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TPG Rise Climate raises $5.4 billion for largest climate-focused private equity fund

July 27, 2021, 10:27 AM UTC

Good morning.

The evidence continues to mount that 2021 marks an inflection point for business commitments to climate change. The latest news, out this morning, is that TPG Rise Climate has raised $5.4 billion to invest in climate solutions.

“What we’ve seen happen here is a real cause for optimism,” says former U.S. Treasury Secretary Hank Paulson, who will serve as executive chairman of the fund. “When we started off…no one thought we might raise $5 billion as quickly as we did.”

I spoke with Paulson and TPG co-founder Jim Coulter yesterday, and both were almost giddy with their fundraising success. Coulter, who recently stepped down as co-CEO of TPG, will serve as managing partner of the new fund. He says each investment will go through a dual screen—one to evaluate the financial return and another to measure carbon emissions avoided. “The financial impact has to be the same as any TPG deal. But we have added a second, independent arm where we look solely at the climate effect. We have to pass both test one and test two.”

The most interesting angle to TPG Rise Climate is that over a billion dollars was raised directly from large corporations—including 3M, ADM, Allstate, Alphabet, Apple, AXA, Bank of America, Boeing, Dow, FedEx, General Motors, Honeywell, John Deere, Nike and more. “Every one of these began with a call from me to the CEO,” Paulson said, clarifying later that both he and Coulter had made the calls. Each corporation will have the opportunity to work with the funds’ portfolio companies to build climate solutions. Their willingness to participate in a private equity fund on climate is a sign of the times. 

At over $5 billion, the new TPG fund is the largest private equity fund devoted exclusively to climate. But it won’t be the last. “This will be the biggest industrial transformation in the history of the world,” said Paulson. “It better scale quickly,” added Coulter. “If you can ignite the institutional investors and ignite the corporates, the private sector has the opportunity to make a difference a la Operation Warp Speed.”

More news below. And check out this week’s installment of our podcast Leadership Next, which features a fascinating conversation with Best Buy CEO Corie Barry. “You’re definitely seeing CEOs lead differently than they ever have before,” she told Ellen McGirt and me. “One of the things we talk a lot about at Best Buy are inclusive leadership behaviors—courage, empathy, vulnerability and grace… It’s a very different way to talk about talent.” Listen to the entire interview on Apple or Spotify.

Alan Murray
@alansmurray

alan.murray@fortune.com

Correction and clarification: This article was amended on July 27 to correct “ACA” to “AXA” and add a clarification about Paulson’s quote.

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This edition of CEO Daily was edited by David Meyer.

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