The Brief | April 14, 2022

The Brief: Climate adaptation innovation, female food founders of color, sustainable textiles, lending to farmers in India, solutions at scale in Latin America

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Greetings, Agents of Impact!

Featured: Adaptation Finance

Social ‘co-benefits’ and ecosystem restoration begin to make climate adaptation investable. Climate-smart investments that restore ecosystems, improve women’s lives, reduce damage from storms and surges, avoid dislocation and migration, and generate other social benefits have inarguable value. The challenge has been developing investable business models to attract the capital to finance climate adaptation at scale. “There is an urgent need to create bankable investment opportunities in developing economies that will attract private resources and help to shift global adaptation finance trends,” Climate Policy Initiative’s Barbara Buchner tells ImpactAlpha. Among the innovations: 

  • Co-benefits. The African Development Bank is piloting “certified adaptation benefits,” or CABs, which it says represent verified and quantified progress that governments or international donors can pay for. C-Quest Capital, based in Washington, D.C., offers “transformation credits” that combine carbon reduction with improvements in the lives of the rural poor with clean cookstoves, solar irrigation systems, and energy-efficient lighting. The verification body Verra attaches a label to the projects’ carbon credits attesting to their contribution to the Sustainable Development Goals.
  • Ecosystem restoration. “Adaptation is intrinsically linked to restoration,” says Venkat Iyer of World Resources Institute, which is selecting 100 projects and enterprises in Africa for grants and low-interest loans from its TerraFund. By planting native trees, shade trees and drought-tolerant plants, local enterprises are helping to create more resilient food and water supplies, increase soil health and biodiversity, and ward off invasive species and desertification. TerraFund is pooling donations from organizations including the Bezos Earth Fund, Good Energy Foundation and social media giant Meta.
  • Institutional capital. The Coalition on Climate-Resilient Investment represents $20 trillion in assets. Shell Foundation last week struck a partnership with Nuveen to deploy $100 million for companies helping vulnerable communities in Asia and Africa get clean energy and build climate resilience. Climate Adaptation Notes, incubated by the Global Innovation Lab for Climate Finance, aim to unlock funding for water and other climate-smart infrastructure in Southern Africa by enabling local institutional investors and development finance institutions to commit to refinancing. This provides assurance to banks to extend construction loans at competitive rates.
  • Keep reading, Social ‘co-benefits’ and ecosystem restoration begin to make climate adaptation investable,” by Amy Cortese and David Bank on ImpactAlpha.
  • Next week’s Call. Special guests Songbae Lee of USAID and Resilience Capital Ventures’ Gillian Marcelle, will join Apollo Agriculture’s Benjamin Njenga, the Lightsmith Group’s Jay Koh and other Agents of Impact to explore “Catalytic capital for climate adaptation and social equity,” Tuesday, Apr. 19 at 10am PT / 1pm ET / 6pm London. RSVP today.

Dealflow: Returns on Inclusion

General Mills invests $15 million in Fearless Fund and Supply Change Capital. The Minneapolis-based food giant made the investments via its corporate venture arm, 301 INC, to promote equity for underrepresented female food entrepreneurs. “Closing this gap means more great innovation in our food system — from new concepts to emerging food technologies — and more inclusive cycles of opportunity for entrepreneurs, companies and communities,” said General Mills’ Doug Martin.

  • First-time managers. Atlanta’s Fearless Fund and L.A.’s Supply Change Capital both are led by first-time fund managers. Fearless, which invests in high-growth ventures run by women of color, has raised capital from Bank of America, PayPal, LISC and Mastercard. Latinx women-led Supply Change backs early-stage food and food tech founders focused on sustainability, health and diversity. 
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Natural Fiber Welding raises $85 million for sustainable textiles and materials. Most of the world’s largest brands are still using plastics and synthetic materials. Peoria, Ill.-based NFW is looking to create a supply chain for 100% plant-based and sustainable materials and textiles. The company says it is supplying plastic-free and chemical-free packaging materials to global brands for footwear, apparel, car interiors and handbags. Ralph Lauren introduced a polo shirt made entirely with cotton fabric supplied by NFW at the Australian Open tennis tournament earlier this year.

