The world is beginning to realize that climate change touches everything. According to GreenBiz, the 21st century global economy will be heavily influenced by climate and sustainability factors, and the new climate economy will be a defining player for governments and companies. Investors are finding ways to put their money into various solutions to the challenges posed by climate change.

Venture Capital in climate tech has grown faster than VC in general over the past seven years. The climate tech VCs are looking at a broader range of investment than just renewable energy production. They consider agriculture and food production, transportation, and startups that can reduce greenhouse emissions. While the market for climate tech is maturing, there are still gaps that need to be filled.

Funding for climate tech ventures is coming from all segments of the market, from traditional VC firms to corporations, government-backed firms and private equity. Corporate VC is key to startups where the capital costs are high. In addition to funding, they also bring their knowledge of commercial and industry intricacies for deploying new innovations into the market.

Banks and other lending institutions, for the first time, have invested more heavily in green bonds and loans than fossil fuels since the beginning of 2021. Bloomberg believes the financial markets are following the signs that governments and businesses are taking climate change more seriously. Some companies are beginning to include volatility related to climate change in their projections.

Companies are increasingly adding a Chief Sustainability Officer to the C-suite. While the duties vary with the company, CSOs are responsible for ensuring that business practices are economically, environmentally and socially sustainable. But the charity CDP found that many companies are either not assessing their climate risk, or doing it without good data, thus providing misleading information.

Forbes has noted an upswing in the number of votes by shareholders for climate-related and environmental proposals. Included in this mix is the proposal to GE seeking details on the company’s net-zero emissions policy, shareholders of Bunge, Ltd, asking for a stronger deforestation policy, and DuPont shareholders seeking a stronger plastics pollution policy. Investors are looking for disclosures on how companies are planning to meet climate change goals, and how that impacts the bottom line.

We are at a crossroads for mitigating climate change. The climate economy may give us a stronger foothold in meeting the goals of the Paris Accord. Every initiative is important. Innovation and investment will get us closer to our climate goals and can be profitable, too.