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How Aligned Intermediary makes climate deals work for institutional investors

A new type of financial advisory firm is packaging clean-energy deals to make them attractive and big enough to grab hundred-million dollar checks from pension and sovereign wealth funds.

The awkwardly titled Aligned Intermediary (AI), led by Peter Davidson, former head of the Department of Energy’s loan guarantee program, has landed at least nine big clients that have collectively committed to deploy more than $1.4 billion toward climate solutions. Clients are already moving money, according to a Forbes post from Dr. Bob Eccles, the founding chairmen of the Sustainability Accounting Standards Board.

In late December 2016, an unidentified client made a $50 million investment in a western U.S. water infrastructure project, Eccles said in his post. And, six months later the University of California Regents, also an AI client, put $100 million into Pattern Energy, a North American renewable projects developer.

Other domains

Climate deals are often too risky, too small, or too opaque for the institutional giants. AI surfaces and seeds climate and clean-energy projects, maps markets and coordinates capital among investors with varying risk-return-impact appetites to make deals work for its large clients. The firm also helps investors track impact and benchmark their climate investments.

AI co-founder Ashby Monk of Stanford University told ImpactAlpha in an email that such intermediaries could provide a model for unlocking funds for other system-wide challenges including resource scarcity, inequality and the 17 Sustainable Development Goals.

“The idea of an Aligned Intermediary being applied in other domains is totally possible,” Monk said. In fact, he and Stanford’s Rajiv Sharma wrote a book on it (see Reframing Finance).

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