Main trends - Redwood Grove Capital

Technological Innovation

Technological innovation is essential to address global climate change. As governments and corporations accelerate efforts to reach net-zero targets, we believe the effectiveness of climate-related technologies will become increasingly vital.

At Redwood Grove, we seek out breakthrough innovations that challenge traditional models and drive decarbonization. These include renewable energy, battery storage, electric and autonomous vehicles, artificial intelligence, 5G, smart cities, Internet of Things (IoT), bioplastics, and emissions detection systems, among others.

Regulatory Change

Climate-related regulation is dynamic and often underappreciated by markets. Over the next 5-10 years, we expect continued policy shifts toward carbon reduction—though the path will be nonlinear.

Our analysis spans federal, state, and local policies as well as actions at the relevant regulatory agencies. To deepen our understanding of policy impacts, we collaborate with NGOs and policy experts to evaluate legislation and its financial implications for the companies we invest in.

Physical Climate Risks

The physical impacts of climate change are accelerating. Rising sea levels, increased wildfires, more intense hurricanes, and shifting precipitation patterns are already disrupting business models and supply chains across industries.

We believe these risks are misunderstood in public equity markets. Our analysis spans industries to identify both vulnerabilities and opportunities—such as infrastructure adaptation, agricultural shifts, extreme weather response, and insurance innovations. From outdated FEMA flood maps to wildfire risk in utility territories, we seek to understand and capitalize on how physical climate realities affect long-term asset values.

Consumer Behavior

Consumer preferences are shifting as awareness of environmental impact grows. We anticipate rising demand for healthier foods, low-emission products, reduced plastic use, and sustainably sourced goods will become a key differentiator across industries—particularly in consumer-facing sectors.

Companies indifferent to the sustainability of their sourcing and manufacturing face growing reputational risk. To evaluate a company’s adaptability, we engage directly with management, consult NGOs and industry experts, analyze sustainability reports, and benchmark peers to assess environmental positioning and performance.