Greetings, Agents of Impact!
Featured: Risk, Adjusted
Riskwashing: How the crusade against ESG is hurting businesses, taxpayers and retirees. Firms engage in “greenwashing” when they deceive customers or investors about their environmental impact. Now come politicians who neglect their fiduciary and governing duties by substituting ideological agendas for attention to material risks to their cities and states. Call it “riskwashing.” Most stewards of other people’s money want more, not less, information about investment risks. Not Republican governors and state treasurers who have coordinated a campaign to bar the consideration of environmental, social and governance risks in the management of state and local assets.
- Texas bailout. The state last year blacklisted JPMorgan Chase, Bank of America, Goldman Sachs and two other large banks that Texas comptroller Glenn Hegar said discriminated against fossil fuel or firearm companies. Those banks collectively underwrote more than a third of the state’s municipal bonds. The switch to smaller underwriters already has cost taxpayers an estimated $532 million in extra fees, including the hefty $13 million charged by Jefferies to manage a $3.4 billion bond offering. The irony: The Texas bond is meant to bail out Texas utilities caught unprepared by last year’s freeze that left more than 11 million people without power. Identifying and planning for climate-related risks is something good ESG practices would flag.
- Thousand-year floods. Kentucky in April enacted a law that prohibits state agencies from doing business with companies that “boycott” fossil fuel companies. A few months later, deadly flash flooding devastated some of the state’s poorest counties, part of a wave of extreme climate events that scientists say are exacerbated by fossil fuel emissions. “These people will not have flood insurance,” the mayor of Hazard, Ky., told CNN. “If they lose their home, it’s a total loss.” For its next target, the anti-ESG brigade is eyeing insurance companies that take environmental factors into account when assessing risks.
- Impact outcomes. Don’t tell the politicians, but delivering more, not less, impact is the next frontier for ESG investing. Measuring impacts alongside profits, says Sir Ronald Cohen, chair of the Global Steering Group for Impact Investment, “revolutionizes the ability of market economies to deliver solutions to our great challenges alongside rising prosperity.” Anti-ESG politicians are ignoring the financial threats posed by drought, crop failure, weakened infrastructure and worsening public health, writes Ceres’ Mindy Lubber. “Either their resources and assets will be put at severe risk, or they will avert the worst of that risk because our society shifted to a cleaner economy.”
- Keep reading, “Riskwashing: How the crusade against ESG is hurting businesses, taxpayers and retirees,” by Amy Cortese and Dennis Price on ImpactAlpha.
Sponsored by J&J Impact Ventures
Why J&J Impact Ventures invests in other funds. The healthcare impact-investment fund within the Johnson & Johnson Foundation has primarily invested directly in healthcare companies. Another strategy: Investing through other impact funds. “We believe this is an important way to effectively pool resources, catalyze additional funding, and support entrepreneurs and enterprises in the health impact space,” writes Dana Deardorff of J&J Impact Ventures, “and ultimately reach the communities most in need.”
- Scaling impact. J&J Impact Ventures has invested in New Delhi-based HealthQuad and Toronto-based Cross-Border Impact Ventures and is considering investment opportunities in similar impact funds. The capital allows the funds to scale their impact and support even more entrepreneurs, says Deardorff, while allowing J&J Impact Ventures “to expand our reach into new geographies and underserved patient populations.”
- Keep reading, “Why J&J Impact Ventures invests in other funds,” by Dana Deardorff. Check out ImpactAlpha’s coverage of Investing in Health, in partnership with Johnson & Johnson Impact Ventures.
Dealflow: Carbon Tech
The Engine backs Mantel’s carbon-capture technology. The MIT-spinout venture fund is known for betting on very early-stage “tough tech.” Boston-based Mantel is developing molten-salt-based carbon capture technology for high-temperature environments, such as boilers and furnaces. Recycling the heat from these systems can cut energy losses from existing carbon capture processes by up to 60% and reduce costs by half, the company says. That’s key for industries where “low-cost carbon capture is a critical need,” said The Engine’s Michael Kearney. “Net-zero emissions can be a cost-efficient, achievable reality.” The Engine invested in Molten’s $2 million seed round alongside New Climate Ventures.
- Tough tech. The Engine was an early investor in Commonwealth Fusion Systems, which in December raised $1.8 billion to edge the company’s fusion technology toward delivering “net energy” by 2025. Its portfolio also includes Form Energy, a long-duration battery company also backed by TPG Rise Climate. Sublime Systems is making zero-carbon cement. Via Separations is slashing the energy required to produce pulp, paper and other materials. Foray is bioengineering plant-based materials like wood in a lab, in hopes of curbing deforestation.
- Read on.
Fervo Energy rakes in $138 million for geothermal energy. Unlike wind and solar energy, geothermal energy offers steady, renewable power that doesn’t need storage. “Power buyers are interested in geothermal power because they are actively looking for reliable energy sources that can address climate change and rising energy prices,” said Tim Latimer of Houston-based Fervo, which uses the horizontal drilling methods of frackers to tap into geothermal sources. The company secured a partnership last year with Google to develop a geothermal power project in Nevada. Fervo also signed a 40-megawatt power purchase agreement with Oakland-based East Bay Community Energy. The Series C investment will help Fervo complete geothermal power plants in Nevada and evaluate opportunities in other states and globally.
- Clean energy transition. Fervo is “working to unlock the potential of geothermal energy to provide clean, reliable energy at a sustainable price point,” said Bruce Hogg of the Canada Pension Plan Investment Board, or CPP Investments, which invested $20 million in the round led by DCVC. Investors that re-upped include Breakthrough Energy Ventures, Capricorn’s Technology Impact Fund and Elemental Excelerator. New investors include Grantham Foundation, Impact Science Ventures, Liberty Energy, Macquarie and Prelude Ventures.
Dealflow overflow. Other investment news crossing our desks:
- Brazilian telehealth services startup Dr. Consulta raised 170 million reais ($33.3 million) to expand its network of physical medical centers in Sao Paulo.
- Nigerian retail tech startup Omnibiz clinched $15 million in pre-Series A funding to digitalize logistics for informal retailers.
- Zitara scored $12 million in Series A financing led by Energy Impact Partners to help electric vehicle and energy storage partners optimize their battery-powered assets.
- Bangalore-based Exponent Energy snagged $13 million in a round led by Lightspeed to scale up its network of electric vehicle rapid-charging batteries in India.
Agents of Impact: Follow the Talent
Goldman Sachs’ Sustainable Investing Group seeks an associate in New York… BlackRock is hiring an impact investing research analyst… VCC Social Enterprises is looking for a senior investment analyst in Richmond, Va… Honeycomb Credit is hiring an impact analyst intern in Pittsburgh… Westfuller Advisors is looking for an investment analyst in New York… Social Finance seeks an associate in Boston… The Global Impact Investing Network is hiring a research associate and executive assistant in New York.
Aon is recruiting a head of responsible investing in Waltham, Mass… Peak Performance Tax seeks an impact and ESG analyst in Sacramento… ProPublica will host, “The climate debt crisis,” today at 3pm ET… The Interfaith Center on Corporate Responsibility is hosting a panel discussion on being a “good company,” Thursday, Sept. 29 in New York… U.S. Venture and gener8tor are launching an accelerator for early-stage sustainability and mobility startups in the U.S. and Canada.
Thank you for your impact!
– Aug. 24, 2022