Alternative Investment Opportunities Through a Slowing Economy

For hedge funds, certain managers have looked to implement an “ESG integration” approach within theirportfolios. This is a technique that considersESG data and metrics to favor underlying investments with attractive ESG attributes and/ordisfavor investments that have unattractive ESG attributes, while seeking to generate returns. In private equity, the climate-tech venture capital market has increased significantly, with climate representing the fastest growing sectorwithin venture capital, withan 84% CAGR since 2012 ( FIGURE 14 ). While there has beena great expansion in investment in climate across all asset classes, the venture capital sector is uniquelypositioned to be the innovation engine for effective solutions that can be deployedeffectively. Currently, the focus is on venture, as the pipeline in growth-stage opportunitiescontinues to build. Emerging climate tech startups are targeting a broad range of industriesas they seek to add tangible utilityand value to end consumers and business while simultaneouslydecarbonizing the economy. The opportunity to fund these companies in the early- tomid-stage remains attractive as the total addressable market continues tomature. FIGURE 14 : Climate-Tech Venture Capital Activity $1.0 $1.3 $1.7 $3.0 $5.4 $10.4 $17.0 $14.0 $17.3 $31.4 $20.8 172 161 213 247 333 443 520 562 602 798 687 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Deal value ($B) Deal count Source: Pitchbook, asof September 30, 2022 Chart shows venture capital deal activitymeasured by individual deal numbers and total deal volume in bil ionsof US dollars. OPPORTUNITIES | WEALTH OUTLOOK 2023 | MID-YEAR EDITION │ ALTERNATIVE INVESTMENTS | 24