Energize hires Meredith Breach

By John Tough | September 14, 2022

Some hires are so obvious that you immediately can’t imagine scaling without them. When we hired Kevin Stevens to take the lead on our growth platform we immediately unlocked scale as our firm went to a multi-strategy model.

Our most recent hire for the Growth platform brings the same contribution expectations. This week we formally announced that Meredith Breach joined Team Energize. Meredith becomes the second dedicated resource to our Growth platform and will help with origination, deal structuring and execution, and ultimately portfolio value and governance coverage. Meredith joins us after spending over 5 years at Vista Equity Partners. We were able to meet and get to know Meredith over a number of months and her skillset and goals are aligned with our lofty ambitions for the growth strategy. Vista Equity is one of the premier growth and control technology investors and we are excited to combine Energize’s approach to investment discovery and domain expertise with Meredith’s more traditional growth equity software background.

Energize Leads €30M investment into Monta

By John Tough | September 14, 2022

Back to back funding announcements!!

Energize Ventures goal to capitalize and support the best companies within the sustainability software stack continues as we lead the €30M Series A+ round into Monta.

Monta is the premier digital backbone for the EV charging industry, enabling a simple and seamless control strategy for site owners, fleet operators, and consumers. We are excited to partner with Casper H Rasmussen and Anders M., and the whole team Monta team. Casper’s quote in the article below shows our experience in the space.

Juan Muldoon and Mark Tomasovic have been spearheading our most recent effort into the space with tremendous help from our entire team. This is Energize Ventures fourth investment in the digital infrastructure that enables the new scale of EVs and EV charging, alongside Smartcar, TWAICE, and Sitetracker.

We are fortunate to again invest with CREANDUM and join Pale blue dot in this round.

We have already had a tremendous amount of pick-up, including an article in Techcrunch. I love this quote from Casper, the CEO of Monta:

We were really impressed by how much knowledge Juan Muldoon and the entire Energize Ventures team had about the EV market when we first connected. For Energize, Monta represents their third investment in digital solutions to support the buildout of EV charging infrastructure,” notes Rasmussen. “Compared to our conversations with other prospective investors, the topics were on a different level. We spoke in-depth about the challenges and opportunities with our software approach. To be honest, we had not planned on taking on a new investment, but from the beginning, we could feel that this partnership was a very good match. Even over the last few months, we are confident that our decision to work closely with electrification experts who understand the entire ecosystem is the right choice as we continue to scale
Casper Rasmussen, CEO of Monta

Press release here:

Monta lands 30M EUR in additional financing to accelerate the buildout of EV charging infrastructure

Company will use the funding to open up new markets, create transparency within the electricity market, and digitalize the power grid infrastructure.

Monta, the only all-in-one EV charging management platform, today announced it has closed an additional EUR 30 million as part of a Series A+ round led by Energize Ventures, a leading global investment manager accelerating digital innovation for energy and sustainability, with participation from returning investors Creandum, Pale Blue Dot, byFounders, and Headline. The latest financing brings Monta’s total to EUR 50 million.

While 2021 European EV sales increased by more than 65% compared to 2020, the lack of EV charging infrastructure is still one of the biggest hurdles to mass adoption. Not only do nearly 3,000 new public charge points need to be built each week for Europe to reach its target of operating one million charge points by 2025, but the customer experience is often hampered by a highly fragmented ecosystem of charge point operators and owners.

Led by a team of seasoned entrepreneurs with experience managing large software development organizations, Monta is delivering an all-in-one EV charging platform that simplifies and streamlines deployment, use, and management of EV charging infrastructure. Via the Monta platform, charge point owners have full visibility into charge point use, pricing, access, and transactions. For EV drivers, Monta provides reservation, virtual queuing, and payment features under one platform as well as access to public charge points.

