Written by Antoine Pradayrol & Josh Edwards, September 2024
Green Angel Ventures invests exclusively in early-stage companies that fight climate change. These companies mitigate greenhouse gas (GHG) emissions directly through their activities or have a positive environmental impact that results in reduced greenhouse gas concentrations.
To tackle greenwashing, which remains a significant challenge in fund management, the UK’s Financial Conduct Authority has recently implemented its new Sustainability Disclosure Requirements and fund labels. The Green Angel Ventures EIS Climate Change Fund now carries the ‘Sustainability Impact’ label, meaning that it invests mainly in solutions to sustainability problems, to achieve a positive impact for people or the planet.
One of the things we have been doing for a number of years – and which is now a requirement for funds carrying the ‘Sustainability Impact’ label – is to report on the progress of our investments in achieving their stated sustainability objective. In our case, we report on the realised carbon impact of our portfolio companies, from the point of our investment.
This time, we are proud to announce that as of 30 June 2024, the cumulative greenhouse gas savings of our portfolio companies has reached 265,000 tonnes CO2e, up 67% on last year.
In addition, this year, to continue improving on our carbon impact assessment methods, we have become a member of Project Frame, an initiative led by the non-profit organisation Prime Coalition, aimed at strengthening and standardising the methods used by impact venture capital and private equity investors specialising in the fight against climate change (1).
As part of this report, we have developed new methodologies to measure the carbon impact for three new Green Angel Ventures portfolio companies. Overall, 24 of our 46 portfolio companies are now estimated to have started making an impact on greenhouse gas emissions; the remaining 22 are either too early in their development to have had an impact yet, or resources have not yet been available to finalise an impact calculation methodology.
Finally, in order to provide as much transparency as possible, we also publish the methods that we have used to estimate our portfolio companies’ carbon impact in this accompanying Methodology Paper.
Our portfolio companies have saved 265,000 tonnes of CO₂e!
Thanks to the activities of our portfolio companies, we estimate that 265,000 tonnes of CO₂e have been avoided since we started collecting data in 2018. This is equivalent to taking ~190,000 cars off of the road for one year (2).
The greenhouse gas savings from our portfolio companies have continued to grow at a rapid rate. From June 2023 to June 2024 we recorded a 67% increase in avoided CO₂e emissions – driven by the growing activity of portfolio companies as well as the addition of new companies to our portfolio.
Although our investments are relatively evenly spread across five key sectors, the Industry and Recycling sector contributed to over half of the CO₂e savings realised during H1 2024 – a significant increase from previous reporting periods.
A key driver for this large increase in the Industry and Recycling sector is the integration of QLM in the calculation. QLM is making and selling cameras that detect methane leaks on industrial sites, and therefore enables the prevention of important methane leaks into the atmosphere. Methane is a highly potent greenhouse gas – hence detecting and stopping such leaks translates into a large CO2e impact.
Scientists tell us that for the transition to net zero to be credible, the hard-to-treat sectors, including industry, buildings, food and agriculture, aviation, and mining must be decarbonised as a priority [3]. The good news is that Green Angel Ventures is not shying away from backing innovative solutions in such sectors – including 11 companies in industry & recycling, six in the built environment and six in food and agriculture.
What are the foundations of impact?
Green Angel Ventures has invested over £47m into 47 portfolio companies. Our initial investment is typically in early-stage companies, often characterised by being pre-revenue. We sustain our investment commitment through follow-on rounds as the company progresses and matures, aiming to bolster its growth trajectory and consequent carbon impact.
We define ‘carbon impact’ as the quantifiable emission reduction from a product, component or service, achieved by replacing a more carbon-intensive alternative. This could be from the production of a good from materials that sequester or store carbon, and/or from selling a good or service which is produced or delivered using no (or much lower) greenhouse gas emissions than the standard product or service on the market.
Many new innovations across different sectors will be required to shift to a net zero economy. Green Angel Ventures strategically allocates investments across a diverse array of companies, recognising their unique roles in mitigating climate change. Our portfolio companies are impact makers and impact facilitators – both of which are important to recognise. To help us bring impact calculations ‘under one roof’, we are progressively aligning our methodologies with the Project Frame framework. The key steps defined in Project Frame’s guidance are set out below:
- Define the solution and map the effects of the solution that lead to a reduction in GHG emissions.
2.Define the solution unit – The unit could be one product, one application of the product or one plant producing a product. The solution unit must be comparable to the incumbent product.
