Since 2013, the foundations have invested an increasing proportion of their assets in green impact funds, which on the one hand are intended to counter climate change and on the other hand contribute attractive returns. We believe that it is possible to deliver on the double bottom line.

A significant proportion of the impact investments are placed in facilities for the generation of green power from wind turbines and solar cells as well as sustainably managed forests around the world. We also invest in green growth companies and startups at various stages of development. The facilities and the companies are selected by specialists in the various areas of activity. 

Our goal for the period 2016-2019 has been for impact investments to make up 10% of the foundations' tied-up assets – and that goal has been achieved. By 2023, we want to have increased this class of investment to 15%.

Key investments in the United States 

The investments are distributed worldwide, focusing on the US, which, as the world's economic superpower, has a dynamic, innovative business climate and enterprises in all growth phases, ranging from small-scale start-ups to the world's largest multinational corporations. The US is consequently central to any investment portfolio. Historically, the US has enjoyed privileged access to energy and resources, which has led to heavy consumption of resources and dampened interest in green technologies. However, far from all US citizens, politicians and industry leaders share this relaxed approach to environmental concerns, and skyrocketing oil prices in the '00s and growing awareness of the threat posed by global climate change have gradually altered the picture and generated many investment opportunities with attractive impact potentials. Market mechanisms and the global economy ensure that technological advances in US companies will be applied worldwide.

Focus on green technologies 

Our main investment area is the generation of renewable energy from solar, wind, biomass and hydropower sources. We have a total of 31 investments in this category, which break down into 15 from solar, 15 from wind and one from hydropower. Electricity generation based on coal, gas and oil emits significant amounts of CO2, so replacing black power with green alternatives has substantial positive impact on the climate. In the coming years, we expect electricity consumption to increase as more and more processes become electricity-based rather than oil-, coal- and gas-fired. 

The second largest investment area is sustainably managed forests in North America, South America, Asia and Australia. Forests can convert significant amounts of atmospheric CO2 into carbon, and they are therefore a vital means of combating climate change. Through photosynthesis, trees take up CO2, and store it in their trunks, branches and roots. 

A significant proportion of the foundations' impact investments are placed with green companies and start-ups operating in various sectors such as transport, energy, industry and agriculture. The common feature of these ventures is that they are dedicated to developing, marketing and selling the green technologies of the future. The aim is to achieve profitability and gain access to markets across the globe, thereby maximising the positive impact on the climate through sales of the firm's products and services.

Three examples of impact investments: 

Foto: Saildrone Inc.
 

Saildrone

The Saildrone company is an example of a technology-focused investment in a venture currently in the early growth phase. Saildrone is a US company from San Francisco that designs, manufactures and operates self-propelled wind and solar powered water-surface vehicles for ocean data collection. Despite the fact that most of Earth's surface is covered by oceans, we know astonishingly little about them, including how they are reacting to climate change.

One reason for this is that ocean research is costly and resource-intensive, as it typically involves large research vessels and crews. Saildrone reduces the cost of data collection as the vessels are self-propelling, remote-controlled via satellite and are powered by renewable energy. The drones can, for instance, measure sea temperatures, CO2 content and fish stocks. They can also enhance weather forecasts for the benefit of the 65% of the world's population that lives near the coast.

The drones can remain at sea for months on end and operate in the harshest environments. Most recently, one of the drones completed the world's first autonomous circumnavigation of Antarctica, covering 22,000 kilometres in 196 days. 
The mission put the drone to tough tests in 15-metre high waves, wind speeds in excess of 35 m/s and collisions with icebergs. The drones have also been used by Norwegian research institutions in the North Sea close to Denmark.

Photo: Proterra

Proterra

Proterra  is the leading designer and manufacturer of electric buses and is duly known as 'the Tesla of buses'. The company holds the world record for the longest distance driven on a single electric vehicle charge, totaling 1,772 kilometres. Electric buses do not emit CO2, NOx or harmful particles when operated, and they make far less noise than traditional diesel-based buses. Proterra estimates that CO2 emissions are reduced by just over 100 tonnes annually for each diesel bus replaced by an electric bus. This corresponds to the annual CO2 emissions of approximately nine Danes. To encourage uptake of its technology and get more electric vehicles on the roads, Proterra partners with a number of established manufacturers of buses and lorries since the technology can also be incorporated into other heavy electric vehicles such as lorries and refuse collection vehicles.

The partners design and manufacture the vehicle 'shell', such as the bodywork and interior, while Proterra supplies the advanced 'innards' in the shape of engines, batteries and steering technology. In this way, manufacturers are able to market and sell electric vehicles under their own brand without investing resources in developing the advanced technology. This approach is well-known from notebook computers, where the manufacturer of Intel chip components, under the tagline 'Intel Inside', supplied chips to other manufacturers of notebooks for many years.

Photo: New Forest

Forest investment in California

The foundations have invested in a sustainably managed forest in California of approximately 7,000 acres, which is equivalent to 9,750 football fields. Part of the forest is earmarked for CO2 storage, which means it must not be felled for the next 100 years. This has generated CO2 credits that have been traded on the Californian CO2 market introduced back in 2013. This system is comparable with the European CO2 market that makes it possible for companies to compensate for their own CO2 emissions by purchasing CO2 credits.

The coming years

Our impact investments are long-term, and so it will take a few more years before we have proof of the feasibility of delivering on the double bottom line. However, we have great confidence in this type of investment, and we hope that others will find inspiration in our efforts, so that more investors will eventually include impact investments in their investment options.

A teaching case at Harvard Business School

The foundations' commitment to investing for impact was singled out as a case study for use in Harvard Business School's MBA degree programme.

For further information, please contact:

Anders Lyngaa Kristoffersen
Head of Impact Investments, THE VELUX FOUNDATIONS
Phone: 
+45 24 98 76 16