Due Diligence Questions in Climate Tech Ventures
We typically advise our investor-side clients to ask climate-specific due diligence questions in addition to general due diligence inquiries when contemplating an investment in a climate tech venture.
Here is a list of questions we have found to be helpful:
1. Is there a chief science officer or chief climate officer responsible for ensuring that the claims made by the venture are consistent at least with IPCC analysis and recommendations, if not the best available science?
2. What are the venture's key assumptions about projected warming? Is there an acknowledgment that current government policies may lead to 2.8°C of warming by 2100 (see UNEP’s October 2022 Emissions Gap Report, for example). How does the venture attempt to solve climate change impacts associated with that kind of warming?
3. If the venture is deploying technology or infrastructure in different jurisdictions, has the venture consulted with local stakeholders and communities about the need for such technology or infrastructure? Is there buy-in and consent from such local stakeholders and communities? Does the venture have legal counsel in the applicable jurisdiction that has signed off with respect to local law?
4. Does the venture take into account human rights impacts associated with any technology or product deployment? Exotic mitigation technologies—for example, technologies associated with solar radiation management, but also many others—could have significant human rights implications. How is the venture addressing human rights concerns raised by the technology, including human rights concerns contained in its supply chain?
5. Has the venture assessed its customer base and is there both the capability and demonstrated need to sell to such customers? Different customers—governments with mandates to purchase the products or services, energy and manufacturing companies, investment and financial services customers, and/or consumers purchasing direct-to-consumer products and services—will each have their particular needs and challenges. Direct-to-consumer technologies raise additional questions and concerns. For example, is the venture sensitive to concerns that advanced adaptation technologies may only be available to people with means, and what is the venture doing to address such concerns?
