7 June, 2024: In a recent report, the independent venture capital platform PT1 and the strategy consultancy DWR Eco highlight the massive backlog demand for investments in so-called AdaptationTech solutions. Specifically, there is a financing gap of around 44 billion euros per year!
In their latest whitepaper, PT1 and DWR Eco show that the real estate industry in particular has a huge amount of catching up to do in the area of climate impact adaptation. This can be recognised by the Adaptation Finance Gap of EUR 1 trillion p.a., which describes the investments required worldwide in climate impact adaptation.
In particular, the real estate sector is not only a driving force for CO2 emissions, but is also particularly affected by the consequences of climate change. Heavy rainfall, storms and extreme cold can have devastating effects on building infrastructure – and on the livelihoods of countless people. Just think of the flood disaster in the Ahr valley. Buildings must not only become more energy-efficient to reduce emissions, but be constructed with materials that are more resilient. We need to catch up in the areas of intelligent conditions monitoring and predictive maintenance.
AdaptationTech solutions can detect climate change-related disasters at an early stage, mitigating the potential property damage and personal injuries, while increasing the resilience of communities. Specifically, this includes software solutions for climate data collection, disaster response and recovery systems, water management solutions, IoT products in the field of smart infrastructure and new insurance products. The aim is to build and strengthen resilient and livable urban spaces.
There is no shortage of startups working on innovative solutions for dealing with the effects of climate change in the real estate sector. However, this sector is still massively underfunded overall. One of the main reasons for the overall low level of funding is the low level of private capital involvement, since 98% of investment currently comes from the public sector.
In reality, however, the potential is immense: “We are firmly convinced that investments in AdaptationTech not only have a positive social impact, but are also economically rewarding. An ecosystem with (unfortunately) secured demand is currently emerging here due to the failure to meet climate targets. Our aim is to raise awareness of this issue and to introduce investors to the attractive opportunities in this sector,” says Nikolas Samios, PT1 Managing Partner and initiator of the non-profit initiative HEAT.
AdaptationTech startups are therefore not only necessary to prepare the real estate sector and other industries for the consequences of climate change, but are also becoming a new hidden champion vertical for investors. Germany could take on a pioneering role and create a new range of export products through targeted support, thereby compensating to some extent for the shortcomings in the solar industry, for example.
David Wortmann, Managing Director and founder of DWR eco, adds: „The fact that we are highly unlikely to achieve the climate targets we have set does not mean that we should slow down on climate protection measures. However, we must expand the field of ClimateTech to include AdaptationTech so that we can also mitigate the effects of the climate crisis through technologies and investments.”
At a regulatory level, the EU, federal government, federal states and local authorities have already created initial guidelines, which now need to be refined. In addition to its advanced regulatory framework compared to the rest of the world, Europe can draw on a rich tradition of research and development in the fields of energy efficiency and materials science. The whitepaper by PT1 and DWR Eco underlines the potential to combine economic profitability and social impact with targeted investments in AdaptationTech solutions.
The white paper is available for download here.
Legal disclaimer: This is a marketing advertisement. Please read the EuVECA information document and the key information document before making a final investment decision.
