Changes in U.S. climate policy in past few months have been head-snapping. The new administration exited the Paris Agreement (again), scrubbed references to climate change from federal websites, and reversed EV subsidies and other elements of the Biden climate initiatives. Meanwhile, banks that once proudly touted their leadership on green finance abruptly quit an industry coalition formed to cut carbon emissions.
Yet despite these discouraging headlines, there are signs of progress.
In fact, when it comes to climate change, it’s always been more important to look at what companies and investors are doing rather than what they are saying. Their capital commitments speak louder than any press release.
By that measure, there were two positive developments in recent days.
First, MasterCard achieved a 7% decline in its carbon emissions last year, even though its revenue grew by 12%. In the past, emissions rose in-line with revenue, but now MasterCard is among several firms that have decoupled their emissions from revenue growth.
And those results reflect active management of the company’s carbon output and real investments to make them happen.
MasterCard’s progress was included in its Impact Report, a data-rich publication that presents the company’s progress on a host of ESG measures. Give them credit for continuing to produce it at a time when many companies have scaled back or jettisoned such reports altogether.
The other bit of good news was from the world of private equity, where new data from PitchBook showed firms specializing in climate raised $63 billion over the past five years. And while first-generation climate PE funds generally underperformed, more recent funds “had an improved return profile, performing roughly on par with the greater PE universe.”
Investors still see opportunities to finance the climate transition, despite the challenges facing the sector.