The Brief | February 16, 2022

The Brief: Climate adaptation investing, food for health, neobank in Brazil, carbon sinks in Europe, electric transit in Kenya, rules for corporate disclosure

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Greetings, Agents of Impact! 

Call No. 38: Public policy. Private capital. Public good. Agents of Impact will key in on the upcoming rule-making by the SEC around corporate ESG disclosure, climate risk reporting and human capital management – and the anticipated challenges and backlash (see below). Join the U.S. Impact Investing Alliance’s Fran Seegull, Satyam Khanna, former ESG advisor at both the SEC and EPA, and Cambria Allen Ratzlaff of the UAW Retiree Medical Benefits Trust and the Human Capital Management Coalition, Tuesday, Feb. 22 at 10am PT / 1pm ET. RSVP today.

Climate adaptation gets a fund of its own to invest in data, analytics and resilience. Investments to help businesses and communities adapt to climate change have long taken a back seat to financing to mitigate global warming. U.N. Secretary-General António Guterres has called for half of all climate-related investing to go to adaptation. The current figure is about 8%; nearly all of that comes from public investors. The Lightsmith Climate Resilience Fund, believed to be the first private-equity growth capital fund focused on climate resilience, has raised an initial $186 million to invest in water management, resilient food systems, agriculture and supply chain analytics, satellites and sensors, and catastrophe risk modeling.

  • Adaptation solutions. One of Lightsmith’s first investments is in SOURCE Global, based in Scottsdale, Ariz., which makes hydropanels to extract drinking water from vapor in the air. Another is Waycool, which works with smallholder farmers in India to cut out middlemen and reduce waste. As much as 35% of food produced in India is lost in the supply chain. “We are aiming for technologies that can get us through this challenging set of conditions,” Lightsmith’s Jay Koh told ImpactAlpha.
  • Catalytic capital. Koh and partner Sanjay Wagle have worked for years to acclimatize investors to opportunities in climate adaptation and resilience. A key piece fell into place last month, when the U.N.’s Green Climate Fund put up $46 million in first-loss capital to backstop commercial investors. That helped attract private investors, including multifamily office Caprock Group. “There are so many decarbonization growth equity funds right now, and climate resiliency and adaptation is critical and complementary to decarbonization,” said Caprock’s Mark Berryman.
  • Keep reading, “Climate adaptation gets a fund of its own to invest in data, analytics and resilience,” by Roodgally Senatus and Amy Cortese on ImpactAlpha.

Dealflow: Investing in Health

S2G Ventures backs NourishedRx to integrate healthy food into healthcare. NourishedRx launched in 2019 to address a gap in the U.S.’s healthcare system: diet and nutrition. NourishedRx aims to make “nutritious and culturally relevant food accessible for health plan providers’ most vulnerable members,” said founder Lauren Driscoll. The company provides policyholders with nutrition advice and even grocery delivery. “NourishedRx is targeting the most vulnerable populations, folks that can benefit the most from the nutritional improvements,” S2G Ventures’ Sanjeev Krishnan told ImpactAlpha. “It’s creating a flywheel effect for a better food system, improved patient health and lower healthcare costs.”

  • Seed round. Route 66 Ventures, Connecticut Innovations, Primetime Partners and individual investors joined S2G in NourishedRx’s $6 million funding round.
  • Check it out

Spanish bank BBVA adds $300 million to its stake in Brazilian neobank Neon. Neon launched in 2016 to provide credit and other digital financial services to Brazil’s low and middle income individuals, self-employed people and small businesses. The investment gives BBVA an opportunity to reach Brazil’s financially underserved population; nearly 90% of Neon’s 15 million account holders are low and middle-income.

  • Doubling down. The deal brings BBVA’s stake in Neon to 29.7%. The bank previously invested in Neon’s Series A round via its venture arm, Propel, alongside impact-minded investors Quona Capital and Monashees. Latin American fintech ventures took in nearly 40% of the region’s $15 billion in venture capital investment last year.
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Dealflow overflow. Other investment news crossing our desks:

  • Copenhagen-based Agreena raises $22.5 million to help farmers earn carbon credits – that they can sell – for storing and tracking carbon in their land.
  • The U.N.’s Joint SDG Fund invests $54.5 million across five projects in Kenya, Madagascar, North Macedonia, Suriname and Zimbabwe “to rescue the Sustainable Development Goals.”
  • Toronto-based Kizmet Impact Capital’s forthcoming fund on Canada’s NEO Exchange will let retail investors invest in high-impact food, health and technology companies in the U.S. and Canada.
  • EV maker BasiGo clinches $4.3 million to transition Kenya’s mass transit vehicles to electric vehicles.
  • Remedial Health raises $1 million in pre-seed funding to digitize Nigeria’s pharmacies and help them curb fake and expired drug supplies.

Impact Voices: Policy Corner

Agents of Impact eye corporate disclosure rules on climate and human capital. Mandatory climate and human capital disclosure is coming to corporations. The question is how far and how fast the U.S. Securities and Exchange Commission is willing to go. The climate rule has been delayed, for example, as commissioners have debated whether to mandate reporting of “Scope 3” emissions, which cover a company’s entire value chain. The rules are certain to be met with legal challenges; some corporations are already pushing back.

“We are optimistic that this will represent a monumental step forward on the path toward an economic system that better accounts for the impacts on all stakeholders,” the U.S. Impact Investing Alliance’s Fran Seegull writes in a guest post. “The impact investing community should prepare to coordinate its messaging and emphasize in written public comments why corporate ESG disclosures will help protect investors by improving their access to clear, comparable and decision-useful information.” 

  • Broad and complete. Seegull asked impact experts and advocates to weigh in on the upcoming rules. The Center for American Progress’ Alex Thornton urged “complete disclosure of the greenhouse gas emissions associated with a company’s Scope 1, 2 and 3 activities – not limited in any way by materiality.” Rachel Curley of Public Citizen wants to see corporate disclosure of political activity and taxes. Brian Horn of Disability:IN advocates for inclusion of people with disabilities in any human capital management disclosure rules.
  • Agents of Impact. Also commenting: The Predistribution Initiative’s Delilah Rothenberg, The Shareholder Commons’ Rick Alexander, B Lab’s Holly Ensign-Barstow, Ali-Reza Vahabzadeh of the American Sustainable Business Council, and Meredith Sumpter of the Coalition for Inclusive Capitalism.
  • Keep reading, Agents of Impact eye corporate disclosure rules on climate and human capital,” by Fran Seegull on ImpactAlpha. And join The Call, Tuesday, Feb. 22. 

Agents of Impact: Follow the Talent

Jonathan Berman, ex- of AIP Investors, joins Shell Foundation as CEO… UpMetrics partners with National Bankers Community Alliance to design an impact measurement framework for minority depository institutions… CcHub, Google, Mojaloop Foundation, and the government of Rwanda are recruiting applicants for their fintech innovation program… CapEQ seeks an advisory services consultant… Morgan Stanley is hiring an emerging market equity sustainability analyst in New York. 

ImpactAlpha is hiring a director of subscription growth… Opportunity Finance Network kicks off its 2022 webinar series on Wednesday, Feb. 23 with “Tech it Up: Leveraging Technology for Impact, Growth and Collaboration”… BlueMark and CDC Group are co-hosting “An Inside Look at CDC’s New Impact Scoring System,” with Impact Frontiers’ Mike McCreless, CASE at Duke’s Cathy Clark, BlueMark’s Christina Leijonhufvud and CDC’s Liz Lloyd, Paddy Carter and Giletje Adriaans, Wednesday, Mar. 2.

Thank you for your impact.

– Feb. 16, 2022