2030 Finance | June 29, 2017

Wrestling with gender, pay-as-you-go merger, Canadian startups, Mission 2020

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Greetings, ImpactAlpha readers!

#Featured: Returns on Investment (podcast)

What’s the value of gender diversity, anyway? The ongoing series of gender eruptions in Silicon Valley and elsewhere suggest a provocative question: does the representation of women on corporate boards really improve corporate performance? “What is Arianna Huffington doing on the board of Uber?” Imogen Rose-Smith of Institutional Investor magazine wonders in the latest Returns on Investment podcast. “She was quite happy to sit on the board for the last few years without changing the culture.” Imogen cites recent research that indicates the presence of women on boards does not lead to outperformance after all, challenging what she calls a “cherished myth” of gender-lens investors.

We’ll have to dig deeper to identify levers for gender-equity culture-change. Self-reflection is a good start, she suggests. “The impact investing community needs to turn around and look at itself.” That includes fellow podcast participants Brian Walsh of Liquidnet and David Bank of ImpactAlpha. “You guys struggle with it in a way you don’t struggle with other issues,” Imogen says. Have a listen as our Returns on Investment roundtable wrestles with gender dynamics in real-time.

Listen to the podcast, “What’s the value of gender diversity, anyway?”:

What’s the value of gender diversity, anyway? (podcast)

Subscribe to the Returns on Investment podcast on iTunes.

#Dealflow: Follow the Money

Mobisol expands pay-as-you-go solar with acquisition of Lumeter. Mobisol has installed nearly 10 megawatts of off-grid solar capacity in Tanzania, Rwanda and Kenya, serving 350,000 people. The acquisition of San Francisco-based Lumeter will allow Mobisol to expand its “pay-as-you-go” services to any type of solar hardware and other products, such as irrigation systems. That’s particularly important “in countries whose markets may not be large enough to support vertically integrated companies to set up their own distribution channels,” Lumeter’s Mitra Ardron told ImpactAlpha. More than one billion people lack access to reliable electricity. Few off-grid households can afford to pay upfront for solar or agricultural products, making financing essential for expanding access to low-cost energy and livelihood products. Terms of the acquisition were not disclosed.

“Samurai” bond in Japan will refinance social investments in France. Samurai bonds are yen-denominated bonds listed by foreign issuers for the Japanese market. Groupe BPCE, France’s second largest retail bank, structured the ¥58.1 billion ($518 million) bond like a traditional or green bond, targeting the proceeds to refinance loans made in education, healthcare and social sectors in France by its Banque Populaire and Caisses d’Epargne operations. Groupe BPCE has been active in the Japanese market since 2012 and is the largest Samurai bond issuer. Low interest rates in Japan have made European bonds attractive for asset managers looking for higher returns. The listing aligns with a “growing demand from Japanese investors in the field of socially-responsible investment,” says investment firm Mizuho International. Interest rates were not disclosed.

China establishes green finance zones to kickstart war on pollution. The government is launching five pilot projects with financial institutions in Guangdong, Guizhou, Jiangxi, Zhejiang, and Xinjiang. Each one will focus on new financial products and services, such as investment funds, credit options, emissions trading, water-use permits and green insurance. China has experienced ups and downs in combatting air, water and soil pollution (a recent study found soil and water pollution worsened in 2016 over 2015). The effort is expected to cost the country $440 billion per year and the government is hoping private sector green finance will cover a shortfall from national and provincial-level funding. In the heavy industrial area of Guangdong, the government wants to see new credit options focused on energy conservation and emissions reductions emerge, whereas in the agricultural region of Guizhou, the focus of the pilot will be financing agricultural waste treatment.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

Canadian entrepreneurs look for big challenges to tackle. The Canadian consulate in New York showcased Canadian entrepreneurs using science, research and tech innovations to tackle U.N. global goals №2 (zero hunger) and №3 (health and well-being). Such global challenges are motivating millennial entrepreneurs in the country. In the near future, as many as half of new businesses will be social enterprises, predicted Erika Karp, CEO of Cornerstone Capital, who emcee’d the ImpactNow event, cohosted by Canada’s mission to the United Nations and iImpact Consulting. Among the startups on display: Nutraponics, based in Alberta, tackles hunger with indoor crop-growing facilities that can work in both urban centers and remote communities. Halifax’s Hypergive uses blockchain to create digital food wallets for homeless and hungry people, making donations cash-free. Vancouver-based ThisFish provides traceability software to bring transparency to seafood supply chains. “When you think about what you’re doing, don’t think about being a success,” Karp said, quoting Albert Einstein. “Think about being of value.”

#2030: Long-Termism

Mission 2020. Many of the goals in the Paris climate agreement target the year 2030. But to reach them, we need to make a big dent in carbon emissions by 2020. That’s the year greenhouse gas emissions should begin dropping to keep global temperature rises below two degrees Celsius. Carbon emissions have leveled off in recent years, but the current rate of 41 gigatons a year could exhaust the world’s carbon budget in as little as four years. Once the budget is exhausted, emissions must drop immediately to zero or “temperature goals set in Paris become almost unattainable,” says Christiana Figueres, who led the UN’s efforts to reach the global climate deal.

To avoid such a “jump to distress,” Figueres is leading “Mission 2020” to rally greenhouse gas reductions ahead of 2020, and to elevate the issue at the upcoming G20 meeting in Hamburg Mission 2020 has identified six key goals that the world should work towards in the next three years:

  • Energy. Renewables should comprise 30% of the world’s electricity supply, from about 24% in 2015. Coal power plants should start phasing out.
  • Infrastructure. Cities should upgrade at least 3% of their building stock to zero- or near-zero emissions each year, and be fully decarbonized by 2050.
  • Transport. Electric vehicles should comprise 15% or more of new car sales, up from 1% today. Mass transit usage should double. Vehicle fuel efficiency needs to improve by 20%, as does greenhouse gas emissions from air travel.
  • Land. Newly created forests and reforestation represent a “carbon sink” to push net global emissions closer to zero between 2020 and 2030.
  • Industry. Heavy industries like iron and steel, cement, chemicals, and oil, which are responsible for 20% of global CO2 emissions need to halve emissions by 2050.
  • Finance. Green bond issuances in 2020 should be 10x the $81 billion issued in 2016. The financial sector should mobilize at least $1 trillion a year for climate action.

Figueres and her colleagues at Mission 2020 acknowledge that the targets are “idealistic.” Reaching them starts with science-driven policymaking (yes, you, Washington); rapid scaling of existing and new solutions; and… optimism. “We must remember that impossible is not a fact,” Figureres says. “It’s an attitude.”

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