Greetings Agents of Impact!
In today’s Brief:
- Impact investors raise red flags on Europe’s shift to defense spending
- Climate tech to reshape ‘the urban stack’
- Repricing ESG as a competitive advantage
Featured: Defense Tech
In Europe, many impact investors reject the notion that ‘Camouflage is the new green.’ First came the war in Ukraine. Then, President Donald Trump’s reluctance to guarantee Europe’s security raised anxiety levels further. Now comes the president’s not-so-veiled threats to Greenland. It’s no surprise that defense spending is booming across the European Union’s 27-nation block. As record sums of money flow to armaments and defense tech, some European impact leaders have grown increasingly uneasy, warning that investments in “security” could displace social and environmental goals and undo years of work in aligning finance with sustainability. They’re even more concerned that military applications are being called “impact investments.” “You could say defense spending is a very unfortunate necessity,” Kristoffer Nilaus Tarp of the government-backed Impact Fund Denmark told ImpactAlpha. “It might be necessary but it’s just not for us.” The debate around impact funds and defense is “a very challenging one, given that one of the SDGs is actually peace and security,” said Stefan Germann of the Swiss Ursimone Wietlisbach Foundation. He says the foundation, which owns specialist impact investor Blue Earth Capital, would “never” invest in defense.
- Defense surge. The prices of European defense stocks have more than tripled since Russia invaded Ukraine in February 2022, driven in part by governments ramping up their defense budgets. VC funding for early-stage defense and defense application firms in Europe last year soared to a record $1.5 billion; Germany’s Allianz Global Investors and Switzerland-based UBS Asset Management both scrapped bans on sustainability funds backing manufacturers of conventional weapons. Already this year, German investor Digital Transformation Capital Partners launched the bloc’s biggest defense tech fund. “We are highly confident in the structural growth prospects of this sector for decades to come,” Digital Transformation’s Vicente Vento said. Czech armored vehicle and munitions maker CSG raised €3.8 billion in one of the world’s largest defense IPOs on Euronext Amsterdam. JP Morgan Asset Management lifted defense restrictions on more than a hundred “light green” funds “in response to client expectations relating to defense preparedness.” The Stoxx Europe Total Market Aerospace and Defence Index has already gained more than 7% this year.
- Doing good? Defense investing was a major point of debate at the annual Impact Week gathering that brought 600 impact leaders to Malmö, Sweden in late November (see, “Sovereignty and resilience are the watchwords as Europe navigates the new terrain”). Members of Impact Europe “are very worried that the big asset managers and asset owners are shifting capital towards defense, which takes away from the impact on the ground,” Roberta Bosurgi, who led the organization until last year, told ImpactAlpha. Sir Ronald Cohen, a longtime champion of impact investing, told ImpactAlpha that defense tech has become a “necessary” investment in the current geopolitical landscape, provided its impact is properly scrutinized. That brought an impassioned response from SVX Mexico’s Laura Ortiz Montemayor. “There is a fundamental difference between acknowledging that states may allocate public budgets to defense — especially in these frightening times — and actively promoting the idea that investing in weapons qualifies as impact investing,” Ortiz wrote on LinkedIn. “Calling weapons ‘impact’ is not courage. It is surrender.”
- Keep reading, “In Europe, many impact investors reject the notion that ‘Camouflage is the new green,’” by Danielle Rossingh.
Dealflow: Sustainable Cities
UK-based 2150 raises €210 million for climate tech startups that reshape ‘the urban stack.’ In five years, the venture firm 2150 has backed 27 tech startups that are working on reshaping cities and the industries that power them, what the firm calls “the urban stack.” The firm has followed its first fund of €270 million ($315 million) with a second fund to reinforce its bet on sustainable cities and industries, focusing on clean and climate technologies that compete on cost. “There wasn’t and there isn’t a green premium,” 2150’s Chris Hernandez, a former Google and Meta executive, told ImpactAlpha. “People are not willing to pay two, three times the price just because it’s green. They’re willing to buy something that’s going to have a lower total cost of ownership, saves them on their energy costs and gives them stability of pricing.”
- Institutional impact. 2150’s second fund attracted commitments from 34 limited partners in the US, Europe and Asia. The long list of LPs include existing backers like Dutch impact investor Carbon Equity, Danish sovereign fund EIFO, Denmark-based Chr. Augustinus Fabrikker and Novo Holdings, the investment manager of the Danish Novo Nordisk Foundation. Among new investors are European family offices Viessmann Generations Group, Security Trading Oy and New York-based Church Pension Group. “2150’s combination of the tool of venture with impact for people and planet aligns with both our financial ambitions and our mission for our members,” the faith-based group’s Alan Snoddy told ImpactAlpha.