“We are aiming to fully digitalize the EV ecosystem to tackle all the immediate challenges within the industry and build toward a more transparent and flexible future. By partnering with hardware OEMs we can deliver new features straight out of the box, like our new feature that allows operators to set a percentage on top of the spot price in order to follow the market fluctuations and automatically offer a fair price for charging, ” says Casper Rasmussen, Monta CEO. “The investment from Energize and our returning investors is a strong vote of confidence in our vision, team, and software as the cornerstone of the mobility infrastructure of the future.”

Monta’s EV charging management platform is used by notable utility, aviation, and transportation industry companies such as Vestas, CPH Airport, and PostNord as well as wholesalers, who are leveraging Monta to upskill installers. Since the company’s latest financing in January 2022, Monta has secured strategic partnerships with hardware manufacturers to launch its Powered by Monta (PBM) program in multiple markets. Key partners include Garo, CTEK, and ABB which each boast a range of charge points in Europe as well as Zaptec, which recently launched Zaptec Park, a co-branded app for its users.

“The market penetration of electric vehicles is climbing sharply as economic, regulatory, and climate levers accelerate EV adoption – and deployment of charging infrastructure has to keep pace. We expect more than 1.6 million public chargers and 20 million private charging stations to be deployed in the U.S. and Europe by 2025,” said Juan Muldoon, Partner at Energize Ventures. “As the market for charge point hardware grows and commoditizes, Monta offers a software solution that enables a consistent, improved charging experience for players throughout the EV charging value chain – from installers to drivers. We’re thrilled to partner with the Monta team as they pave the way for a more scalable and sustainable EV infrastructure.”

Monta will leverage the additional investment to open up new markets including North America, while consolidating its position in Scandinavia, the UK, and Germany, all of which have legislation in place slated to ban new ICE vehicle sales by 2025, 2030, and 2035 respectively. To further support the needs of the EU and the US – which has set a goal for 50% of its car sales to be EVs by 2030 – Monta will ramp up its product innovations and develop critical features to help EV drivers and charge point owners seamlessly navigate the industry.

Looking further ahead, Monta seeks to expand its product development to include grid management services amid challenges as more EVs hit the roads. Ultimately, the company expects to facilitate the sale of excess power back to the grid (V2G), manage interoperability with other zero carbon technologies (V2H, V2X), aid in the creation of local energy markets, and empower end users with ownership over their energy consumption.

“The ability to take advantage of these new opportunities requires changes in information flows among grid devices as well as innovations in communication and coordination tools that increase the observability, predictability, and controllability of the grid. The societal impact and environmental potential of these technologies are massive. Monta is at the forefront of developing the systems needed to monitor and reward this flexibility to create an equitable energy solution for all EV drivers,” said Casper Rasmussen.

The deal is expected to close later this year, subject to regulatory approval.

About Monta

Monta is the operating platform powering the EV ecosystem serving drivers, companies, cities, and the electricity grid with one integrated software solution. We believe that accelerating and democratizing the adoption of EV technology is key to fostering the future we like to imagine. Monta’s mission is to provide the best technology solutions for the entire EV charging cycle. At our core, we provide access, stability and reliability to the mobility transformation. We’re here to make the transition to electric mobility as seamless and exciting as possible with one integrated software built to EV better.

About Energize Ventures

Energize Ventures is a leading global alternative investment manager focused on accelerating digital transformation in energy and sustainability. Founded in 2016, Energize has funded 23 companies to-date and is backed by strategic and institutional LPs including CDPQ, Invenergy, Schneider Electric, General Electric, Caterpillar, and more. With an unmatched depth and breadth of industry and operational expertise, Energize works in partnership with its portfolio companies to realize their full potential from early commercialization to growth scaling and into the public markets. For more information on Energize Ventures, please visit www.energize.vc.

Media Contact

Energize Leads $55M Series B into Patch

By John Tough | September 13, 2022

Today the Energize team is announcing one of our most recent investments. I like to tell the team how we should “zig” when the market “zags” and some of our upcoming investments announcements (this one included) are the Energize team executing with this mindset. Our carbon market thesis was a few years in the works when we met the Patch team late last year. Our prepared mind research approach made it a slam dunk partnership and I am thrilled that we get to work with Brennan and Aaron going forward. This is also the third time we are working with Andreessen Horowitz and the third time with Coatue. There is an emerging group of generalists that have grasped the sustainability transition and Energize is glad to be their partner of choice in the theme.

