How investing with Carbon Equity works

Top-tier climate funds are often closed to individual investors. They require institutional ticket sizes and only accept LPs they trust. Carbon Equity gets in because of:

• Deep networks. Our investment team has spent years building relationships with leading climate fund managers, and our backgrounds in PE, VC, and institutional investing give us credibility with the General Partners we partner with.
• A rigorous selection process. We screen the full universe of climate funds (700+) and only back the small fraction that meet our bar on returns and impact. Top managers value us as a serious, long-term partner, which opens doors to the next fund, and the next.
• Pooled capital. By aggregating commitments from our investor community, we meet the multi-million-euro minimums that top funds require, giving you access that would otherwise be out of reach.

No, investors cannot select specific companies. You will be invested in the entire portfolio of a fund. Diversification across multiple companies reduces single-company failure risk.

There are two parts to this: how we assess potential investments on impact, and how we measure the impact performance of our funds.

We assess potential investments using our proprietary climate due diligence framework. Fund managers are scored across five topics: climate ambition, climate expertise, intentionality, safeguards against opportunism, and most importantly their climate impact track record. Each fund is benchmarked against global best practice on 15 specific criteria.

For each portfolio company in a fund, we then assess its potential contribution to net zero by asking two questions. First, does the technology focus on a material greenhouse gas issue, meaning it appears in a key decarbonisation pathway (such as those defined by the Intergovernmental Panel on Climate Change, the International Energy Agency, Project Drawdown, or the European Union Taxonomy), or addresses a problem causing at least 50 megatonnes of greenhouse gas emissions per year? Second, is the technology net zero aligned, meaning it fits a net zero economy without creating material lock-in risks? Companies that pass both checks are classified as having substantial decarbonisation potential.

Our objective is for at least 70% of portfolio companies in each fund to have substantial decarbonisation potential. At present, all of our funds perform well above this target. This is the main metric we report on every quarter.

We also share the underlying impact reports from each fund manager directly with our investors, and full company profiles are available in your investor dashboard. We believe the companies themselves speak louder than our words, and we encourage you to see their impact for yourself.

We run a rigorous, multi-stage process to identify the small number of funds that meet our bar on both climate impact and financial returns. Each fund goes through four stages of due diligence:

• Quickscan. An initial assessment of how committed a fund is to impact, looking at its mandate, thesis, minimum impact threshold, track record, and intentionality.
• Climate due diligence. A deep assessment scoring the fund against global best practice on 15 specific criteria across ten topics.
• Financial due diligence. A deep dive into the fund's strategy, team, processes, and prior investments to ensure a satisfactory risk and return profile.
• Environmental, social, and governance assessment. A review of the fund manager's policies and performance, including alignment with the European Union's Sustainable Finance Disclosure Regulation.

Funds that clear all four stages are presented to our Investment Committee, where approval requires a unanimous decision. Less than 5% of the funds we review make it through.