Investments aligned with this Strategic Goal aim to reduce greenhouse gas (GHG) emissions by offering affordable and equitable climate-friendly modes of transportation for both passengers and goods, thereby mitigating climate change, maximizing economic opportunities, and improving overall quality of life.

What

Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What problem does the investment aim to address? For the target stakeholders experiencing the problem, how important is this change?

Investments in this Strategic Goal aim to reduce the transportation sector’s dependence on fossil fuels. In the transition to clean mobility, emissions reductions must, as far as possible, be considered in combination with other challenges: (a) in terms of physical infrastructure, clean mobility should be accessible to all, regardless of economic and social status; (b) in financial terms, clean mobility should equitably allocate costs and benefits so that low-income communities are not burdened by uneven, per-capita distribution of costs; and (c) clean mobility should be more efficient, safer, and healthier.

The World Resources Institute highlights transportation as one of the most-emitting economic sectors, contributing as much as 15.9% of global GHG emissions in 2016 (13). With steadily increasing world population, emissions from the transportation sector will only continue to increase, with a projected two billion cars on the road in 2040 compared to 1.1 billion in 2015 (1). By 2030, global freight volumes will exceed those in 2015 by an expected 70% (2). Such unprecedented growth calls for an immediate transition towards a worldwide clean mobility future to lower GHG emissions from the transportation sector and to keep the rise in global temperature to well below two degrees Celsius, the limit of global temperature rise set by the Paris Agreement. For more information, see Intergovernmental Panel on Climate Change (IPCC).

Traditional transportation systems and existing infrastructure are inequitably distributed, leading to unequal access to mobility in both rural and urban areas. The negative impacts of these inequities are disproportionately borne by lower-income communities and communities of color (2). According to the current rural accessibility index, an estimated 450 million people in Africa have been left unconnected from transportation infrastructure, depriving them of social and economic advancement (2,3). Transportation is also a major source of air pollution that, as the American Lung Association reports, disproportionately affects lower-income communities.

While minimizing the effects of climate change, addressing these problems could improve lives and livelihoods—environment, health, and quality of life—for billions of people.

Investments aligned with this Strategic Goal can:

  • produce, distribute, sell, and use low- to zero-carbon vehicles;
  • expand electric vehicle charging infrastructure;
  • design and implement next-generation battery technology, such as Vehicle to Grid (V2G) technology;
  • design and implement technology that ensures that automation, electrification, and sharing or pooling are fully integrated into vehicles and vehicle services;
  • research and develop sustainable alternative fuels;
  • design and implement technology to reduce vehicle miles traveled (VMT) and increase utilization of alternative modes and ownership of transportation, such as pooling in private vehicles, Transportation Network Companies (TNCs), and intermodal integration, including microtransit and micromobility;
  • support the decarbonization of corporate and government vehicle fleets;
  • enable innovation in aviation, including electrification, fuel-efficiency technologies, and sustainable fuels; and
  • enter public–private partnerships to promote sustainable land use and build infrastructure for cycling and walking, as well as micromobility (e.g., e-bikes and electric three-wheelers), transit, and microtransit.

Note: See more about the GIIN’s resources on Climate Finance.

What is the scale of the problem?

As the World Resources Institute has reported, the transportation sector accounts for 15.9% of global annual GHG emissions (including CO2 and non-CO2 gases) and roughly 25% of CO2 emissions from burning fossil fuels (4). On-road vehicles are responsible for 72% of these emissions, underlining the urgency to decarbonize the global vehicle fleet in order to keep the rise in global temperature well under two degrees Celsius (4). In certain geographies, transportation represents an even larger share of overall GHG emissions. In the state of California, for example, 41% of total measured GHG emissions come from the transportation sector (5).

Who

Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who (people, planet, or both) is helped through investments aligned with this Strategic Goal?

As with all efforts to mitigate global climate change, investments in this Strategic Goal have a broad set of target stakeholders, as climate change is inherently a global problem. Considered more narrowly, the main groups affected are the following.

