The Brief | March 7, 2022

The Brief: Corporate ESG incentives, carbon to diamonds, gender lens in Nigeria, even cheaper solar, food waste in Egypt, everyday impact investors

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Greetings, Agents of Impact!

Featured: Impact Management

Incentivizing corporate executives and suppliers to move the needle on climate and diversity. From tech giants to global retailers, corporations are rewarding executives and suppliers for delivering on environmental, social and governance, or ESG, goals. At least 20% of companies on the S&P 500 now link compensation to ESG performance. Such practices are an example of a shift from “thinking of ESG as just a reporting exercise, to realizing it’s a code book for operating in ways that align with emerging standards and regulations,” says Duke University’s Cathy Clark. On ImpactAlpha’s Call tomorrow, Walmart’s Brendan Morrissey and Salesforce’s Sunya Norman will join Clark to walk through a four-step process that any organization can follow to operationalize its ESG goals using the practices of impact management, tomorrow Mar. 8, at 10am PT / 1pm ET / 6pm London. Last chance to RSVP.

  • Executive compensation. Salesforce, the San Francisco-based platform for managing customer relationships, is the latest company to tie executive compensation to the company’s environmental and social performance. The company last month confirmed that a portion of variable pay for senior executives would be determined by a handful of ESG measures of equality and sustainability.
  • Supply chain financing. Through its Project Gigaton initiative, Walmart is providing lower-cost financing for suppliers that reduce emissions, in order to help Walmart meet its goal of eliminating a gigaton of greenhouse gas emissions from its global value chain by 2030. More than 3,100 suppliers have signed on to Project Gigaton, agreeing to set goals and verify reductions.
  • Keep reading, “Incentivizing corporate executives and suppliers to move the needle on climate and diversity,” by Dennis Price on ImpactAlpha.

Dealflow: Climate Tech

Aether raises $18 million to convert atmospheric CO2 to diamonds. Natural diamonds are nothing more than crystallized carbon. New York-based Aether is using the surplus of atmospheric carbon to make diamonds in a lab. The company, which relies on direct-air capture of carbon, claims its process produces gems that are “among the top 2% of all diamonds on the planet.” The company’s Series A round was led by Helena and TRIREC, with backing from Ashton Kutcher’s Sound Ventures, Khosla Ventures and Social Impact Capital. Nonprofit Helena invested to help carbon capture reach “truly global scale,” said Helena’s Henry Elkus. “This can only happen if we move beyond underground sequestration and create viable commercial use cases for captured carbon.”

  • Impact bling. Aether’s conflict-free diamonds solve both environmental and social problems. The B Corp says every one-carat diamond removes 20 metric tons of CO2 from the atmosphere, “enough to offset the average American’s carbon footprint by more than a year.” It sources its carbon from Swiss direct-air capture tech venture ClimeWorks.
  • Check it out.

Nigerian gender-lens fund Aruwa Capital backs cold-chain company Koolboks. Koolboks makes affordable, renewably-powered refrigerators for food-based and other small businesses in Africa. The woman-led company is based in France and operates in Nigeria, Ghana and Kenya. It offers its technology on a lease-to-own basis. Aruwa’s Adesuwa Okumbo Rhodes told ImpactAlpha that the fund backed Koolboks after seeing “first-hand the enormous impact their product is having on the lives of business owners in rural off-grid areas,” nearly three-quarters of whom are women. Many of its customers use Koolboks’ devices to store and sell frozen foods, she explained (see, “Agent of Impact, Adesuwa Okunbo Rhodes”). The undisclosed amount of funding is Koolbok’s first equity round, though it will largely use the funding for working capital.

  • Gender portfolio. Aruwa Capital invests in small and mid-sized businesses that are founded and led by women, or which have a substantial base of women customers. Koolboks is Aruwa’s sixth investment. Its portfolio also includes consumer goods company Agroeknor, health products company Wemy Industries, fintech ventures Crowdforce and Pngme, and pharmacy chain Lifestores Pharmacy. Aruwa expects to close its first $25 million by mid-year.
  • Read on.

Erthos clinches $17.5 million to cut solar costs by installing panels on the ground. The Tempe, Ariz.-based company claims its ground installations reduce solar development costs by up to 20% because the projects don’t require trackers or metal support structures, and they take up less space. Capricorn Investment Group led the Series B round. Capricorn’s Ion Yadigaroglu said Erthos was possibly “the single largest contributor to decarbonization” that the firm will be involved with over the next decade.

  • Cutting costs. There may be few opportunities left to reduce the cost of solar technology, which is already “the cheapest source of electricity in history,” according to the International Energy Agency. Erthos says it has mitigated most of the downsides of installing solar arrays directly on the ground, including cleaning, inspection and weather conditions, like rain, wind and snow.
  • More.

Dealflow overflow. Other investment news crossing our desks:

  • Brazil’s Cloud9 raises 280 million reais ($55.6 million) to invest in startups overlooked by traditional venture capital funds.
  • Norfund and CDC Group invest 600 million rand ($39 million) in H1 Capital, a Black-owned and managed renewables investment and development company in South Africa.
  • Egypt’s FreshSource raises seed funding to facilitate contract farming and reduce food waste in the country.

Signals: Impact Platforms

Creci debuts with the aim of mainstreaming impact investing. Everyday investors have a new impact investing option: Delaware-based Creci, which aims to support impact-focused small and mid-sized companies that advance the Sustainable Development Goals. Like CNote or Worthy Financial, the fintech startup uses Regulation A+ to enable U.S. retail investors to invest in notes that fund loans to impact businesses, initially in Colombia, where Creci cofounder Andres Idarraga was born. Creci, which is derived from “to grow” in Spanish, plans to extend loans to businesses in Latin America and the U.S. “We wanted to test the model out before bringing it to the United States,” Idarraga told ImpactAlpha. It will also seek to attract impact-focused institutions looking for a mission-aligned place to park cash. 

  • Incentives. Creci offers investors a flat 5% return. Business borrowers pay between 12% and 22%, with discounts for setting and meeting impact goals. Creci has made loans to companies like Moksa, which manages water pollution and recovers wastewater, and Bareke, a marketplace for sustainable, artisanal fashion. Creci, a participant in Village Capital’s Finance Forward Latin America accelerator program, has been funded by its founders, friends and family, and grants.
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Agents of Impact: Follow the Talent

Don’t miss these upcoming ImpactAlpha partner events:

  • New Ventures is hosting its Latin American Impact Investor Forum, or FLII, in Merida, Mexico, Mar. 15-17. ImpactAlpha subscribers save 45% with code IMPALPHA22. Sign up today.
  • Phenix Capital is convening its Impact Summit Europe in The Hague, Mar. 29-30. Register now.
  • AVCA is convening its annual conference, “Private Capital in Africa at a Crossroads,” in Dakar, Apr. 25-29. Register today.
  • Island Innovation is hosting its Island Finance Forum virtually, Apr. 25-29. Register for free.
  • ImpactPHL is convening “Total Impact: Investing for New Economies,” in Philadelphia, May 16-17. ImpactAlpha subscribers get $300 off with code IMPACTALPHA. RSVP today.

Thank you for your impact.

– Mar. 7, 2022