PATCH RAISES $55M SERIES B, EMBEDDING CLIMATE ACTION DIRECTLY INTO THE GLOBAL ECONOMY

Led by Energize Ventures, this latest funding round accelerates Patch’s ability to fulfill growing global demand for companies to take climate action through carbon markets

September 13, 2022 – Patch, the climate-tech company that is making meaningful climate action a part of everyone’s business, announced today a $55M series B funding round, customer growth and overall company momentum. Energize Ventures led the round with participation from new and existing investors including Coatue Management and Andreessen Horowitz, bringing the company to a total of $80M in funding to date.

Scientific consensus from the UN IPCC shows that reaching global climate goals will require carbon removal to scale 1 million times current capacity by 2050. Patch plays an essential role at the intersection of climate and technology by powering the ability to embed, through an enterprise grade API, climate action into every product and service – a critical component to achieving this level of scale.

With Patch’s platform, businesses of any size, with any budget, can easily purchase carbon credits as a means of taking climate action. The transparent infrastructure is transforming a traditionally complex and opaque system for purchasing carbon credits. Patch also provides those developing the climate solutions with the infrastructure they need to grow and scale their businesses, facilitating impactful transactions on the voluntary carbon market, which is projected to become a $100B market by 2050.

More than 100 Corporate Customers Spanning E-Commerce to Financial Services

In the last year, Patch saw incredible demand, growing its customer base five times to more than 100 companies worldwide. Using Patch, forward-thinking companies across all industries are incorporating climate action directly into their business:

Afterpay, the buy now pay later group, touted the ease of Patch integration which was built into Afterpay’s system in less than three months and now enables thousands of customers to both understand and take action to neutralize the emissions associated with their purchases.
European investor, EQT, has leveraged Patch to position themselves at the forefront of climate innovation, using the platform to neutralize their own carbon footprint through bold investments in frontier technologies.
Shop Apotheke Europe – one of Europe’s leading e-pharmacies – used Patch to procure credits that will neutralize their company’s emissions for the first half of 2022, part of the company’s robust decoupling measures.
Restaurant company Just Salad recently integrated Patch right into their mobile app, offering customers the ability to easily neutralize the carbon footprint of their lunch order with one simple swipe.

Company Momentum Towards Scaling Climate Action

Patch has quickly grown its team by 400 percent to more than 60 employees worldwide in the last 12 months and opened a European headquarters in London. The company continues to attract top talent from leading technology companies like Shopify, Stripe and Plaid, leveraging veteran tech expertise to address the most important problem to solve of our time.

This latest funding round will continue to support hiring, growth into new markets and development of an expanding technology footprint, putting the company on track to deliver massive climate impact across the globe.

Supporting Quotes

“The market for carbon credits is on a trajectory to reach $50 billion in the next 10 years, making it one of the largest and most paramount markets of our time,” said Energize Ventures Partner Tyler Lancaster, who joins the Patch board of directors. “However, today’s carbon credit infrastructure is highly fragmented and lacks standardization – making it difficult and complex to tap into. Patch’s platform provides a much-needed digital backbone that simplifies the transaction complexity of the carbon management ecosystem for both buyers and suppliers, increases transparency, and enables the carbon market to scale to meet global climate goals.”

“We are at a crucial pivot point, and it’s essential we get as many companies as possible taking action to reverse climate change, but many struggle with how to integrate this action into their business,” said Brennan Spellacy, CEO and co-founder of Patch. “At Patch, we are changing that. Our infrastructure lowers the barrier to entry for both businesses and climate project developers looking to enter the carbon market which, in turn, could help unlock 20% of the climate change solution the world so desperately needs.”