  • Planet: Global CO2 emissions have reached 53.5 gigatons annually, the highest in human history, and transportation is one of the highest-emitting sectors (6). Increased global annual temperatures from higher atmospheric CO2 concentrations lead to melting polar ice, rising sea levels, and extreme weather events. These threaten the planet’s ecosystems and biodiversity and can cause irreversible ecological damage. To avoid the worst impacts of a warming planet, GHG emissions need to reach or be close to net-zero by 2050 (6).
  • Individuals: Access to clean mobility positively impacts individuals of different income groups, genders, ages, disability status, and geographic locations. Better connectivity, backed by resilient and sustainable infrastructure, can improve access to health, education, employment, and productive opportunities. Improved health from reduced noise pollution and better air quality are other positive impacts of clean mobility, especially for individuals in lower-income groups and densely populated developing and emerging countries.
  • Vehicle Manufacturers, Suppliers, and Fuel Producers: Shifting from “molecules to electrons” in transportation--that is, transitioning from fossil fuels to renewables and low-carbon power--will produce winners and losers, affecting major industries including oil and gas in the long-run and automotive and power-generation in the short-run. An emerging electrified transportation system presents opportunities for major oil, automotive, and power companies to adopt new business models in green hydrogen production and supply, electric transportation, charging infrastructure, electric supply, and services to manage energy flexibility.
  • Companies and Fleet Operators: Electrified corporate fleets will benefit from lower operating costs. In January 2020, Ceres launched the Corporate Electric Vehicle Alliance (CEVA), a platform that supports large companies with significant U.S. vehicle fleets to make and achieve bold commitments to fleet electrification. The goal of CEVA is to accelerate corporate electric vehicle (EV) deployment by identifying and collectively working towards solutions to current challenges and barriers to electrification (including lack of diverse EV models on the market, high purchase prices, and policy hurdles).
  • Municipalities: Besides their key role in enabling modal-shift opportunities, municipalities have increasing options in newer and greener transportation technologies. Procuring low- or zero-carbon vehicles decreases a municipality’s overall carbon emissions, improves human health outcomes, increases access to clean transportation, and can even lower municipal expenditures on fuel. Further, in city centers, restrictions on internal combustion vehicles, greater use of zero-emissions delivery vehicles, and alternatives for residents, such as micromobility and supporting infrastructure, have significant health, climate, and quality-of-life benefits.

What are the geographic attributes of those who are affected?

Clean mobility is urgently needed around the world to mitigate climate change, improve human health, and increase socio-economic equity. Adoption of clean transportation is country-specific, depending on factors such as population, vehicle-to-people ratio, existing infrastructure, land area, weather, and especially the energy mix of a country’s power generation. It is important to note that greater penetration of electric vehicles will increase demand for electricity. As such, whether an increased number of electric vehicles benefits the environment and reduces emissions depends on how electricity is generated.

With higher penetration of electric vehicles, the demand for electricity will rise -- therefore, it depends on a country’s power generation mix whether an increased number of electric vehicles is indeed beneficial for the environment and reduction of emissions. For instance, where fossil-fuels have a larger share of energy mix in a region and the fleet of coal power plants is relatively new, the transition to clean energy may take a few years. In such a situation, countries can cut emissions from the transportation sector by improving the fuel efficiency of combustion engines to retrofit older vehicles or by investing in battery technologies and alternative transport fuels.

Contribution

Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

How can investments in line with this Strategic Goal contribute to outcomes, and are these investments’ effects likely better, worse, or neutral than what would happen otherwise

Organizations can consider contribution at two levels—enterprise and investor. At the enterprise level, contribution is “the extent to which the enterprise contributed to an outcome by considering what would have otherwise happened in absence of their activities (i.e., a counterfactual scenario).” To learn more about methods for assessing counterfactuals, see the Impact Management Project.

Investors in technologies, products, services, and solutions that support the transition towards clean mobility can contribute as follows.

Signal that Impact Matters: By investing in technologies, products, services, and solutions that support the transition towards clean mobility, investors send a clear message that moving away from fossil-fuel-dependent transportation systems is essential to mitigating the impacts of climate change. They can do so by investing in companies along the electric vehicle value chain, from automobile production and suppliers to sustainable batteries, charging infrastructure, materials, metallurgy, and recycling. Investors can create public–private partnerships to invest in infrastructure that supports walking and cycling as alternative modes of transportation. They can also move capital away from companies whose revenues and profits depend primarily on the old, dirty transportation system.

