Anyone who pays attention to greenhouse gas (GHG) emissions knows that the automotive industry is a major contributor. Transportation accounts for about 29 percent of total GHG emissions in the United States, according to the Environmental Protection Agency, making it the nation’s largest contributor of GHG emissions.

The world’s leading automakers are aware of this, and some have begun taking steps to help rectify the situation. Two of the biggest – General Motors and BMW Group – recently launched new funds aimed to enhance sustainability in the automotive industry.

In June, Detroit-based GM announced the creation of a $25 million Climate Equity Fund to help close equity gaps as the auto industry transitions to electric and emissions-free vehicles. The fund complements GM’s $35 billion global investment in electric vehicle (EV) and autonomous vehicle (AV) programs, research, technology, manufacturing, and charging infrastructure.  

A day after GM’s announcement, BMW i Ventures unveiled a new $300 million venture capital fund that will invest in early-to mid-stage start-ups operating in the sustainability, transportation, manufacturing, and supply chain industries. BMW i is an independent venture capital firm affiliated with German automaker BMW Group. This latest fund is BMW i Ventures’ second.

GM’s foray into climate funds comes amid a broader effort by the company to prioritize equitable climate action as a way to ensure that its all-electric future is inclusive for its workforce, customers and communities that might be particularly impacted by climate change.

“Climate change does not impact every community equally,” GM Chair and CEO Mary Barra said during the Aspen Ideas Festival in June. “As we move to an all-electric, zero-emissions future, it is on us to lead positive change and implement inclusive solutions that bring everyone along, especially our employees and communities.”

The company’s focus on equitable climate action is rooted in four key areas:

• The Future of Work: As part of its sustainability initiative, GM looks to reinforce its commitment to its workforce and reiterate its support for efforts by the United Auto Workers union to organize employees at the Ohio and Tennessee Ultium Cells LLC battery cell manufacturing plants.
• EV Access: The company plans to offer a wide selection of EVs across a range of price points. It also announced programs leveraging its HYDRO TEC fuel cells for rail and aircraft applications.
• Infrastructure Equity: GM is committed to charging solutions that can help make EV ownership accessible to a larger population of customers.
• Climate Equity: With its new fund, GM will provide capital to organizations that are closing the climate equity gap.

On June 29, GM began accepting proposals for funding from its new Climate Equity Fund, with potential grantees encouraged to submit proposals aligned to the four climate equity outcomes listed above. GM said it will prioritize grassroots organizations working at the community level.

Like EV market leader Tesla, GM has already used up all of the $7,500 federal tax incentives offered to consumers when they buy EVs, the Detroit News reported. Some lawmakers are considering an increase in tax incentives to help spur EV adoption.

During the Aspen conference, Barra said one key to making electric vehicles more accessible is battery costs – which is why her company is putting so much focus on that piece of the EV market. GM is partnering with LG Energy Solution to build four battery cell plants in the U.S. The first one, in northeast Ohio, is scheduled to go online next year.

“We’re making sure that we’re also investing in focusing on how do we get the energy density up and the battery cost down, so we can have a variety of solutions that serve everyone,” Barra said.

Meanwhile, the second fund from BMW i extends the commitment BMW Group has made to investing in environmentally friendly technologies. As noted on the TechCrunch website, the latest fund will emphasize sustainability and zero emissions in all sectors that lead up to designing, manufacturing and building a car. That differs from GM’s fund, which focuses more on autonomous and digital vehicle technology, customer experience and advanced production.

“Sustainable supply chain is one of the things we’re really interested in right now,” Marcus Behrendt, managing partner at BMW i Ventures, told TechCrunch. “BMW has announced that it wants to significantly reduce its carbon footprint, and therefore it’s looking at all ways of producing this – not just emission from the vehicles, but also the emissions that are produced when manufacturing and developing the cars.”

BMW i Ventures made its first foray into sustainable investments at the end of 2019 when it invested in a trio of companies: Turntide Technologies, which makes smart electric motor systems; Solid Power, a developer of solid-state battery technology; and Boston Metal, which aims to decarbonize the metal industry.

BMW i Ventures doesn’t plan to acquire any of its investments. Instead, its mission is to find companies with high potential that can work with BMW and the rest of the auto industry. However, the startups it invests in will get the benefit of networking with BMW engineers and employees to learn more about how the automotive ecosystem works.