3. Set system boundaries – Define what is included and excluded in emission calculation e.g. raw material extraction, manufacturing, distribution, use, and disposal.
4. Define the scope of the solution and qualify the solution’s effects. The scope of the solution could be:
○ Direct product – a solution can be purchased as a whole to yield GHG impact
○ Direct component – part of an overall solution that plays a critical role in delivering GHG impact
○ Facilitating – advances our ability to reduce emissions or adopt an emerging solution that ultimately delivers or accelerates GHG impact e.g. methane detection leak
5. Calculate a baseline scenario – A baseline scenario is a counterfactual projection of GHG emissions over time. It reflects what would have happened in the absence of the company’s climate solution.
6. Calculate the unit impact.
○ Unit impact = incumbent unit emission – solution unit emissions + solution unit GHG removal
What are the latest developments?
Not all of our portfolio companies have started producing goods or selling on the market yet, therefore the 265,000 tonnes of CO₂e mitigated results from the commercial activity of 24 companies. As more companies grow and establish a customer base, the cumulative carbon impact is expected to continue growing.
Every time we update our impact calculations, we work with portfolio companies to develop, review and improve the methods we use to calculate their carbon impact. For this edition of our report, we welcome the contribution of three additional companies: Carbogenics, New Motion Labs and QLM.
- Carbogenics produces sustainable carbon adsorbents, a type of biochar, from difficult-to-recycle organic waste, in particular paper waste. Their ‘CreChar’ product improves the efficiency of anaerobic digester plants by improving the microorganisms’ working environment. Anaerobic digestion (“AD”) plants generate energy from waste, as they produce electricity and fertiliser by degrading organic materials. Adding CreChar to an anaerobic digester leads to an uplift of 15% in biogas production which can be used to make electricity. Carbogenics’ solution not only enhances the AD process but also avoids the burning of the paper waste which is instead used as useful input in their process.
- New Motion Labs has developed a chain drive and sprocket (Enduo) which generates less GHG emissions to produce and lasts five times longer than incumbent chain drive-and-sprocket products. The Enduo solution particularly targets the e-mobility market (e-cargo bikes, motorbikes) and the industrial market (e.g. conveyor belts in large plants).
- QLM produces cameras with innovative quantum-based imaging technology that detects, locates and quantifies emission rates of greenhouse gases, in particular methane, on industrial sites such as oil and gas infrastructure and wastewater treatment facilities. Their facilitating solution allows companies to identify and fix the leaks of potent greenhouse gases into the atmosphere. Separately, three other companies that were included in the previous carbon impact reports have stopped making an impact because the related commercial activity has stopped.
Sustainable Development Goals (SDGs) across the portfolio
The SDGs “provide a shared blueprint for peace and prosperity for people and the planet, now and into the future”.[4] The 2023 Sustainable Development Goals progress report found that the world is far off track to achieving the 17 Goals by 2030. Whilst some SDGs are close to the target and are on track (access to mobile networks, internet use, skilled birth
attendance, full employment, and sustainable and inclusive industrialisation), others have stagnated or are moving in the wrong direction.[5] In particular, the progress report identified climate change, alongside food security and protecting biodiversity, to be the SDGs moving in the wrong direction.
Over time the private sector has become more engaged with achieving the SDGs, however in a similar vein to the risks of greenwashing discussed above, there is a risk of
SDG-washing. At Green Angel Ventures we do not measure the contribution of our portfolio companies to the 17 Goals, however, we do map what SDGs their activities positively impact. To enhance transparency, we disclose that we only include SDGs that a company directly influences from their commercial activities.
Our portfolio companies directly contribute to achieving 10 of the 17 Goals. The 17 Goals are interconnected and a greater focus has recently been given to understanding the synergies, co-benefits and tradeoffs between them. A 2023 report by UNDESA and
UNFCCC found evidence that links SDG 13 Climate Action to 80% of 2030 Agenda targets.[6] The same narrative can be found among our portfolio companies, whereby 28 companies contribute to 2 or more SDGs through their activities.
SDG 12, SDG 9, and SDG 7 are being addressed the most by our companies. Since 2020 the advancement towards these goals has made limited or no progress (SDG 12 and 9), or fair progress but acceleration is needed (SDG 7). More action needs to be taken by the public and private sectors to realign the trajectory to achieve the Goals by 2030. Green Angel Ventures will continue to deploy capital into climate innovations to fight climate change and in parallel make a greater contribution to the SDGs.