Engage Actively: Investors can proactively engage management teams, such as those at traditional automobile manufacturers, to improve their businesses’ environmental and social performance. They can encourage them to offer a wider range of electric vehicles and improve fuel efficiency standards for vehicles powered by internal combustion engines until such vehicles are completely phased out. Investors can take a board seat and offer technical and management support to companies that provide products and services in clean mobility. Investors are also a proven, compelling voice in engaging directly with policymakers. In examples of recently enacted policy that present investment opportunities, the recently enacted ACT (Advanced Clean Truck) regulation in California requires the electrification of medium- and heavy-duty vehicles over the next 15 years, and 15 U.S. states recently committed to collaborate on increasing deployment of electric medium- and heavy-duty trucks, including supporting infrastructure (10,11). Clean transportation policies will be critical to move towards the clean mobility future.

Grow new or undersupplied markets: Research and development of clean mobility technologies can be capital-intensive and time-consuming, with years often elapsing before commercial viability and concrete social and environmental benefits. Significant investment will be required to test and scale alternative fuels, such as green hydrogen and advanced sustainable biofuels. Investors with higher risk appetites can provide the patient capital needed to build sufficient capacity for alternative fuels.

Provide flexible capital: Companies that are in the informal sector or at earlier stages of the product / technology lifecycle have higher risks and therefore may require some flexibility from investors that can provide catalytic capital.

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many target stakeholders can experience the outcome through investments aligned with this Strategic Goal?

The number of target stakeholders impacted by this Strategic Goal has the potential to affect all of the world's population, transcending geographies and rural and urban areas. Rural and urban mobility issues and solutions are quite distinct, however. For example, rural transport issues may be related to lack of infrastructure, such as paved roads or last-mile connectivity, while urban transport may involve challenges around land use, congestion, and poor air quality. Though urban emissions are a major contributor to GHG emissions in the transportation sector and require specialized attention, most of the world’s poor live in rural areas in developing countries where the lack of transportation services exacerbates cycles of poverty and creates barriers to development, trade, economic growth, and global integration. Furthermore, 90% of all growth in urban population through 2050 will occur in emerging and developing countries in Africa, Asia, and Latin America (7). These are currently the fastest-growing parts of the world and contribute more than 60% of gross world product (8). Yet, in these regions, close to a billion people lack access to all-weather roads and transportation services, making inevitable the need for cleaner and climate-resilient transportation for their social and economic advancement (9).

How much change can target stakeholders experience through investments aligned with this Strategic Goal?

Investments in clean mobility can reduce the impacts of transportation on the environment and improve the health and financial stability of people around the world. Sustaining change over time depends on a successful global transition to a clean mobility future.

Risk

Dimensions of Impact: RISK

Key questions in this dimension include:

What impact risks do investments aligned with this Strategic Goal run? How can investments mitigate them?

The following are impact risk factors for investments in line with this Strategic Goal.

