Former Treasury Secretary Hank Paulson is the key player.
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, ACA, 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. 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
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Antitrust muscle
The Justice Department has effectively sunk the proposed $30 billion merger between Aon and Willis Towers Watson; the insurance brokers have abandoned the deal, after the DOJ sued to stop it on the basis that it would have harmed competition. This was the first big antitrust case of the Biden era. Aon's share price rose more than 8% on the news, and Willis Towers Watson's fell by slightly more. Wall Street Journal
Intel progress
New Intel CEO Pat Gelsinger yesterday unveiled some new chip-design technologies that the company will be rolling out from 2024 to regain its competitiveness. He also revealed major customers for Intel's new chip-foundry business: Qualcomm, the mobile processor giant, and Amazon Web Services, the cloud leader. Fortune
Korean relations
North and South Korea have re-established communications with each other. North Korea cut off their mutual hotline in June last year, at a time of great tension. "We're glad to talk again after over a year," said a representative for the south. North Korea's KCNA news agency: "The top leaders agreed to make a big stride in recovering mutual trust and promoting reconciliation." BBC
Chemicals explosion
There was a major explosion this morning at a chemicals disposal site near the city of Leverkusen in western Germany. With a tall stack of black smoke in the air, authorities have issued a warning of extreme danger, telling residents of the area to get indoors immediately and close their windows. The site is run by Currenta, a company that Bayer sold to Macquarie Infrastructure and Real Assets a couple years back. Reuters
The worker-employer relationship disrupted How can business leaders respond to the challenges brought on by the pandemic such as the evolving worker-employer relationship? Deloitte's 2021 Global Human Capital Trends Special Report explores the importance of a clear and sustainable workforce strategy. Read more
Kids' vaccines
Moderna is expanding a study of its COVID vaccine in younger children, so it can get a better idea of possible rare side-effects. A small number of teenagers have developed a rare type of heart inflammation after getting a Moderna or Pfizer mRNA shot. Fortune
Supply chains
Some U.S. retailers may have trouble stocking their shelves thanks to factory shutdowns in Vietnam and Bangladesh; the latest supply-chain hiccups to be caused by the coronavirus's Delta variant. Whirlpool CEO Marc Bitzer: "Whatever the new normal is, it will happen a lot later than people assume…Everybody hopes for [the] new normal to be next quarter. It’s not going to be." Washington Post
Market normality
Markets won't be meeting their new normal anytime soon either, writes Ritholtz Wealth Management's Ben Carlson in his latest piece for Fortune: "There is no such thing as a 'normal' market. There is no equilibrium when it comes to stock prices, interest rates, inflation or valuations. These variables are always in a constant state of flux and assuming they will magically go back to their long-term averages… can be a dangerous exercise." Fortune
African vaccines
Neither Pfizer nor Moderna has shown any signs of being willing to work with a WHO-backed technology-transfer hub for mRNA vaccines in South Africa, which could result in doses on the ground by 2022 if Big Pharma plays along. As this Politico piece explains: "[The hub's] promise goes beyond coronavirus and holds the potential for applications related to cancer, Ebola or HIV. But it’s exactly this potential that makes pharmaceutical companies all the more keen to cling to their newly minted technology even more tightly." (Bonus read: the WTO discussions over a vaccine patent waiver are on hold until mid-September due to the European summer holiday.) Politico
This edition of CEO Daily was edited by David Meyer.
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