2030 Finance | November 14, 2017

(Almost) all-in on climate, indigenous economics in Australia, media goes impact, climate-smart…

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#Featured: ImpactAlpha Original

America pledges itself (almost) all-in on climate action. There’s a powerful idea emerging at the global climate talks in Bonn, reports Lou Del Bello for ImpactAlpha. The U.S. can fulfill its climate responsibilities even if some of its elected leaders do not. Indeed, the U.S. may already be halfway to the 2025 goal of reducing emissions by 26–28% below 2005 levels.

If you’re looking for the folks that can help get the U.S. the rest of the way to its goal, they’re not at the official U.S. delegation to COP23, as the climate talks are known. The bright white inflatable dome of the Climate Action Center is humming with activity. There, senators, CEOs and other so-called “non-party” actors are declaring #WeAreStillIn and making pledges to fulfill America’s obligations under the still-in-force climate agreement. The coalition’s new report is intended as a “roadmap for increased climate ambition from U.S. states, cities, businesses and others, and will transparently demonstrate to the international community how” the U.S. can deliver on its Paris commitments. “We are in control of our own destiny in the states,” declared Washington Gov. Jay Inslee.

States, cities, and businesses in the coalition mobilizing for “America’s Pledge” represent more than half of the U.S. economy, making the entity effectively the third-largest economy in the world, ahead of Japan and Germany. Leaders were keen to accentuate the positive, but conceded the sub-national commitments are not yet enough to meet the 2025 goal, and stated, “We cannot underscore strongly enough the critical nature of federal engagement to achieve the deep decarbonization goals the U.S. must undertake after 2025.”

Keep reading, “America pledges itself (almost) all-in on climate action,” by Lou Del Bello, who’s on the ground in Bonn for ImpactAlpha.

America pledges itself (almost) all-in on climate action

#Dealflow: Follow the Money

Green packaging startup TIPA raises $11 million. Recycle this: in 2015, 146 million metric tons of polymer plastic packaging was produced; 141 million metric tons were thrown out. Plastic sits in landfills for as long as 400 yearsbefore it starts degrading. Israeli startup TIPA has developed compostable packaging material similar in durability and strength to regular plastic but that decomposes in 180 days (a bit longer if it’s tossed in the trash instead of the composter.) Austin Hearst, of the media conglomerate Hearst Corp., and his wife, fashion brand founder Gabriela Hearst, led TIPA’s Series B round. Gabriela Hearst will package her brand using TIPA’s products (designer Stella McCartney uses TIPA’s product as well as recycled ocean plastics). Earlier investors GreenSoil Investments and Horizons Ventures also backed the round.

NOAH Impact Fund makes first investment in Minnesota affordable housing. The $25 million equity fund, part of the Greater Minnesota Housing Fund, aims to preserve naturally occurring affordable housing (or NOAH) by connecting social impact investors with developers and owners in the Twin Cities. NOAH invested in the acquisition of a 768-unit affordable housing portfolio, working alongside nonprofit developer Aeon, Enterprise Community Investment, Bellwether Enterprise, BMO Harris Bank, the Bloomington Housing and Redevelopment Authority and the St. Paul Housing and Redevelopment Authority. Bellwether contributed $60 million in debt, while Enterprise Community Investment and BMO Harris kicked in $12.7 million in equity. The NOAH Impact Fund was raised last year with capital from Minnesota foundations and community banks.

Indigenous Business Australia to invest $50 million in good jobs and indigenous ownership. The new government-backed impact fund will back businesses that deliver good jobs and equity ownership for indigenous Australians, reports the Australian Financial Review. The agency will invest roughly $10 million in each business, which must include equity ownership from Aboriginal and Torres Strait Islanders or seek to develop indigenous lands. The indigenous partners will buy out IBA’s stakes over seven to 10 years, giving the fund a return of 4.5% above inflation. Last year, IBA exited its Cicada luxury lodge investment in Nitmiluk National Park. This year, IBA exited Consolidated Manufacturing Enterprises, a pet food manufacturer, to Real Pet Food Co., backed by Quadrant Private Equity. “We want to stimulate investment into the indigenous sector,” said IBA’s Rajiv Viswanathan. The fund will target tourism, healthcare, energy, civil construction and affordable housing.

See all of ImpactAlpha’s recent #dealflow. Send deal tips and news to [email protected].

#Signals: Ahead of the Curve

Forbes joins the impact investing parade with boldface-name reception.Sorry, it’s invite-only. The magazine’s event arm this week is gathering “the world’s most influential people — entrepreneurs, celebrities, family offices, athletes, investors, musicians, next-gen leaders and creators — to scale impact investing and influence culture.” Forbes will host an impact investing “summit”in June in New York. Forbes is the latest mainstream business publication (see also: The Economist) to stand up an impact investing event by declaring that impact investing is indeed mainstream. The Forbes community’s advisors include Cornerstone Capital’s Erika Karp, the Case Foundation’s Jean Case, DBL Partner’s Nancy Pfund, the ImPact’s Abigail Noble and Brava Investments’ Nathalie Molina Niño. Actress Mary-Louise Parker, and artist and entrepreneur ASAP Ferg will speak. Forbes Impact will launch as part of Forbes’ event business, ForbesLive, rather than the Forbes publication. That follows the model of The Economist, which has stood up U.S. and London events, but not yet sustained, beat coverage. Fast Company launched its Ethonomics newsletter in September, promising “a guide to the future of impact finance.” Investopedia now has a dedicated impact section. Bloomberg’s weekly Sustainable Finance brief recently redesigned its website. For smart, daily coverage of impact deals, signals and long-term thinking, go to…ah, you’re already here. (Not a subscriber? Sign up.)

#2030: Long-Termism

Securing the 2050 food supply without cooking the planet. As global population increases to an estimated nine billion by 2050, agricultural production needs to increase, by around 50 percent. With business-as-usual, that would represent a massive increase in global greenhouse-gas emissions, as agriculture and forestry today account for up to 30% of global greenhouse-gas emissions. With farmers already suffering droughts, flooding, and heat waves that decimate their livelihoods and increase food insecurity — something’s gotta give.

The key to climate-smart agriculture turns out to be financing for the world’s half-billion smallholder farmers (see, “Smallholder Farmers are Investable”). In developing countries, agriculture is the largest source of income and jobs. New business models and finance mechanisms could usher in an era of climate-smart agriculture, according to “Creating Markets for Climate Business,” a new report from International Finance Corp. Countries are experimenting with blended finance, innovative risk management tools, first loss and partial risk guarantees, new investment vehicles that meet the risk-return profile of different investors, and bonds, to enable financiers in developing countries to partner with climate-finance investors. The Climate Finance Lab is piloting theLong-Term Foreign Exchange Risk Management instrument to address currency and interest rate risk for climate-smart projects in developing countries.

Vietnam, Latin America, and several sub-Saharan African countries have led with agriculture to successfully grow their economies. Tech can help. Precision agriculture and improved animal nutrition and breeding can reduce methane production. Reducing food waste, including through improvements in logistics and transport has the potential to save more than four metric gigatons of equivalent carbon dioxide annually. Cold storage is big business: the global cold chain market is projected to reach $271 billion by 2022, with an annual growth rate of 7%. Advances in cold storage technology are helping to phase out hydrofluorocarbons which are — you guessed it — major greenhouse gases.

Onward! Please send news and comments to [email protected].