The Brief: AI for climate, sustainable forestry investing, Congruent’s climate tech fund, Zestmoney’s shutdown, crypto and ESG

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ImpactAlpha

Greetings, Agents of Impact! 

Featured: The Transition

AI’s killer app: Guiding humanity through the climate challenge. The power of artificial intelligence (as well as its potentially massive energy consumption and carbon emissions) has been the talk of the COP28 global climate summit underway in Dubai. The US is leading an effort “to put AI for climate literally into the text of the outcomes here at this COP,” US deputy climate envoy Rick Duke said in a panel discussion. Calling Sam Altman: By applying AI to meet the greatest existential threat facing humanity, AI can absolve itself of itself being the greatest existential threat to humanity. In other words, ask not what artificial intelligence can do for the climate, ask what the climate challenge can do for AI.

  • Use cases. At COP28, corporate backers such as Google and Microsoft, and global consultancies like BCG and PwC have been touting the efficiencies made possible in emissions monitoring and reduction, disaster forecasting and recovery, and decarbonizing industrial processes. AI-driven insights, for example, have enabled American Airlines to cut its planet-heating contrails by more than half. Google claims its Maps users have avoided more than 2.6 million tons of greenhouse gasses since the introduction of AI-powered eco-friendly routing two years ago. Al Gore’s Climate Trace tool tracks detailed emissions from more than 350 million sites thanks to AI and a network of satellites.
  • Social intelligence. A bigger prize would be forging a global consensus on the path forward and the most urgent action items. To test that hypothesis, ImpactAlpha put some questions to ClimateGPT, a custom-built generative AI chatbot developed by Erasmus.ai that aims to enhance “climate social intelligence.” Right now, “the world is not on track to make the necessary changes” to limit warming to 1.5 degrees Celsius, it declared. So should we just give up? “No, we should not give up… It is up to us to implement these changes.” Does “us” include the ClimateGPT chatbot? “No… The changes needed to limit global warming to 1.5 degrees Celsius must be made by real people, such as governments, businesses and individuals.”
  • Keep reading,AI’s killer app: Guiding humanity through the climate challenge,” by David Bank and Amy Cortese on ImpactAlpha.

Dealflow: Sustainable Forests

The Russell Family Foundation offers up $3.5 million for sustainable food, energy and infrastructure. The largest chunk of funding was a $2.3 million mission-aligned investment in Timberland Investment Group, an investment division of Brazilian bank BTG Pactual that manages more than three million acres of timberland in the US and Latin America. TIG is working in partnership with The Nature Conservancy to establish science-based climate and conservation targets for the US portion of its $5.7 billion timber portfolio. It’s also working with Conservation International on a $1 billion, five-year investment strategy for forest protection and restoration in Latin America. 

  • Catalytic grants. The Russell Family Foundation, based in Gig Harbor, Wash., also wrote more than $730,000 in climate-focused grants to 15 organizations. Nearly three-quarters of the funding was directed through its year-old Food for Climate Solutions program to help local farms shift to regenerative practices. Recipients include Community to Community, a women-led organization for Latino and Indigenous farmworker activism and rights, and Kulshan Carbon Trust, which is exploring the impact and revenue potential of biochar use on farms in Washington state.
  • Green infrastructure. The foundation also invested $500,000 in Generate Capital, an infrastructure investor and owner that in January raised $880 million for green hydrogen, microgrids, waste-to-fuel and other green projects. TRFF’s Kathleen Simpson said the Generate and TIG investments support the foundation’s 2025 investment goal of transitioning “an additional 15% of assets toward more climate solutions-oriented decarbonization technologies and nature-based strategies.” The foundation, which has roughly $100 million in assets, aims to achieve net zero across its portfolio by 2030.
  • Check it out

Congruent Ventures rakes in $275 million for its third climate tech fund. The San Francisco-based fund received bids of more than a half-billion dollars from endowments, sovereign wealth funds, foundations and pension plans, including California State Teachers’ Retirement System. Congruent’s Joshua Posamentier said the firm turned down $300 million of investor interest to maintain a fund size that can support early-climate entrepreneurs. Institutional investors, “cannot find managers or funds, which can logically absorb the amount of capital they want to put out into the ecosystem,” Congruent’s Abe Yokell told ImpactAlpha. “We’re coming out of emerging manager jail and that is what is allowing us to convert all these limited partners we’ve been speaking with for years.”