  • Execution Risk: Often, time-consuming, capital-intensive research and technology will be needed to electrify the transportation system. Investees working on advanced battery technology, researching alternative fuels, developing software and hardware for autonomous vehicles, or experimenting with more efficient materials and processes for manufacturing electric vehicles may not show immediate positive results. This risks loss of investor confidence and capital, abruptly stalling such critical initiatives. Investors can mitigate this risk by supporting investees with patient capital and with management tools and techniques that allow investees to overcome the challenges of reimagining and transforming the current transportation system. For more on capacity building, see Beyond Investment: The Power of Capacity Building Support.
  • External Risk: Investments in this Strategic Goal face External Risk from policy and supply chains. In terms of policy, the regulatory landscape is a significant risk factor in expanding clean mobility. So far, government policy action has been insufficient to achieve commitments made under the Paris Agreement. A policy landscape advantageous to clean mobility could include a tax or price on GHG emissions and tightened regulations on fuel efficiency for passenger and commercial vehicles. On the other hand, policies that reduce subsidies or eliminate tax credits before clean transport becomes commercially viable can adversely impact transition timelines. Investors can mitigate policy risks through advocacy, including advocacy regarding vehicle and fuel policies at the state, federal, and international levels. In terms of supply chains, their resilience is key to stable manufacturing of electric vehicles and related infrastructure. Disruptions across global supply chains can cause substantial risk and negative impacts for investors in every sector. As climate change worsens, increased severity and frequency of extreme weather events around the world could considerably disrupt supply chains, making it difficult to source critical components needed for the manufacture of electric vehicles. Investors must be aware of these risks and work towards their mitigation through resilient supply chain systems and climate modeling.
  • Stakeholder Participation Risk: Electric vehicle (EV) infrastructure is expensive to build, and some investors are reluctant to commit capital to a small market. Investors are often left without a clear way to prioritize within their portfolios between the cars themselves, charging stations, or other elements of infrastructure critical to making electric vehicles a more widely used technology. Lack of regulation, planning, and coordination at the city, regional, and national levels can hinder the deployment EV infrastructure at scale. Since electrification interacts with energy, economic, social, and policy aspects, investors can overcome these challenges in deployment by working closely with government authorities, utilities, and EV manufacturers, advocating for appropriate policies and structuring investment schemes that account for the importance of cross-sectoral balance.
  • Endurance Risk: Global economic uncertainty and volatile (lower) oil prices are bad news for an electrified transportation system, making electric vehicles and alternative fuels less competitive and lengthening the transition towards clean mobility. Investors can mitigate this risk by making electric transportation as cost-effective as possible, potentially through artificial-intelligence approaches to EV management that can meet population and economic demands without congesting and polluting cities. Ride-sharing, car-sharing, and self-driving vehicles must all be part of clean mobility.

What are likely consequences of these impact risk factors?

These risk factors, if materialized, would keep investors from reducing GHG emissions in the transportation sector, thereby failing to mitigate the risks of climate change.

Illustrative Investment

Generate Capital, a specialty distributed infrastructure company, entered into a joint venture with Chinese electric vehicle company BYD to accelerate the adoption of electric buses in the United States. Under the terms, Generate invested USD 200 million to buy and lease buses from BYD. Initial clients included smaller municipalities, as well as universities and corporations, which used the buses to transport students and employees. Key project outcomes include the resulting decreases in GHG emissions and increase in the electric bus stock in use in the United States. At the time the partnership was formed, there were 345,000 electric buses on the road globally but only about 350 in the United States (12). Replacing all of the country’s diesel-powered transit buses with electric buses could eliminate more than two million tons of GHG emissions each year.

Capricorn Investment Group, one of the largest mission-aligned investment firms in the world, was among the investors in a USD 100 million Series B financing round in Joby Aviation in 2018. This followed the company’s previously unannounced Series A financing, led by Capricorn in 2016, and brought the company’s total funding to more than USD 130 million. The Series B round enabled Joby Aviation to take its all-electric vertical take-off and landing (eVOTL) passenger aircraft into pre-production and certification. Predicted outcomes include gains in the sustainability of air travel through the use of electric passenger aircraft, reduction in traffic congestion on the ground, and increased efficiencies in transportation; for 100 km trips, electric flying vehicles could be 35% more efficient than a fuel-powered car. To date, Joby has completed sub-scale testing on its aircraft design and begun full flight tests of production prototypes. Joby also began the certification process for its aircraft with the Federal Aviation Administration (FAA) at the end of 2018.

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

NESTA: 2
How Clean Are Electric Vehicles?

Weeberb J. Requia, Moataz Mohamed, Christopher D. Higgins, Altaf Arain, Mark Ferguson. “How Clean are Electric Vehicles”. Atmospheric Environment Volume 185, (2018): 64-77

NESTA: 2
Meeting an 80% Reduction in Greenhouse Gas Emission From Transportation by 2050: A Case Study in California

Christopher Yang, David McCollum, Ryan McCarthy, Waynel Leighty. “Meeting an 80% reduction in greenhouse gas emissions from transportation by 2050: A case study in California” Transportation Research Par D: Transportation and Environment,Volume 14, Issue 3, (2009): 147-156

NESTA: 1
Opportunities to Address Air Pollution with Transport Biofuels

The Energy and Resource Institute, Tampere University, Finnish Meteorological Institute, Finland. Position Paper, Opportunities to address air pollution with transport biofuel. (2019)

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.