Volvo Group invests in Zacua Ventures as ESG efforts expand

Global construction and transportation equipment manufacturer Volvo Group has invested in venture capital firm Zacua Ventures to further its sustainability efforts. 

Zacua Ventures, established in 2022, launched its inaugural $56 million fund targeting early-stage construction technology startups on Feb. 27, according to a release from the firm. The fund is backed by 18 other construction sector corporations. 

Volvo Group views the fund as an opportunity to further collaboration in its net-zero efforts, David Hanngren, investment director at Volvo Group Venture Capital, told Equipment Finance News. 

“Sustainable transport and infrastructure are very important for the Volvo Group, and we are committed to driving the transition to sustainable, safe and more productive solutions, while making the journey to become a net-zero society,” he said. “We are sure that to succeed with this, various actors will need to collaborate on various solutions.” 

Overcoming infrastructure concerns

Infrastructure concerns extend beyond the Volvo Group, as Volvo dealers also look at infrastructure issues as a key area to address, Patrick Daly, chief operating officer of Nacarato Truck Centers, told EFN. 

“You have to look at the facility, does the facility have the correct amount of power coming into it and is it set up to be 480-volt, Phase-3 power,” he said. “When you get into the bigger type of equipment, on the Volvo side, that is almost 100% necessary to have that type of infrastructure, so bringing in that infrastructure can be a little bit more costly.”

 Volvo Group added another collaborator to its alternative fuel development efforts March 11, with the announcement of a joint venture with Westport Fuel Systems to further the adoption of Westport’s High Pressure Direct Injection fuel system. Westport’s fuel system can lower greenhouse gas emissions in internal combustion engines. 

The investment in Zacua Ventures allows Volvo to further its construction efforts while the Westport joint venture furthers the transportation side, Volvo’s Hanngren said. 

“Zacua Ventures provides us with early access to leading start-ups in the construction industry,” he said. “Through the cooperation, we look forward to connecting with more players at the forefront with innovative solutions that can make the construction industry more efficient and sustainable.” 

Measuring ESG, market trends 

To measure environmental and sustainability goals, investment research firm Sustainalytics developed ESG risk ratings to measure a company’s exposure to industry-specific, material ESG risks, according to the Sustainalytics website. In addition, the metric measures ESG risk management and compares it to other companies in the industry. ESG — environmental, social and governance — is used to measure a company’s sustainability impact. 

Volvo’s ESG risk stands at 25.7 and represents medium ESG risk, according to Sustainalytics. Among Volvo’s peers:  

• Daimler’s ESG risk is low at 19.9;  
• Paccar’s ESG risk is medium at 24.4; and  
• Traton’s ESG risk is also medium at 29.1. 

ESG trends play a significant role in the investments of Volvo Group Venture Capital, Hanngren said, adding that more collaboration with Zacua is a possibility.  

“The market trends shaping the future of transportation, infrastructure solutions and the strategic priorities of the Volvo Group define the investment focus areas at Volvo Group Venture Capital,” he said.  

As the United States adopts more ESG and alternative fuel-related policies, dealers should prepare for the future rather than fall behind, Nacarato’s Daly said. 

“You see what’s happening in California over the past 10-plus years, and that continues to have a ripple effect across the rest of the states,” he said. “It’s just something that we want to prepare for, and we’d rather be on the front of it than on the outside looking in down the road.” 

Registration is now open for Equipment Finance Connect, the nation’s only dealer-centric equipment lending and leasing event, which will take place May 5-7 in Nashville, Tenn. Learn about the event and free dealer registration at EquipmentFinanceConnect.com.