Jakarta – Venture Capital (VC) funds investment in sustainability-related projects and entities in Indonesia shows an upward trend. This indicates that venture capitals are now looking for profits and returns and how their investment impacts the communities and environment.
In principle, sustainability, better known as environmental, social, and governance (ESG) investment, considers a company’s environmental impact, social responsibility, and governance practices.
ESG investment was previously a peripheral investment consideration. However, today, ESG is at the forefront, ensuring companies are judged by their balance sheets and broader societal impacts.
These VCs usually apply the socially responsible investment (SRI) principle. This investment strategy filters investments through a social good lens. It restricts funds to businesses that demonstrate positive societal impact, addressing environmental health, social justice, and more. Another popular term is ‘impact investment’, which blends the dual goals of profit-making and engendering positive societal change.
In principle, there are two types of VC investment in environmental, social, and governance (ESG) projects. First, VCs invest in companies or projects that have integrated ESGs into their operations. Second, they invest in ESG-related projects, start-ups, or corporations.
Some VCs are popular and widely known as they are often written in media or publications. However, some operate behind the scenes and opt not to be seen by the public. Most of these VCs are overseas-based, but some are local or domestic-based entities.
According to the latest report of Shizune.co, as of January 2025, at least 50 VC funds are investing in sustainability entities and projects in Indonesia. Some of them are well-known VCs, such as SOSV, Alpha JWC Ventures, Clime Capital, Schneider Electric VC, Convergence Ventures, East Ventures, iSeed Ventures, Kakao Investment, Openspace VC, Kejora-SBI Orbit, and Saratoga Investama Sedaya.
Singapore-based Clime Capital, for instance, focuses its investments on creating positive climate action by developing green energy investment opportunities. So far, it has invested in solar, renewable energy, and smart home projects.
Clime Capital investment portfolios include Hijau, a business entity that provides solar energy solutions; Xurya, a renewable energy entity that provides commercial and industrial rooftop owners; and Nami Energy, which provides its clients with renewable energy solutions as well as collaborate with other parties to attain a balance between environmental sustainability and human well-being.
Another VC focused on investing in the renewable sector is Schneider Electric VC. The company invests in climate tech and the energy sector. Its portfolios in Indonesia include ATEC, an entity that provides sustainable, affordable, and accessible clean cooking products, and EIT InnoEnergy, which makes equity minority investments in early-stage companies and offers added-value services to make the business bigger, sooner, and safer.
Meanwhile, Kejora-SBI Orbit VC mainly invest in mobile, battery and Series A funding. Its portfolio includes Bizhare, a crowdfunding platform; Swap, a city-based infrastructure of battery swapping stations for e-motorcycle riders; and KedaiSayur, a company that serves orders through delivery of various types of kitchen needs ranging from vegetables, fish pukes, spices and fruits.
Founding Partner of Rigel Capital, Sebastian T0gelang, said during a recent panel discussion held by DealStreetAsia, entitled ‘Balancing Impact and Alpha in Climate and ESG Investments’ that sustainable businesses are increasingly outperforming traditional models, delivering cost savings and greater efficiency.
He cited the case of electric vehicles (EVs) and organic fertilisers, which are now more cost-effective alternatives to internal combustion engine (ICE) vehicles and chemical fertilisers.
He said Rigel Capital has shifted the company’s investment in sustainable-related projects. “While not initially focused on impact investing, more than 70% of our recent investments in recent years are tied to sustainability,” he said on his personal LinkedIn page, summarising his speech at the seminar.
The company’s portfolios include organic fertilisers, used cooking oil recycling, metal recycling, electric vehicles, air quality optimisers, digitising SMEs, and modern supply chain/logistics solutions.
Based on the PWC 2023 report, climate tech investments deliver strong financial performance, with a median investment rate of return (IRR) of 27%, outperforming traditional VC sectors.
Sebastian concludes that integrating sustainability in investment “isn’t just good for the planet and a smart business strategy. (Roffie Kurniawan)