Climate Finance | September 20, 2017

SDG-finance unicorns, Barclays impact fund-of-funds, climate mitigation opportunities, goalkeepers’…

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#Featured: ImpactAlpha Original

Here come the SDG-finance unicorns. To get to $1 trillion, much less the tens of trillions needed to achieve the Sustainable Development Goals, you first have to get to $1 billion. At the Rockefeller Foundation, the hunt is on for 10 innovative financial structures that can mobilize at least $1 billion each for solutions in healthcare, energy access, climate resilience and other sectors key to meeting the global goals. Call them “SDG-finance unicorns,” in the spirit of startups worth more than $1 billion.

Among the current experiments in Rockefeller’s ‘Zero Gap’ portfolio: a micro-levy on bottled water to finance water access, sanitation and hygiene projects; insurance products to transfer risks of climate disasters and disease outbreaks from the public sector and citizens and onto to capital markets; and pay-for-success vehicles to finance forest restoration and small-business growth capital.

ImpactAlpha has reported on many of the initiatives in Rockefeller’s portfolio, including Swiss Re’s reef insurance in Mexico, the Impact Investment Trust in the U.K., and Mirova’s Land Degradation Neutrality Fund. Not all of the experiments in Rockefeller’s portfolio will make the jump from pilot projects to market launch to replicable scale and $1 billion. Those that do could help close financing gaps in SDG-aligned sectors primed for an influx of capital. Says Rockefeller’s Lorenzo Bernasconi, “Philanthropy has an important role to play in driving the innovation of these new mechanisms which are often seen as too risky or too small by traditional asset managers or intermediaries.”

Read, “Here come the SDG-finance unicorns,” by Dennis Price and David Bank on ImpactAlpha:

Here come the SDG-finance unicorns

#Dealflow: Follow the Money

Barclays impact fund-of-funds gets Big Society capital. Barclay’s Multi-Impact Growth Fund is the bank’s first mainstream impact investing product. The U.K.-based social investment firm Big Society Capital is committing £5 million ($6.8 million) as the first investor in the fund, which is being offered to commercials, private client, and retail investors. The Multi-Impact Growth Fund was developed to meet clients’ demand for impact products, Barclays’ Damian Payiatakis says. The fund is structured as a UCITS (for “Undertakings for Collective Investment in Transferable Securities”), the most common European-style mutual fund among small investors. It will invest in other impact-focused stock portfolios and bonds.

Bridges takes a majority stake in Just Ask’s low-income housing services. Low-income residents in U.K. housing associations have a higher rate of physical and emotional problems and unemployment than the national average. Just Ask, which manages such facilities, hires and provides skills training for housing association community members while undertaking community improvement projects. Bridges’ £9 million ($12.2 million) investment gives it a majority stake in the company. The company employs 450 people and serves 50,000 housing units throughout southeast England. Bridges plans to expand the company’s reach in other parts of the country. As part of the deal, incentives for Just Ask’s management team will be linked to social impact performance — a first for Bridges. The deal appears to be the first from Bridges’ targeted £150 million ($202 million) fourth fund.

Shortlist raises $1 million to connect Indian and African employers and skilled jobseekers. The Mumbai-based tech startup’s jobseeker-vetting platform helps companies “hire based on skills and potential, rather than pedigree.” More people in sub-Saharan Africa will join the labor force by 2035 than from the rest of the world combined, according to the World Bank. India’s workforce adds one million people each month. The flood of jobseekers has caused employers in these regions to make hiring decisions based on on CVs and personal connections. “The single biggest challenge for growing companies is finding the right talent to scale,” Shortlist’s Paul Breloff says. Shortlist’s concept was piloted with funding from the ANDE-Argidius Talent Challenge last April. The startup has partnered with 80 companies, including M-KOPA, MicroEnsure and other social enterprises. The seed round was backed by University Ventures, Zephyr Acorn, Bodley Group, and several Indian and U.S. angel investors.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

An index to investable climate-change solutions. Look to China and India to step up as major climate-change mitigation players. Cuba, Nigeria and Bangladesh top a list of high-potential, if nascent and risky markets for clean energy investments. A new index from Morgan Stanley’s Institute for Sustainable Investing aims to help investors identify opportunities to invest in technologies that support climate change mitigation in 20 countries. Growing energy demand, environmental concerns and falling prices are combining to make clean energy investments attractive in both emerging and developed markets, but innovation is increasingly coming from outside of developed economies. The index and an accompanying report suggest growth opportunities can be found in the substitution of clean for dirty infrastructure, green buildings and low-carbon solutions in agriculture, the source of 13% of global greenhouse gas emissions. Investors can use the index to sort climate-mitigation opportunities by country, stage, and sector.

Social Finance Awards to celebrate Canada’s impact field-builders. This year’s fourth edition of the Social Finance Awards for Canadian impact investing leaders will be presented at the 10th Annual Social Finance Forum on November 9th-10th in Toronto. The MaRS Centre for Impact Investing will make awards for Impact Investor and Social Entrepreneur of the Year awards. In addition, the RBC Youth Innovation Award will go to an exemplary leader addressing youth challenges, while the Ewart Newton Award will go to an outstanding social entrepreneur working within an organization to achieve social impact. ImpactAlpha is proud to co-host the awards. Apply here by October 20th.

#2030: Long-termism

Goal! A new scorecard will track progress through 2030. A dose of optimism and signals of progress may be what’s needed in a world increasingly desensitized to large-scale global problems. The series of animated charts in the new Goalkeepers site from the Bill and Melinda Gates Foundation shows the surprising progress the world has made against poverty, neonatal mortality, rates of HIV, rates of family planning, rates of smoking, coverage of essential health care services, and other key indicators of global health and wellbeing. Global child mortality, for example, for children under the age of five fell from 11.2 million in 1990 to five million in 2016. Should we continue to make such progress, this number could drop as low as 2 million in 2030, the report predicts. The foundation plans to issue the report yearly through 2030.

The report includes 18 sets of global data. Most of the charts begin in 1990 and include forecasts through 2030 “if we regress” and “if we progress.” Even with progress, most of the Sustainable Development Goals will remain unmet. A half-dozen case studies highlight successes, such as the uptake ofcontraceptives in Senegal: In 2012, Senegal decentralized its contraceptive supply chains and, with the help of private-sector partners and theOuagadougou Partnership, made sure that women who sought out birth-control services would get it, raising contraceptive prevalence rates from 3% in 1990 to 15% in 2016. Another case study focuses on financial inclusion in India, where digital financial services and programs like PMJDY have made it easier and more secure for poor people to do business with banks, and demonstrated the link between financial inclusion and women’s empowerment.

The report also highlights the continuing need for better data. In categories like quality of education, land tenure by women, and productivity and income around agriculture, there is insufficient information to even make a graph. New technologies and methodologies such as AGRIS are helping capturing such data.

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