The Brief | September 27, 2021

The Brief: Accounting for impact, Impact 3.0, decarbonizing industry, off-grid energy access, banking Pakistan’s workers, sustainable insulation, Black geekdom

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Greetings, Agents of Impact! 

👏 Last chance to RSVP: Optimizing for Impact. Get up to speed on impact measurement and management in a hands-on workshop led by Duke University’s Cathy Clark and special teaching assistants Beth Bafford of Calvert Impact Capital and Courageous Capital’s Laurie Spengler. Join Agents of Impact Call No. 31, tomorrow, Sept. 28 at 10am PT / 1pm ET / 6pm London. RSVP today.

  • Agent of Impact. “I love that I get to support young professionals as they are arming themselves with new skills and deciding where in the world to aim them,” Clark tells ImpactAlpha in this Agents of Impact profile.

Featured: Policy Corner

Global standards for sustainability accounting must be holistic and inclusive. The International Financial Reporting Standards Foundation sets financial reporting and accounting standards for companies in 166 jurisdictions worldwide. Now, it’s getting ready to set global sustainability standards as well. At the COP26 global climate summit in Glasgow in November, IFRS is expected to launch an International Sustainability Standards Board, and its first-ever roadmap towards sustainability reporting. “It will mark a historic milestone,” writes Krisztina Tora of the Global Steering Group for Impact Investment, which represents national advisory boards from 33 countries. Currently, investors and corporations face an alphabet soup of at least a dozen widely used sustainability reporting standards, from the Task Force on Climate-Related Financial Disclosures, or TCFD, to the Sustainable Finance Reporting and Disclosure, or SFDR, in Europe. The new Sustainability Standards, Tora says, “will finally make it possible for investors and stakeholders to consistently account for and compare the positive and negative impacts of investments and businesses on people and the planet.” 

  • Impact 3.0. The GSG Global Impact Summit from Oct. 6-8 will take up the future of impact investing. “In our movement, impact has meant the intention to generate positive social and environmental impact alongside financial returns,” the GSG’s Cliff Prior writes in a companion post. New developments are positioning impact as a tool for measuring outcomes, not just intentions. “The result could be impact considerations across every investment decision and every company decision,” Prior says. “This is Impact 3.0 and it’s already coming over the horizon.” What’s next.
  • Dynamic materiality. The IFRS’s new Sustainability Standards broaden the definition of materiality to include actions that affect enterprise value-creation and destruction, not just profits. They also require investors and businesses to consider medium and long-term impact alongside short-term. “This is incredibly important as sustainability impacts may not manifest for many years,” Tora says.
  • Inclusive standards. The proposed governance of the new International Sustainability Standards Board skews towards wealthy economies; the African continent is underrepresented. “We think this is unacceptable,” writes Tora. IFRS standards represent the de facto global language of financial reporting. “It will only be through the efforts of local partners and their work with governments that the sustainability standards become meaningful in all contexts.”
  • Keep reading, “Global standards for sustainability accounting must be holistic and inclusive,” by GSG’s Krisztina Tora on ImpactAlpha.

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Dealflow: Decarbonization

Ara Partners fund secures $1.1 billion to decarbonize the industrial sector. Ara’s second fund will focus on buyouts and growth investments in companies in heavy industry and manufacturing, chemicals and materials, energy efficiency and green fuels, and food and agriculture. The industrial sector is responsible for one-third of all global greenhouse gas emissions. “Lowering carbon emissions in the industrial sector is an important piece of the global climate effort,” said Ara’s Troy Thacker. The fund received commitments from pension and sovereign wealth funds as well as endowments and foundations. Ara’s first fund, which raised $400 million last year, had a similar strategy.

  • Early portfolio. Ara second fund has made five investments to date, including Polar Sapphire, which manufactures high-purity alumina, a critical input for LEDs, lithium-ion battery separators and other green technologies. It also backed plastic recycling platform Aloxe, renewable energy developer Anesco, and energy and industrial infrastructure asset manager px Group, which is recycling food waste into renewable natural gas (for context, see “Resilient Infrastructure Group acquires renewable natural gas facility from Equilibrium Capital”).
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Zola Electric raises $90 million to expand off-grid energy access. Zola launched in 2011 as Off Grid Electric to connect millions of energy-poor households to low-cost, renewable power. Last year, it secured an $8 million partnership with Distributed Power Africa (for context, see “Zola Electric scores $8 million partnership for solar mini-grids in Africa”). Zola’s products are used by more than 1.5 million people and 300,000 homes and businesses in Côte d’Ivoire, Ghana, Namibia, the Democratic Republic of the Congo, South Africa, Zambia and Nigeria. The company is targeting the more than 2.2 billion people and hundreds of millions of businesses globally without access to reliable and affordable electricity, according Zola’s Bill Lenihan. Its power systems integrate often-unreliable grid electricity with solar, batteries and even diesel to offer service-level agreements to residential and business customers.

  • Growth capital. Off-grid solar lender SunFunder and Dutch development bank FMO invested $45 million in debt capital; an equal amount of equity capital was committed by DBL Partners, TotalEnergies Ventures, Helios Investment Partners, Vulcan Capital, Electron Capital Partners and Lyndon and Peter Rive, co-founders of Tesla-owned solar energy company SolarCity.
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Dealflow overflow. Other investment news crossing our desks:

  • Pakistan’s Tag raises $12 million to offer banking services to employees of its business customers (Dopay is using a similar model in Egypt.)
  • Minority-owned real estate investor Casoro Group in Austin launches an impact fund and aims to raise $1 billion to invest in underserved communities.
  • Buffalo, N.Y.-based CleanFiber secures $11.9 million to manufacture sustainable building insulation.
  • Genius Guild’s Greenhouse Fund backs Quirkchat, a Black woman-led creative video and chat community for Black anime and comic fans.

Agents of Impact: Follow the Talent

Economic Policy Institute names Heidi Shierholz as president and Naomi Walker, ex- of the Economic Analysis and Research Network, as vice president… National Community Reinvestment Coalition is looking to fill multiple positions in Washington, D.C…. Urban Institute is hiring a director of federal equity initiatives in Washington, D.C. 

Surdna Foundation is recruiting a program associate for its inclusive economies program in New York… The Carrot Project seeks an agricultural business advisor…  PolicyLink is hiring a program coordinator for community safety and justice in Oakland… My Climate Journey is looking for a head of community in the U.S… Verizon Forward for Good Accelerator is accepting applications for its disability innovation cohort.

Thank you for your impact.

– Sept. 27, 2021