About Patch

Patch is the platform scaling unified climate action. With Patch, companies can embed climate action into their own products, neutralizing the carbon impact of everyday transactions like shipping, travel and financial services. Companies can also compensate for emissions within their own operations and supply chain using Patch. Whether leveraging an API integration or directly purchasing trusted credits, Patch is the platform for businesses and consumers to seamlessly take meaningful climate action. For more information, visit patch.io.

About Energize Ventures

Energize Ventures is a leading global alternative investment manager focused on accelerating digital transformation in energy and sustainability. Founded in 2016, Energize has funded 22 companies to-date and is backed by strategic and institutional LPs including CDPQ, Invenergy, Schneider Electric, General Electric, Caterpillar, and more. With an unmatched depth and breadth of industry and operational expertise, Energize works in partnership with its portfolio companies to realize their full potential from early commercialization to growth scaling and into the public markets. For more information on Energize Ventures, please visit www.energize.vc.

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Contact

Katie Lyons

katie@patch.io

The speed and scale of solar

By John Tough | September 8, 2022

Bloomberg New Energy Finance recently released their 2023 global, mid-year forecasts. One of the most prominent charts is the continued growth of solar deployments. Outside of internet fiber, very few infrastructure type projects have ever grown this fast at this scale. And it’s hard to imagine any slowdown as costs continue to decline and decentralized resilience (solar and batteries) continues to gain front page prominence.

We are actively looking for investments that help enable this deployment. We have a few companies already serving the market… And want to find more entrepreneurs accelerating and serving this scale.

Energize is the largest shareholder in Aurora, the leader in the solar software design and sales market. They released the below chart just this week that shows the number of systems designed on their platform since inception. It took the company nearly 5 years for the first 1 million rooftop designs. Aurora’s software now does that level in less than 3 months, and the cadence is accelerating. This is a generational opportunity.

Investment Focus Areas- updated messaging

By John Tough | September 3, 2022

Team Energize recently updated our website to better present our focus areas. In the past we focused the messaging on the problems we believed digital technologies could solve, and we had words like “decentralization” and “risk management” as focus areas. We used those terms because we, as operators and industry experts, tend to approach investments in our field with the goal of finding solutions that will remove barriers and unlock growth. We are now simplifying the message for our entrepreneurs and co-investors. We found that these individuals tend to be newer to our themes and have difficultly relating to the outcome-oriented messaging. With this update we wanted to provide clarity on business type (software) and the verticals of focus.

For the first time on the site we are also sharing the investment parameter differences between our (now distinct and active) venture and growth strategies.

A screenshot of the page is below. Let me know if you have any feedback!

Hiring a GM for a Hi-Growth Business Segment

By John Tough | August 30, 2022

Been off here for a while as have been scaling up a lot of exciting items at Energize. The market forces for the energy and sustainability transition are accelerating and the recent IRA 2022 Bill is a major tailwind. More on that soon.

In the meantime, one of the most exciting hires in the Energize portfolio is about to happen. The role is to be the GM (a P&L owner) of the energy transition segment for this portfolio company. Energy transition is a newer but fastest growing segment of the company, but also the reason Energize invested. The company is already having tremendous success in the space, and has product-market fit. We now need to add leadership and ownership to manage and optimize the growth. While not required, we are likely looking to hire this individual (and other members of the energy transition team) here in Chicago so that Energize can help craft and accelerate the scale.

We are keeping the details intentionally vague on this type of broad distribution but are happy to share more in 1:1 settings. Interestingly enough, energy awareness may not be a heavy requirement as Energize can help train there. Strength in business strategy, sales and GTM leadership is key – with a desire to be creative and scrappy.

If you are interested, or know someone who could be a fit, please do reach out.

5 Takeaways from Siemens’ $1.6 billion acquisition of Brightly

By John Tough | June 28, 2022

Yesterday a relatively large deal in the industrial software space was announced:

Siemens acquired US software company Brightly for $1.6 billion. Siemens is the multinational industrial technology company, and has a stated goal to increase their software product suite through its’ Siemens Smart Infrastructure segment.

