The Brief | April 3, 2023

The Brief: Blueprints for climate deployment, food processing in Africa, immigrant-led businesses in Europe, greener cement in Senegal, Vanguard in the hot seat

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Greetings, Agents of Impact! 

Featured: Climate Infrastructure 

Skill sets for The Great Deployment: Zoning, permitting and project finance. Deployment is where tech innovation meets the messy real world. Venture capitalists in the past two years have poured historic amounts of capital into climate tech solutions. Now, hundreds of billions of dollars in U.S. federal funding are priming the pumps for a once-in-a-generation buildout of water-system upgrades, renewable energy generation, building retrofits and electric vehicle infrastructure. As the deployment phase gains steam, knowledge of permitting and zoning, pre-construction design, and local engagement and politics is needed to push solutions past initial demonstrations to successful project implementation. “The current climate moment hinges on the exploration and piloting by funders of new tools and mechanisms that can bridge the valleys of death that companies face at the early deployment stage,” climate strategist Chante Harris writes in a guest post on ImpactAlpha. As a field strategist for a private foundation, canvassed more than 120 founders, operators, policy wonks, corporate leaders and investors to identify needs for regulatory innovation “sandboxes,” project-financing tools, talent networks, and site-selection templates for a range of climate technologies. “The challenge for startups is what happens after they leave the sweet spot of where venture dollars invest,” Harris says.

  • Blueprints and data. Harris is building a data platform to help funders channel capital into projects in the most impactful way. Among the gaps she has identified for full-scale deployment of climate solutions: data on the sources and structures of project financing for past projects, as well as on where projects have been deployed and under what conditions. This data can help identify opportunities for financial innovation and new financial structures and templates that work for the deployment of specific climate technologies, Harris says.  

Dealflow: Farmer Finance

Agri-Business Capital Fund invests in four African food processing businesses. A little capital goes a long way in underserved markets and sectors. ABC Fund, which is managed by Bamboo Capital and Injaro Investments, inked loans totaling €2.3 million ($2.5 million) to support smallholder farmers and agri-processors in three underserved markets. In Benin, ABC Fund invested in Africa Négoce Industries, which processes raw cashews, to ramp up purchasing from 40,000 smallholder farmers and secure organic certification. Promo Fruits, also in Benin, will use €800,000 in debt to finance equipment, manufacturing and working capital costs, as well as farmer training, for its pineapple juice processing operation. Malian poultry feed manufacturer Groupe Diakhate will use ABC Fund’s loan to purchase raw materials, and Ugandan coffee processor Matale Hill Brothers will cover its working capital expenses and grow its network of smallholder suppliers.

  • Rural (micro)finance. ABC Fund also provided $2 million in credit to Nigerian microfinance institution Grace and Mercy to develop and implement a loan product for rural women working in agriculture. ABC Fund was designed in 2016 to drive capital to Africa and Latin America’s agriculture sectors. The fund has made investments totaling €43 million to 28 companies and cooperatives in 11 countries. Its capital has reached more than 170,000 farmers, 41% of whom are women, according to its most recent impact report.
  • Check it out.

No Label Ventures to channel capital to immigrant-led businesses in Europe. People who uproot their lives in one place are uniquely compelled to succeed in another. That’s the premise of No Label Ventures’ investment thesis. The U.K.-based venture capital fund was founded by Lebanese immigrant Ramzi Rafih to invest in startups led by immigrant founders from outside of Europe. “The bigger the journey, the bigger the formative experience,” Rafih told Forbes. He’s betting that “two out of three new unicorns in the U.K., France and Germany will be founded by an immigrant over the next 10-15 years.” The fund, which will cut seed checks of up to $250,000 to new entrepreneurs, reached a first close at about half of its $15 million target.