  • Deal flow strategy. Congruent’s third fund will lead pre-seed, seed and Series A investments in companies with solutions for the energy transition, food and agriculture, waste management and sustainable production and consumption. The firm has more capital from its second fund to deploy first. “The plan is to do eight to 10 new deals per year,” said Yokell.
  • Track record. The fund brings Congruent’s total assets under management to over $1 billion. This year, Congruent closed a $300 million “continuity fund” to write larger follow-on checks (see, “The new, uncomfortable reality for climate tech VC”). Congruent has invested in 53 climate and sustainability companies, including modular fusion reactor developer Avalanche Energy, zero-carbon aviation fuel producer Lydian and wildfire detection provider Pano AI.
  • Dive in.

Dealflow overflow. Other investment news crossing our desks:

  • Indian fintech venture ZestMoney is shutting down after several failed acquisition bids. The company was backed by Quona Capital and Omidyar Network, among other investors. (TechCrunch)
  • Sunsave in the UK scored $6.8 million for its home solar + battery subscription model to make it more affordable for households to switch to clean energy. (EU Startups)
  • Chile’s ColaboraMed raised $1 million to launch a prepaid spending card that allows customers to accumulate points from purchases to use for healthcare needs. (LatamList)
  • Estonia’s UP Catalyst raised €4 million ($4.3 million) to make “green graphite,” eliminating the use of fossil fuels in producing the critical ingredient for e-mobility batteries. (TechEU)

Impact Voices: Venture ESG

ESG and FTX: How VCs can invest more responsibility in crypto this time around. This crypto rally can be different. Crypto’s rise, then fall, then recent rise again, presents an opportunity for venture capitalists to invest more responsibly this time. FTX, which collapsed earlier this year, was deemed “a case study in bad governance.” While consideration of environmental, social and governance factors has penetrated other financial and investment sectors, crypto investors have largely ignored such risk factors. “Signs of a shift are emerging in public markets,” write Cessiah Lopez and Johannes Lenhard in the latest contribution from VentureESG. 

  • Financial ecosystem. New guidance from VentureESG, based on dozens of interviews with ecosystem participants, “can help crypto investors in private markets address ESG concerns up front,” say the authors, and “allow the technology to deliver on its promise of a more sustainable and socially responsible financial ecosystem.” Jacobi Asset Management this year received an EU-compliant ESG label for Europe’s first Bitcoin exchange traded-fund. The UK’s Financial Conduct Authority, the country’s financial regulator, named ESG, crypto assets and artificial intelligence among its annual priorities.
  • ESG and crypto. Skeptics doubt whether a Bitcoin-focused fund can genuinely meet ESG standards, given the energy-intensive nature of Bitcoin mining. VentureESG’s framework prompts investors to begin by questioning the need for blockchain technology in startup projects in due diligence, while scrutinizing environmental, societal and governance implications. By embracing responsible investing principles, write the authors, “cryptocurrencies and blockchain technologies can not only mitigate their environmental impact but enhance their credibility socially – and attract a broader investor base.”
  • Keep reading.

Agents of Impact: Follow the Talent

👋 Next Week’s Call: How to spot overlooked impact and risk in municipal bonds. On the next Call in ImpactAlpha’s Muni Impact series, supported by the Robert Wood Johnson Foundation, learn how to spot rampant mispricing of racial and climate risk – and overlooked opportunities for impact – in the municipal bond market. Join Activest’s Homero Radway, Kestrel’s Monica Reid, R. Paul Herman of HIP Investor, Court Street Group’s Matt Posner and other Agents of Impact, Wednesday, Dec. 13, at 10am PT / 1pm ET / 6pm London. RSVP today

Kauffman Foundation names Brandy Johnson, ex- of Compass Minerals, as chief people officer, starting in January… Latino Community Foundation appoints Julian Castro, a former Obama administration cabinet member, to CEO… The IFC seeks a climate and sustainable finance investment analyst in Washington, DC… Also in DC, the DFC has an opening for a catalytic investments vice president. 

Private Equity Stakeholder Project is looking for a remote climate director… New Spring Network is recruiting a sustainable finance consultant in the Netherlands… Kellogg School of Management and Morgan Stanley are looking for volunteer reviewers, mentors and judges for next year’s Sustainable Investing Challenge.

👉 View (or post) impact investing jobs on ImpactAlpha’s new Career Hub.

Thank you for your impact!

– Dec. 7, 2023