  • Circular economy. Investors in Natural Fiber Welding’s Series B round include Collaborative Fund, AiiM Partners, Engine No. 1, Tidal Impact, Advantage Capital, BMW i Ventures, Ralph Lauren and others. Separately, Swiss venture firm Emerald Technology Ventures is targeting $217 million for a sustainable packaging fund.
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Commonfund Capital raises a $233 million environmental sustainability fund. The private equity arm of Wilton, Conn.-based asset manager Commonfund invests primarily in small and mid-sized real assets and sustainability companies. Commonfund raised the fund from foundations, endowments, family offices, pensions and corporations to invest in companies and funds in clean energy, food and agriculture, water and resource efficiency. Commonfund Capital’s Ethan Levine called environmental sustainability “a source of resilient, meaningful economic value and returns.” Check it out.

Dealflow overflow. Other investment news crossing our desks:

  • Atlanta and London-based Capital on Tap secures $200 million for small and mid-sized businesses in the U.K. and U.S.
  • The Netherlands Enterprise Agency and London-based Charm Impact join forces to invest in expanding the use of clean cooking stoves in Africa.
  • Pahal Financial Services scores $10 million from GAWA Capital and Northern Arc Capital to provide microloans to small-scale farmers in India.

Impact Voices: Latin America

How impact investors can deliver solutions at scale in Latin America. Impact investors in Latin America have moved beyond discussions of “what” impact investing is, to “how” to deploy capital and solutions in the region, says Sebastien Welisiejko of the Global Steering Group for Impact Investment. The GSG now has National Advisory Boards in Mexico, Brazil, Argentina, Uruguay, Colombia, Central America and Chile. In a guest post for ImpactAlpha, Welisiejko reports out from last month’s Latin American Impact Investment Forum, or FLII, in Mérida, Mexico. Home grown solutions like New Ventures Mexico’s Viwala fund can bridge financing gaps for companies that need flexible capital and smaller checks. Viwala manages funds for LGTBQ+ investment, coral reef conservation and other themes.

  • Public policy. “As long as we continue to perceive the public sector solely as an obstacle, a self-imposed limitation will remain in place, driving us away from our ambitious objectives,” writes Welisiejko, who served in Argentina’s Ministry of Health and Social Development. “It is simply naive to assume we will drive a revolution without speaking truth to power, strategically influencing government action, and steering regulation in a virtuous manner.”
  • Keep reading, “What it will take for impact investors to deliver solutions at scale in Latin America,” by GSG’s Sebastien Welisiejko on ImpactAlpha.

Agents of Impact: Follow the Talent

Matt Trevithick, ex- of Google Quantum AI, and Rachel Slaybaugh, co-founder of Good Energy Collective, join DCVC to focus on climate investments… Lance Uggla, ex- of IHS Markit, joins General Atlantic as CEO of BeyondNetZero… Elizabeth (Beth) Lowery, ex- of ERM, joins Piva Capital as senior advisor; Daryl Kennedy, ex- of The Investment Association, joins as investor relations and ESG manager… MCE Social Capital is hiring a communications and business development associate.

Applications are open for summer fellows at 17 Asset ManagementNorthwestern Mutual Black Founder Accelerator seeks founders in fintech, digital health, insurance tech and data analytics… BlueMark is hosting “Raising the Bar: Aligning on the Key Elements of Impact Performance Reporting,” with Fran Seegull of the U.S. Impact Investing Alliance, Elizabeth Seeger of KKR, Tamar Pashtan of Vital Capital, Bhavika Vyas of StepStone Group, and BlueMark’s Sarah Gelfand, Wednesday, Apr. 27.

Thank you for your impact.

– Apr. 14, 2022