and late-stage solutions are complementary and to achieve climate change mitigation will require investments along the entire “innovation continuum” of climate solutions, from conceptual ideas to solutions that are ready for commercial deployment. Drawing a distinction between so-called innovation and deployment-ready technology presents a false dichotomy since innovation takes place even as solutions are deployed. An investment approach that supports and links solutions at the earliest stages of development with more mature solutions will improve the stock and the flow of solutions capable of mitigating greenhouse gas emissions over the long term. Yet this is not the investment approach seen in today’s financial marketplace. In fact, the amount of capital flowing to early-stage solutions is disturbingly low, despite the critical role that these investments play in mitigating climate change. To correct this funding gap, new financing vehicles—especially from charitable asset owners—are needed that better align with the development of climate solutions that will secure a low-carbon future. These vehicles must harness capital that can tolerate long development timelines and accept high risk in exchange for high social and environmental impact. Philanthropists are the investors best suited to fund these vehicles.

The report: The Investment GAP that Threatens the Planet