Why is this a fit? Brightly Software is a leader in intelligent asset management solutions and leverages a cloud-based platform with more than 20 years of data to deliver predictive insights through the entire asset lifecycle. Brightly has more than 12,000 clients for their condition monitoring, asset management and IoT Remote Monitoring product suite. The company primarily targets more traditional industries such as education, healthcare and manufacturing.

Brightly is expected to end 2022 with $160M of recurring software as a service (SaaS) revenue, and is growing 13% per year with ~15% operating income. The company will recognize additional non-software revenue as well. Net, Siemens is paying 10x 2022E ARR or about 60x EBIT for a scaled, profitable, and moderately growing asset.

When I see the transaction announcement, a few thoughts jump to mind:

1- Big Balance Sheets Ready to Act: Big industrial firms like Siemens, Rockwell, Emerson, Schneider have huge balance sheets available to them. Each of those firms has recently acquired at least one company. In a more moderate software valuation environment, I expect these large industrials to strategically build their software portfolio.

2- Scaled Assets Required: The large industrials need to buy scaled, P&L-impactful assets. $160M of software ARR is a meaningful addition to a large industrial that will impact the topline of the Smart Infrastructure segment. Sub $100M revenue acquisitions are hard to make an operational dent, and the integration costs and risks of a sub-$100M business are likely the same or greater than a larger business. Industrials are not great at building software businesses and need the acquisitions to operate slightly independently post acquisition. Small companies can be smothered by large industrials – and Brightly likely is big enough to maintain operational agility.

3- Synergies of Trust & Distribution: While there are natural cost synergies, most of the transaction combination synergy will come from added revenue to the Brightly platform. How? Siemens enters the customer relationship through the upfront hardware and systems sale. Now, their army of sales teams will be able to offer Brightly’s product with the initial sale. This increased Siemens distribution and the embedded conglomerate’s trusted brand should push Brightly’s contribution higher.

5- Moderate Growth AND Profit: Siemens has $65 billion of revenue and a $100 billion market cap. Given Siemens slow, single-digit growth rate and depressed 35% gross margin, Siemens enterprise value is a 1.5x sales multiple. With the Brightly acquisition at a10x revenue multiple, Siemens clearly realizes the need to increase exposure to high gross margin software products. Why did the pay that multiple? Complementing core product sales with software is what the public market investor wants. While growth at Brightly was not too high (13%) it is still above Siemens growth rate. The Siemens press release also indicated that the acquisition would be accretive. This is an important “and” – Siemens was able to buy a higher gross margin business with a higher growth rate that also lifted their operating income targets. Those are unique characteristics that drive industrials to pay higher multiples.

Conclusion

In the industrial technology segment, companies need to keep operating goals simple. These buyers don’t need 60% growth rates with creative ways to show future profitability. The P&L owners at the large industrial do not (intentionally) have very much financial creativity and like to see profitability today. In fact, the industrial conglomerates would rather have a scaled business growing 15% per year with a known 15% operating income. Profitability and growth is quite rate in today’s software landscape. At Energize we are pushing many companies to realize that the goal is operational control, not growth at all costs. We have been that way since the beginning and the market is coming back to a more rational approach. Within our portfolio we have a number of excellent companies approaching this profile and believe it will be an active M&A market over the coming 1-2 years.

The Mediums

By John Tough | June 21, 2022

It has been a wild past few years. I like to joke that in the energy & sustainability markets, we never go “full mainstream” and the resulting hype cycles are always a bit muted. 2021 pushed that phrase to the limit, as cheap capital flowed freely into anything deeptech with the promise of decarbonization.

I aim to keep historical investor perspective, especially when the market is in a peak or trough state. As I joke about with my team, if we stay balanced: the highs are medium, the lows are medium, the mediums… are medium. By valuation and fundraising standard, the tide has pulled out of the traditional technology markets. Increased interest rates are pulling technology multiples down to earth.

