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Expert voices: Fifth Wall's Brendan Wallace on climate credibility

Jun 3, 2024
a illustration of brendan wallace of fifth wall surrounded by colorful circles

Brendan Wallace. Photo illustration: Tiffany Herring/Axios; Photo: Courtesy of Fifth Wall

Buildings alone are responsible for 40% of carbon dioxide emissions — more than heavy industry, transportation, and agriculture.

State of play: If you've talked with Brendan Wallace or heard him speak, it's surely a line you've heard before — and it remains a startling figure.

  • His venture capital firm, Fifth Wall, invests in property tech, with a focus on decarbonization.
  • "Materials, electrification, EV charging — buildings are systemically underfunded when you consider the outsize contribution to emissions," he tells Axios.

This interview was lightly edited for length.

What's been the big news in climate tech this month?

  • "HSBC, J.P. Morgan, Stifel Bank, and a bunch of super-institutional Wall Street lenders gave a $100 million credit facility to Electric Hydrogen.
  • Green hydrogen and electrolyzers have historically been thought of as frontier technology. The fact that large institutional lenders are providing credit against it — it's massively de-risking from a credibility standpoint."

What would you add to the narrative?

  • "More institutional capital will mobilize. It's dawning on investors that climate tech represents the single biggest economic opportunity.
  • The financing for Electric Hydrogen validates that this space can take on institutional credit at a relatively early stage of development."

By contrast, what's going undernoticed?

  • "Real estate has had an incentive to decarbonize based on saving money, attracting tenants, and lowering cost of capital. Now there's a new vector: laws like [New York City's] Local Law 97 that tax and fine energy inefficient buildings
  • Real estate is primarily taxed and regulated locally. Since most cities are environmentally progressive, and most real estate value is in cities, real estate is concentrated in jurisdictions where there's likely to be carbon fines and carbon taxes."

Four fun things:

💼 First job: Busboy at a family Italian restaurant in Connecticut.

👑 Proudest investment: "Our first fund was $212 million. One investment — a single exit — returned over $350 million. As you can imagine, at the beginning of a venture fund's life, you need a big win."

🤦‍♂️ Facepalm investment: "We invested in a company where we had misgivings about the founder. Those issues came back to bite us — a knowable and avoidable mistake."

💡 In three-ish words, one change you'd make to climate tech: "We don't need more solutions for plastic straws. We need solutions for cement."

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