In our rapidly evolving financial landscape, marked by global challenges and opportunities, private investments are not just a choice but a critical necessity for spurring innovation to address climate change. At New Summit Investments, we emphasize “investing for solutions,” believing that new money entering private markets ignites the creation of novel solutions to our planet’s pressing problems. This philosophy aligns with the insights shared in the recent article by KKR titled “A New Foundation for Global Wealth: Rebuilding Portfolios for the New Regime” and the recent CREO report “The Fundamentals of Climate Investing for Families,” which both echo our belief in the transformative power of private capital.
Family offices and foundations, often mission-driven, find a harmonious alignment in private investments. These institutions can dovetail their core missions with the objectives of private funds, creating a powerful synergy for climate action. According to KKR’s report, the last decade has seen a remarkable growth in global assets under management (AUM). While total global AUM grew 118%, from $57.8 trillion in 2012 to $125.9 trillion in 2021, the growth in global private capital AUM was even more striking, exceeding 300%. As a result, private asset classes now represent 7.8% of global AUM, up from 4.2%.
This dramatic increase in private capital is not merely a trend; it represents a pivotal shift that presents a significant opportunity for channeling investments toward innovative and promising solutions to climate change, often found within private markets.
Shifting our focus from the macroeconomic trends highlighted by KKR to a more specific examination, we turn to CREO, a membership organization comprised of family offices, foundations, and family-controlled businesses actively engaged in climate and sustainability investments. CREO’s report offers a microcosmic view of how a dedicated group operates at the intersection of private capital and climate solutions, showcasing the tangible impact and strategies of those leading the charge in sustainable investment. Key takeaways from the CREO report include:
These insights from CREO and KKR resonate with our vision at New Summit Investments. We see a future where wealth management is not just about domestic vs. emerging markets but also about exposure to climate change and contributing to its solutions. This new lens in portfolio management is not just a possibility but an impending reality.
At the heart of our mission is the desire to increase capital flow to private market solutions for climate change and other global challenges, including improving human health and economic opportunity. Is the convergence of initiatives to move more money towards these solutions, at a time when more capital is generally shifting to private markets, serendipitous, or just in time?
In this evolving era, the insights from both KKR and CREO provide valuable guidance. They help us understand the increasing role of family offices and foundations in climate investment and the importance of adaptable, personalized investment strategies. As we navigate this convergence of capital and mission, the team at New Summit Investments remains committed to contributing to lasting solutions for global challenges, fostering a future where investment strategies are intrinsically linked with the well-being of our planet and people.
Alex is the lead Managing Partner at New Summit. He co-founded the New Summit Impact strategy and is a member of the Fund’s investment committee.