The capital intensive long-payout business models are equally getting crushed. In 2020 and 2021 many technology science projects were funded with the hope of a 2030+ payoff. To my knowledge every one of those business plans require more capital, and I don’t believe many will be able to raise that subsequent round as the cost of capital for technical risk has ballooned. The 2008-2012 “winter” for the cleantech space was brutal. I know because I was there. While a few companies survived to thrive (Tesla, Sunrun, Enphase) the overwhelming majority did not continue to operate. By my recollection about 70% of all cleantech companies during that period shut down. I think a similar number of companies that were hardware & sustainability funded over the past 24 months will meet a similar fate.

The reason my “mediums are medium” right now is because of learning those lessons earlier in my career. And most importantly because my Energize team has had this capital intensive risk profile front of mind over the past few years. Sure, more capital light companies will also be hurt. But this new era of sustainability X technology investing is all about survival. Digitally-enabled companies inherently can control their spend more efficiently vs. a projects-based startup. This optionality allows our climate-focused software companies to their duration / cash horizon. And rule #1 these days is to extend runway… so the highs, lows, and mediums… can be medium.

Energize leads $10M Series A into Handle

By John Tough | March 24, 2022

Mark and Juan from the Energize team have a phrase “if you are long renewables, you are long construction”. Whether a wind farm, a building retrofit or an EV charger, the lionshare of the cost and time is in materials and construction. During a year++ long deep dive, Mark and Juan honed their search and yesterday the firm announced our Series A investment into Handle, and cofounders Patrick, Chris, and Blake. We are fortunate to work alongside Ty Findley and the Ironspring team with this investment. We believe that Handle will be the de facto payments platform that helps pay and finance the upcoming sustainability movement. The Energize “why we invested” is below.

Why We’re Investing in Handle

Energize leads $10M Series A round

Energize Ventures is proud to lead the oversubscribed $10M Series A investment in Handle, the leading software platform for construction payments and notice management. Ironspring is co-leading the round, and together we join existing investors Y Combinator, GFC, ZIGG, Elefund, L2 Ventures, and Soma Capital. Energize partner Juan Muldoon joins Handle co-founders on the company’s board, and principal Mark Tomasovic joins as a board observer.

Building the next generation of energy

At Energize, we believe that if you’re bullish on renewables, you’re bullish on construction. To reach net zero goals, more than $4 trillion will need to be invested in renewable energy infrastructure globally by 2030, tripling the current installed base of wind and solar. In fact, the U.S. is on track to reach $1 trillion in renewable energy investment in the next decade. However, building millions of distributed energy resources is no easy task. Construction firms will need to adjust the way they work to supply the labor and material resources needed to build out this unprecedented number of renewable energy assets.

While renewable energy assets don’t consume fuel to operate, these new energy facilities require more upfront materials than their fossil predecessors. Onshore wind plants require nine times the minerals compared to gas-fired power plants, and standard 2 MW wind turbines require 400 tons of concrete, iron and steel. The majority of the lifetime costs for wind turbines – and the majority of capital costs for all renewable assets – are the materials required to build them.

The scalability solution

Energize has been evaluating the construction space for several years through the lens of infrastructure and renewable energy development. When material distributors and subcontractors reach a certain volume of projects, scale becomes difficult. The back-office functions of finance, accounting and payment compliance become particularly strained. Material suppliers and contractors get bogged down by notices, RFIs, deadlines, and invoices that are required for these construction firms to function. According to contractors and material suppliers, bandwidth becomes constrained once the volume of notices and payments exceeds 30 per month. These processes will buckle under the speed and volume required to enable the energy transition and U.S. infrastructure buildout.