- Clean and climate tech. 2150’s first fund backed 20 companies worldwide, including CarbonCure, a Canadian low-carbon concrete maker, and Hong Kong-based Ampd Energy, which makes battery storage systems for mining and other heavy industries. The second €210 million ($245 million) fund has added seven more, such as AtmosZero, a US-based producer of electrified industrial steam heat pump boilers, Metycle, a German marketplace for secondary metal trading, and Mission Zero Technologies, a UK-based carbon capture company. 2150 now has a total €500 million ($592 million) of assets under management.
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Dealflow overflow. Investment news crossing our desks:
- Copenhagen-based The Footprint Firm reached a €76 million ($90.1 million) final close for its inaugural fund that invests in early stage climate tech ventures in Northern Europe. (The Footprint Firm)
- Sahel Capital, fresh off a $29 million first close for its second fund, extended a $2.4 million line of credit to Ghana-based Kuapa Koo for buying cocoa beans from smallholder farmers. (APEN)
- New York-based GlassPoint raised $20 million in Series A funding, backed by New Investment Solutions and MIG Capital, to produce low-cost, solar-generated industrial heat. (GlassPoint)
- IMPAQTO Capital provided a revenue-based loan to Lima-based Cirkula, a company that resells surplus restaurant food at a discount in Peru to prevent waste. (IMPAQTO Capital)
Impact Voices: Impact Management
The mispricing of ESG is an opportunity for investors to make the business case. As the acronym ESG has entered the public consciousness, its meaning has become something of a moving target. In the US it’s a political lightning rod; in the EU, a compliance obligation. In the popular imagination, ESG is a stand-in for carbon reduction, workforce diversity or perhaps “woke capitalism.” “Somewhere along the way, its utility to investors and operators became obscured,” Clearwater’s Joanna Daley and Grant Thornton Stax’s Anuj Shah write in a guest post on ImpactAlpha. “What often gets labelled ‘ESG’ is either too broad to be useful for decision making or too shallow to be material.” Imprecision in reporting these environmental, social and governance factors has created a price distortion, the authors say, hiding from investors how sustainability performance drives cash flow, resilience and growth.
- ESG alpha. Most ESG data never makes it into underwriting or valuation models. Daley and Shah argue that ESG creates value when it is used as a lens for competitive advantage, starting with unit economics, growth and risk. “Upside from better growth or margins is underpriced. Downside protection from lower risk is underestimated,” they write. “When ESG performance is financially legible, it widens the buyer universe, speeds conviction and can support stronger pricing.” The authors call for a short list of material performance indicators tied to specific value drivers, with evidence that shows causality, trend and repeatability. Closing the ESG translation gap, they argue, shifts sustainability from compliance to alpha. “The exact same performance will earn attention in valuation, rewarding companies for outcomes that matter in the real economy and in portfolios.”
- Keep reading, “The mispricing of ESG is an opportunity for investors to make the business case,” by Joanna Daley and Anuj A. Shah.
Agents of Impact: Follow the Talent
Walmart heir Lukas Walton steps up to executive chairman of Builders Vision; Matt Knott, president and COO, will serve as interim CEO while a search is underway… Greentown Labs appoints Julia Travaglini as head of its Boston incubator… The Hive Fund for Climate and Gender Justice taps Stuart Clarke, previously with the William Penn Foundation, as program director… Amelia Ahl, former fractional director of impact at The Builders Fund, joins Transform Finance as an impact measurement advisor… Gaby Wagener-Sobrero was promoted to environmental justice program director at the Chicago Department of Environment.
NY Green Bank welcomes Natalie Trojan, previously with the US DOE Loan Programs Office, as managing director of its business development innovation team… Social Finance adds Olivia Grinker, former venture fellow with Zeal Capital Partners, as head of investor relations for the firm’s Impact First Fund… CapShift welcomes Benedikt Kramer, previously with BlueMark, as business development senior director… Nadia Scharen-Guivel, investment director at the US International Development Finance Corp., joins NESsT as an investment committee member.
At Elemental Impact, Avra van der Zee will step down as chief operating officer for a leadership role at a global climate and human health venture fund. Danya Hakee, currently vice president of portfolio and investments will become COO and Mitch Rubin, senior director of investments and innovation will become managing director of portfolio and investments.
Elemental Impact is hiring a public relations director, a director of energy and built environment investments and a director of food and ag and industry investments.
Save the Children Global Ventures seeks an impact investing principal in Singapore… Dalberg Advisors is looking for a full-time senior consultant, program consultant and associate consultant… Spring Point Partners has an opening for an investment associate in Philadelphia.
The Impact-Linked Fund for Gender Inclusive Fintech is accepting applications for funding from fintech companies that have a focus on underserved women in Sub-Saharan Africa, Asia and the Middle East. The application deadline is Friday, Feb. 13.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– Jan. 27, 2026
