China’s climate leadership, $50M sustainable land fund, impact due diligence, waste-to-profits



Greetings, ImpactAlpha readers!

#Featured: ImpactAlpha Original

China has so far exceeded (low) expectations for cutting emissions — but can it save the planet? China left the global climate talks in Bonn as the new “indispensable nation.” The world’s biggest polluter is also the world’s biggest driver of cheap, clean energy, making China the country that can make or break not only the Paris climate agreement, but the whole global effort to avert the worst of the coming climate catastrophes. China has impressed even skeptics by overachieving its climate targets by almost a decade. In its 2015 “nationally determined contribution,” it had promised its greenhouse gas emissions would peak by 2030. New figures show that they are already starting to decline.

But when it comes to energy supplies, China wants “all of the above” for a voracious economy. It’s ambitious “Belt and Road” infrastructure initiative spreads coal technologies and facilitates the circulation of fossil fuels through the upgrading of ports and corridors. With most projects still in progress or in the design phase, there is still no definitive answer on whether or not China will drive a “green” transition in the developing world.

Read, “Climate action is China’s chance to step up to superpower leadership,” by Lou Del Bello, on ImpactAlpha.

Climate action is China’s chance to step up to superpower leadership

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#Dealflow: Follow the Money

ECOTIERRA launches $50 million sustainable land fund. Agriculture, forestry and other types of land use account for 30% of global greenhouse gas emissions. ECOTIERRA’s Canopy Sustainable Land Management Fund, launched at last week’s COP23 summit in Bonn, Germany, is backed by Quebec-based investment fund Fondaction and Mirova, the responsible investing arm of Natixis Global Asset Management. The Canopy fund will partner with small agricultural producers in Latin America to improve land management practices and support small producer cooperatives’ business models. The fund aims to triple small farmer revenues, protect thousands of acres of forest, and reduce carbon emissions by 20 million tons. ECOTIERRA also is developing sustainable forest and agro-forestry projects in Canada and West Africa.

ReNew Power buys $154 million in Indian wind projects. The Gurgaon-based renewable energy developer is buying the renewable energy division of KC Thrapar Group — a group of companies with a history in the coal sector. ReNew, which is backed by Goldman Sachs, is on a buying spree in India’s renewables sector, spurred by the government’s push to secure 60% of India’s power from non-fossil fuels-based sources by 2027. The plan includes building 60-gigawatts of wind power in the next five years, nearly double last year’s installed capacity. ReNew’s latest acquisition includes KC Thrapar Group’s three wind plants with a capacity of 103-megawatts. ReNew earlier this year raised $200 million from Japan-based JERA Co. Other investors include the Abu Dhabi Investment Authority, Asian Development Bank and Global Environment Fund.

Pure Harvest raises $4.5 million for greenhouse farming in the U.A.E. With its water-scarce, desert climate, the United Arab Emirates imports 80% of its food. Greenhouse produce producer Pure Harvest is looking to launch its first growing facility for locally-grown produce early next year. A U.A.E. government innovation fund backed Pure Harvest’s seed round, along with several angel investors and technology partners, AgFunder News reports. David Scott, a former U.S. National Security Council director for North Africa and the Arabian Peninsula, is a Pure Harvest investor. “Ultimately, I see this kind of sustainable domestic agriculture as a critical component of any successful post-oil diversification strategy,” he says. Earlier this year, U.S.-based indoor farming venture AeroFarms raised $34 million with backing from Dubai to support its expansion to the Middle East.

See all of ImpactAlpha’s recent #dealflow. Send deal tips and news to thebrief@impactalpha.com.

#Signals: Ahead of the Curve

What can impact due diligence tools do for you? The “impact measurement is a waste of time and resources” position is no longer defensible, says Daniel Brett, associate director at Pacific Community Ventures. The San Francisco-based community development financier and consulting firm worked with the Northern California Community Loan Fund to make impact due diligence practical. PCV’s Social Impact Rating System assesses the expected positive impact of potential loans and the extent to which they align with the fund’s mission. The tool assesses impact across four dimensions: community, borrower, beneficiaries and financing. On the last, the due diligence tool asks whether the impact of the borrower can be increased by working with the lender. The community loan fund has used the tool in the deployment of over $70 million in loans. One key way the process has added value? Broadening the universe of potential investments, writes Brett on ImpactAlpha. By scoring organizations according to the Social Impact Rating System, some organizations the loan fund wouldn’t have otherwise considered are rising to the top. Read, “What can impact due diligence tools do for you?” by PCV’s Daniel Brett, on ImpactAlpha.

What can impact due diligence tools do for you?

Social Finance Awards winners spotlight Canada’s impact leaders. Canada’s impact investing scene is hot. Check out the winners of the Social Finance Awards, presented by the MaRS Centre for Impact Investing in partnership with ImpactAlpha. This year’s “impact investor of the year” went to Deetken Asset Management, which manages the first registered, internationally focused, impact investment fund available to individual accredited investors in Canada. The Deetken Impact Fund has backed a dozen companies expanding financial, health and low-cost renewable energy for low-income customers. The “social enterprise of the year” is Persephone Brewing Company in Gibsons, B.C. At what’s locally known as the “The Beer Farm,” Persephone grows “hops, food, beer and community” through regenerative agricultural practices and the inclusive hiring practices. The Ewart Newton Award, for an “intrapreneur” working within an organization, went to Jory Cohen, the director of social finance and investment at Inspirit Foundation, where he’s leading an effort to invest the foundation’s entire asset base for positive impact. Until the Last Child won the RBC Innovating for Youth Award for providing resources and encouraging innovation in tackling child welfare challenges.

Dana Bezerra tapped to lead F.B. Heron Foundation. The foundation is known for directing 100% of its $250 million in assets toward its mission of helping people and communities help themselves out of poverty. Bezerra will succeed Heron’s outgoing president, Clara Miller, on December 31. Bezerra came to Heron in 2006 from Merrill Lynch. She has been active in deal-sourcing, syndicating capital, and cultivating opportunities to deploy grants, program related investments and market-rate mission-related investments. Miller praised Bezerra’s “exceptional ability to connect people and ideas, her diverse experience, and her inclusive working style.” (Disclosure: the Heron Foundation supports ImpactAlpha’s editorial efforts.)

#2030: Long-Termism

One person’s waste is another’s $2 trillion opportunity. At least two billion people worldwide still lack access to solid waste collection. Methane emissions from municipal solid waste management contribute 12% of global methane emissions and 5% of global greenhouse-gas emissions. Rising incomes compounds the problem, as people tend to generate more waste as they earn more. Globally, the $1.5 trillion waste management market could grow to $2 trillion by 2020. China is likely to produce twice as much urban solid waste as the United States by 2030.

Emerging tech is priming the pump for climate-smart solid waste management, according to the International Finance Corp.’s “Creating Markets for Climate Business” report. Advanced thermal conversion technologies and applications for waste-to-liquid fuel create new investment opportunities.Waste-to-energy should attract significant investment too, the IFC report predicts, as policymakers work with businesses to unlock its environmental and energy benefits. In Quebec, Enerkem, a firm that produces cellulosic bioethanol from non-recyclable household waste, invested $115 million (Canadian) in a methanol-to-ethanol unit. The investment was driven by a guarantee from the city to provide a consistent waste supply for the next 25 years — and a payment of $75 per metric ton of waste used.

Onward! Please send news and comments to TheBrief@impactalpha.com.

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