Handle helps material suppliers and specialty contractors solve these broken processes at scale. By automating (historically paper-based) notices, deadlines, RFIs and invoices, Handle enables the efficient flow of materials, saving both time and money across the construction value chain. These savings allow more labor and materials to be provided to job sites and cost-effective renewable energy assets to be constructed at pace. Additionally, Handle protects the payment rights of small businesses and contractors by ensuring that complex liens are valid and cash flow issues don’t threaten livelihoods. With Handle, construction payments and lien management are transformed into digital, traceable and sustainable processes.

What’s next: industry-specific growth

After graduating Y-combinator in 2019, Handle co-founders Patrick Hogan, Chris Woodard and Blake Robertson have continued to build a world-class product for construction payments and payment compliance.

Having grown up in the family’s lumber business, Patrick was familiar with the inefficiencies and soft costs that have historically burdened construction companies. Both material suppliers and contractors needed a more efficient way to protect their payment rights and streamline their payment processes. With a deep understanding of the pain point, the founding team set out to continue to create a valuable solution for their customers. Today, the biggest names in construction trust Handle to manage billions of dollars in invoices through the platform. These customers have decreased DSO (days sales outstanding) by 20 percent, saved 47 hours per employee per month, and improved project data on every job.

Handle and Energize see a massive market opportunity for software to automate administrative functions within construction. With the Series A raise, Handle plans to scale sales and marketing as well as expand product functionality with additional products.Energize is excited to bring our network across construction material suppliers, renewable EPCs, and electrical distributors, as well as our experience scaling SaaS companies. We’re thrilled to partner with Patrick, Chris, Blake and the broader Handle team!

SEC & Climate-Related Disclosures

By John Tough | March 22, 2022

Yesterday – after years and years of posturing – the SEC released guidelines for their first material climate-related disclosures. A link to their summary can be found here: https://www.sec.gov/files/33-11042-fact-sheet.pdf

Late last year Team Energize hired Lauren Densham as our Head of Impact and ESG. After reviewing the facts from the announcement she shared the following review with our team and I thought it was a great summary,

My immediate two cents:

They don’t mention TCFD but the disclosure requirements are largely aligned to what TCFD requires. Starting in 2023 (for big companies) and starting in 2024 (smaller companies) companies must disclose:
- Plans for assessing and managing exposure to physical and transition risk (including strategy and governance)
- Carbon footprint of operations
  - Scope 1
  - Scope 2
  - Scope 3 (where material, or the company is setting Scope 3 targets) – I’m sure there will be much debate on what constitutes “material”
- If the company has set a net zero or other climate goal they need to report on how they plan to meet it and their progress to date in doing so
Other interesting pieces:
- They are requiring that companies have 3^rd party assurance on climate disclosures starting in 2024 and increasing in scope to 2026 – This is a big deal. A very small percentage of companies have any assurance on their data. This will be gold rush for firms that offer this service (e.g. Big 4)
- They are also asking for more detail about the use of RECs and offsets in meeting emissions targets, there will likely be increased scrutiny here
- They are not requiring that companies use scenario analysis but that they need to disclose their methodologies if they do
- In line with current practice, the regulations are focused on the risk of climate change to a company’s operations rather than the risk of the company’s operations to the climate (the latter is called double materiality). There has been a lot of talk about double materiality in the EU, not yet in the US.
- They are asking for companies to disclose the climate risks and assumptions they have used their financial statements vs what is in the climate reporting (believe this is a move to get companies to more closely align the two)

I think pt #4 is a great reminder for anyone new to climate-related investing. The SEC’s concern is on business performance FROM climate change… not necessarily a businesses impact ON climate change. Sure they will start being more critical of offsets (good for our investment into NCX) but only to the extent companies have volunteered to hit targets or for the required subset of industries.

At Energize we have made a number of investments that are aligned to greater climate and risk transparency. And specifically, few firms in the world are as well positioned as Jupiter Intelligence to provide climate risk analysis. Led by Rich Sorkin, Jupiter shows which assets within a company are exposed to climate risks, and that data is what the SEC wants documented and assured. We led their Series B in 2019 and believe Jupiter is a generational company… and I am glad the market is beginning to realize the company’s potential.