The Brief | November 1, 2021

The Brief: Environmental justice funding, clean energy investment, Citi’s social bond, gig healthcare workers, COP kickoff

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Greetings, Agents of Impact! 

🌍 Agents of Impact Call No. 34: Financing growing businesses: Live from Nairobi. Agents of Impact Call No. 34 will explore new channels of equity, debt and catalytic capital for growing businesses in emerging markets. Answer the Call, Tuesday, Nov. 16th at 8am PT / 11am ET / 7pm Nairobi. RSVP today.

Featured: The Reconstruction

Moving racial justice to the center of climate philanthropy (podcast). Climate justice leaders are mobilizing their own “Conferences of the Parties” around the world as heads of government meet in Glasgow at COP26 this week. Among their demands: that people and communities most affected by climate change be central to climate solutions and decision-making. Supporting many of the climate justice organizations is an effort by the Donors of Color Network to rally philanthropic funds to address systemic racial injustice. On the latest episode of The Reconstruction podcast, Monique Aiken hosts Ashindi Maxton, Sharon Chen and Danielle Deane-Ryan, leaders of the network of high-net-worth people of color. Says Maxton, “The goal is really nothing less than shifting the center of gravity in politics and philanthropy, towards racial justice,” says Maxton. 

The network launched a campaign and pledge in February calling on foundations to commit to directing at least 30% of their climate funding to these groups. Less than 2% of $1 billion in annual environmental philanthropy goes to organizations focused on environmental justice. “As a society, we’re not playing with all our players on the field, when some of the most inspiring and effective climate action is being led by communities of color,” says Chen. Three organizations among the top 40 largest donors have committed to the pledge. They are Kresge Foundation (which, at 33%, surpasses the target); Pisces Foundation (17%); and the Schmidt Family Foundation, which hasn’t shared current numbers. The network received a boost this year with a major gift from MacKenzie Scott. “If you care about an environmental movement that is strong, that’s able to mobilize the diversity of voices in the U.S. and is making sure that any policy that you design is informed by those that are most affected by climate change,” says Deane-Ryan, “you’re going to need the genius and the organizing power of communities of color.”

Dealflow: Energy Transition

Builders Private Capital stands up $300 million clean energy fund. The Chicago-based firm is the direct investment arm of Builders Vision, the impact group founded by Lukas Walton, the billionaire grandson of Walmart founder Sam Walton. The clean energy fund aims to provide flexible and creative capital for companies developing scalable decarbonization solutions. The fund “is an outgrowth of some of the work we’ve done with S2G ventures,” which has been investing in sustainable agriculture and ocean health since 2014, S2G’s Sanjeev Krishnan told ImpactAlpha.

  • Climate finance. Builders Vision is using its own capital to launch the clean energy division, which will provide growth capital of up to $50 million in Series B to pre-IPO funding rounds. Stephan Feilhauer and Francis O’Sullivan will lead the group.
  • Plant-based food. S2G Ventures led a $17 million round for woman-led biotech company Shiru, which identifies and creates plant-based ingredients for food companies.
  • Dig in

Citi issues $1 billion social finance bond for emerging markets. Proceeds from the bond will target expanded access to financial services, affordable housing, health and education for underserved communities in emerging markets. The bond is part of Citi’s trillion-dollar pledge to sustainable investing that includes creating access to essential services for 15 million low-income households by 2030. Citi’s Jane Fraser said the social bond shows how the bank can maximize its impact, “especially as we support emerging markets in their recovery from COVID-19.”

  • Off-grid solar. A commitment of $75 million will help Greenlight Planet expand off-grid solar access for low-income communities in Kenya. The sustainability-linked debt, backed by Citi, Norfund, Standard Bank Group and CDC Group will help Greenlight reach 10 million households in the next five years.
  • Citi Impact Fund. Citi launched a $200 million impact fund last year and has backed nearly two dozen companies, more than half of which are led by women and people of color (for context, see “Citi Impact Fund adds seven new investments”).
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ShiftMed secures $45 million to connect gig healthcare workers. The U.S. faces a shortage of healthcare workers due to COVID-19. McLean, Va.-based ShiftMed connects 60,000 healthcare professionals and more than 700 hospitals, nursing homes, home health and assisted living providers. The investment round was led by Healthworx and Panoramic Ventures, a partnership between tech entrepreneur Paul Judge and BIP Capital (for context, see “Panoramic Ventures hunts for underserved founders in overlooked markets”). Participating investors include Motley Fool Ventures, Blue Heron Capital and 3TS Capital. Check it out.