  • Investor and sponsor. The U.K., which once offered a broad self-employment visa for highly-skilled migrants, has narrowed the scheme to focus on tech talent. To make it easier for entrepreneurs specialized in healthcare, finance, and food and beverage to remain in the U.K., No Label Ventures will provide employment and visa sponsorship.
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Dealflow overflow. Other investment news crossing our desks:

  • The IFC originated its first loan for green-materials manufacturing in Africa, committing €120 million ($130 million) to Sococim Industries to make lower-carbon cement in Senegal. A group of banks provided €122 million in local currency debt. (AVCA)
  • Heritas Capital clinched $20 million, including $10 million from financial services group DBS, for its Asia Impact First Fund, which backs early-stage impact ventures in Asia. (DBS)
  • Vancouver-based Svante raised $15 million with backing from United Airlines to capture carbon dioxide emissions and convert them to aviation fuel. (Axios)
  • Nairobi-based commercial and industrial solar developer Equator Energy was bought by IBL Group and impact fund Stoa. (Afrik21)

Signals: Climate Accountability

Move over, BlackRock. Vanguard is the new target for climate activists. Tim Buckley is not a household name like Larry Fink. That may change, as shareholder activists take their climate action campaigns to Vanguard, the second largest asset manager after Fink’s BlackRock. As Vanguard’s CEO since 2018, Buckley has stayed out of the limelight unlike his high-profile rival. Starting today, an environmental coalition will begin airing a cable TV ad highlighting the $8 trillion asset manager’s role in fueling the climate crisis. The spot’s target market: Chester County, Pa., where Vanguard is headquartered and many of its 17,000 employees live. The 30-second spot features a couple and their grandchild. “Investing with Vanguard helped us seed our retirement dreams,” the woman says innocuously, before pivoting. “Now that future is threatened by climate change.” The ad is part of a global campaign by Vanguard S.O.S., a coalition of environmental groups and financial professionals. As smoke billows in the distance, a voice intones, “When you save with Vanguard, you’re an owner of a catastrophic future.”

  • Climate laggard. In December, Vanguard pulled out of the Net Zero Asset Managers alliance, a U.N.-backed group committed to zeroing-out emissions. (The Glasgow Financial Alliance for Net Zero, a related initiative, backed off of requiring members to phase out fossil fuels after some large U.S. banks threatened to pull out.) The move came a week after a group of Republican-led states opposed the firm’s application to the Federal Energy Regulatory Commission to increase its ownership of publicly-traded utilities. “Such industry initiatives can advance constructive dialogue, but sometimes they can also result in confusion about the views of individual investment firms,” Vanguard said in a note announcing its withdrawal.
  • Fiduciary duty. Vanguard is one of the world’s largest fossil fuel investors, with $300 billion in investments in the sector, one-third of which are in coal companies. Think tank Universal Owner forecast that the climate damage resulting from Vanguard’s investments in tar sands and other fossil fuels could lead to $3 trillion in losses for its U.S. equities holdings by 2050. In early March, some 1,400 customers sent a letter charging Vanguard with breaching its fiduciary duties by not managing climate risks. “I expect Vanguard, as my fiduciary, to exercise its duties of loyalty and care in its decisions,” says the letter, drafted by Sierra Club Foundation’s Paul Rissman. “Unfortunately, Vanguard is currently insufficiently managing the risk to my investment from climate change, which potentially violates both of these fiduciary duties.”
  • Keep reading.

Agents of Impact: Follow the Talent

Responsible Innovation Labs is looking for a remote executive director… Kapor Capital seeks an investor associate and principal in Oakland… Goldman Sachs Asset Management is hiring a vice president for its sustainable investing group in New York… Also in New York, the Global Impact Investing Network is looking for a research associate. 

New Story seeks an impact investment director in Mexico City… Ontario Teachers’ Pension Fund is recruiting an investment associate for sustainable investing in Toronto… ARCHIMED is on the hunt for a sustainability and impact associate in Lyon, France… Acumen seeks a program associate for its Acumen Academy in London… The Packard Foundation has an opening for a racial justice director in Los Altos, Calif. 

Early bird registration is open for the Aspen Network of Development Entrepreneurs’ annual conference, being held from Sept. 12-14 in Accra, Ghana… Ryan Hickman, whose Ryan’s Recycling Company has recycled more than 1.6 million waste items from landfills, will share with other young learners how to make a positive impact on the environment and launch their own businesses, Saturday, April 29.

Thank you for your impact.

– April 3, 2023