Dealflow overflow. Other investment news crossing our desks:

  • Neobank Zolve raises $40 million to provide financial services for immigrants living in the U.S.
  • Amazon’s $2 billion Climate Pledge Fund invests in sustainable packaging startup CMC Machinery, which is also backed by KKR’s Global Impact Fund and Resilient Power, a developer of fast-charging stations for electric vehicles.
  • EV charging startup Xeal scores $14 million to deploy 10,000 charging stations in the U.S.

Signals: COP26 Kickoff

Finance takes center stage at global climate summit. After a year’s delay, COP26 kicked off in Glasgow amid protests, stormy weather and diminished expectations. The U.S. is re-engaged on climate action, but has yet to pass key legislation to fund it. The leaders of China, Brazil and Russia are skipping face-to-face meetings. And G20 leaders produced a watered down climate statement at their meeting in Rome. Expectations for the 26th “Conference of the Parties” may be low, but the stakes couldn’t be higher. The world is on a trajectory to warm 2.7 degrees Celsius, almost five degrees Fahrenheit, by the end of the century – far above the 1.5-degree-Celsius threshold scientists say is necessary to avoid a catastrophic cascade. Emissions must be halved by 2030 to keep warming in check. U.S. climate czar John Kerry called COP26 “the last best chance” to avoid climate catastrophe.  

  • Focus on finance. Over the next 10 days, global leaders will hammer out rules for global carbon markets and funding for developing markets to combat and adapt to climate change. Flashpoints include phasing out the use of (and subsidies for) coal and other fossil fuels. With governments bogged down by domestic concerns, including pandemic-fueled energy shortages, attention has turned to the private sector. More than $100 trillion in private finance is needed to reach net zero by 2050, according to U.N. climate finance envoy Mark Carney, who has called on public finance institutions to absorb more risk to attract private capital. ImpactAlpha’s Call. No. 33 last week explored how catalytic capital can fill climate finance gaps. “The world is watching,” Carney told The Wall Street Journal. “I am going to be judged. Everyone is going to be judged.”
  • Tune in. COP26 runs through Nov. 12. Negotiations take place behind closed doors. But a program of public events in COP26’s Green Zone will be streamed live on YouTube. The parallel Green Horizon Summit, organized by the City of London and the Green Finance Institute, will emphasize the role of private finance.
  • Non-proliferation treaty. The expansion of coal, oil or gas production is incompatible with the Paris Agreement’s 1.5-degree-Celsius target. Yet countries are on track this decade to more than double fossil fuel production beyond what would be consistent with the 1.5-degree-Celsius limit, Carbon Tracker’s Mark Campanale warns in a guest post. Campanale is championing a Fossil Fuel Non-Proliferation Treaty to end fossil fuel expansion and phase out existing production. A global registry of fossil fuel reserves will be previewed at COP26. Read, “International cooperation and open data are key to a just transition away from fossil fuels,” by Mark Campanale on ImpactAlpha.
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Agents of Impact: Follow the Talent

ImpactAlpha partner events: Tideline digs into J.P. Morgan Private Bank’s Global Impact Fund with, “An inside look at one allocator’s approach to impact fund diligence,” with J.P. Morgan’s Jessica Matthews and John Ancona, Elevar’s Amie Patel, and Trill Impact’s Pia Irell, moderated by Tideline’s Ben Thornley, Wednesday, Nov. 3. RSVP todayCharter’s Workplace Summit tackles “What kind of leader do I need to be now?” with Slack’s Stewart Butterfield, LinkedIn’s Ryan Roslansky and The New York Times’ Meredith Kopit Levien, Nov. 9-10. Free registration.

Ryan Merkin, ex- of Steven Winter Associates, joins BlocPower as vice president of business development… Media Development Investment Fund seeks an investment officer for Southeast Asia… Morgan Stanley is hiring a global sustainable finance associate in New York… Kapor Center is recruiting a senior data and insights analyst in Oakland.

Thank you for your impact.

– Nov 1, 2021