The Brief | October 19, 2021

The Brief: ETFs for the climate transition, Sudan’s venture deal, Black women social innovators, Indian fintech, SOCAP’s narratives for change

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Greetings, Agents of Impact! 

The Call: Catalytic climate capital. The accelerating low-carbon transition will need an array of innovative financial structures. Call No. 33 will unpack the tools of catalytic climate capital with LEAF Coalition’s Eron Bloomgarden, Prime Impact’s Amy Duffuor, Convergence’s Joan Larrea and other Agents of Impact who are bridging persistent capital gaps in early-stage innovation, full-scale commercialization and climate justice. Expand your solution set as the COP26 climate summit in Glasgow gets underway, Tuesday, October 26th at 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: Personal Finance

How to ride the climate transition with more than a dozen exchange-traded funds. Clean energy. Batteries. Smart grids. Clean energy ETFs tracking elements of the climate transition took off in 2020, attracting billions of dollars from retail and institutional investors. “Investing in the climate transition is no longer just for institutions,” SustainFi’s Lana Khabarova writes for ImpactAlpha. Such public-market funds may have only a marginal effect on mobilizing capital for climate action. But unlike broad ESG funds that track market indexes screened for environmental, social and governance criteria, clean energy ETFs provide exposure to companies with products and services that directly address climate change. Khabarova warns that clean energy funds can be volatile, expensive and overly concentrated. U.S. wind tax subsidies are expiring, and home solar tax credits are being phased out. Following a ‘Biden bump’ last year, clean-energy stocks have struggled in 2021. “Retail investors should continue to exercise a high degree of caution when investing in renewable energy,” she writes.

The iShares Global Clean Energy ETF (ICLN), with $5.8 billion in assets, is the largest of such funds and invests in roughly 80 companies in biofuels, ethanol, geothermal, hydroelectric, solar and wind. The $2.9 billion Invesco Solar ETF (TAN) holds shares of solar panel makers like First Solar, inverter manufacturers SolarEdge and Enphase, and residential installers such as Sunrun. The First Trust Global Wind Energy ETF (FAN), with nearly $400 million in assets, includes wind turbine manufacturer Vestas Wind Systems and Danish offshore wind developer Orsted. Global X Lithium and Battery Tech ETF (LIT) and Amplify Lithium and Battery Tech ETF (BATT) are betting on battery manufacturers and lithium miners. And First Trust Advisors’ smart grid infrastructure fund (GRID) and State Street’s SPDR intelligent structures ETF (SIMS) are counting on “smarter grids,” which need meters, storage and software. “Nuclear power has a bad rap,” Khabarova says, noting that nuclear-energy stocks have soared on the climate-transition thesis. The Global X Uranium ETF (URA), the North Shore Global Uranium Mining ETF (URNM) hold positions in uranium miners and utilities.

Keep reading, “How to ride the climate transition with more than a dozen exchange-traded funds,” by SustainFi’s Lana Khabarova on ImpactAlpha. Catch up on all of ImpactAlpha’s personal finance coverage

Dealflow: The Reconstruction

Echoing Green and Goldman Sachs team up to back Black women social innovators. The New York-based social innovation accelerator will receive $1 million from Goldman Sachs Foundation to create fellowships (applications are open) for Black women social entrepreneurs focused on education, healthcare, workforce development, financial inclusion and climate justice. “We know that those closest to the problems are closest to the solutions,” said Goldman’s Asahi Pompey, who helped launch the bank’s $10 billion One Million Black Women initiative. 

  • Go deeper. With One Million Black Women,“we wanted to do something that was big,” Pompey told Monique Aiken, host of The Reconstruction podcast, earlier this year. “We wanted to do something that was not episodic, that was going to be consistent and persistent over time.” Read Aiken’s Q&A with Pompey: “The Goldman Sachs executive helping the investment bank meet calls for racial and gender equity.”
  • Racial equity lens. Echoing Green surpassed its fundraising goal of $50 million for its Racial Equity Philanthropic Fund to back 500 social enterprises focused on racial equity. “It’s an indicator that social innovation is maturing as a field and is really open to this notion of applying what social innovation is good at to the work of racial equity,” Echoing Green’s Cheryl Dorsey told MacArthur Foundation’s Debra Schwartz in conversation at SOCAP21.
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Sudan’s first foreign venture capital investment in 30 years: $5 million for Macroeconomic, political and currency risks can make investors wary of infrastructure and private equity in Africa (for context, see “Consider yourself a fiduciary? Then it’s time to invest in Africa”). Case in point: Sudan, which is open for investment after the U.S. removed Sudan from the list of terrorist states last year. Sudan was one of Africa’s 10 fastest growing economies in 2020 and offers global investors “major potential across several sectors, with a significant pool of entrepreneurial talent,” said Ashraf Sabry of Egypt-based Fawry, which led the investment in

  • Digitalization. Women-led is a classified ads and digital marketplace. The company will use the investment “to expand our services in fintech so that everyone in the country has the financial freedom they deserve and is able to transact in a fast, transparent, simple and digital way,” said Alsoug’s Tarneem Saeed.
  • Onward

Dealflow overflow. Other investment news crossing our desks:

  • India’s M2P Fintech clinches $35 million from Tiger Global Management, Omidyar Network India, Better Ventures and others to help financial services firms integrate digital services.
  • Nigeria’s Sendbox raises $1.8 million to provide affordable, last-mile delivery services to small businesses and merchants.
  • Kenyan sanitation venture Sanergy secures $2.5 million from the Japan International Cooperation Agency, following a round earlier this year backed by AXA Impact Fund.

Signals: Culture Shift

New narratives for inclusion and investment at SOCAP21. The arrival of Gen Z is upending culture and commerce. “They have very strong values around inclusivity,” said Marcy Ventures’ Larry Marcus on the “Narratives for Change” panel at SOCAP21. “From an evolutionary, survival-of-the-fittest point of view, companies that think they can keep on doing things the same way and maintain their market share, it isn’t going to work.” Macro’s Poppy Hanks said films like “Blue Bayou” and “Blast Beat” can change the discussion around immigration. The key: “Creating a narrative that people can see a version of themselves in, so they are entertained but also being educated. We do want to put the medicine in with the cake.” The Kellogg Foundation invested in both Marcy and Macro to demonstrate that bias is a hindrance and truth-telling a necessity. “What I want to tell people is that the returns are there,” said Kellogg’s Carla Thompson Payton. “The question is whether you have the courage to stand up and do what’s right.”

  • Curb-cut effect. Investment practices that reach underbanked populations can open the market to other historically excluded groups. Mission Driven Finance dropped the use of credit scores for its placed-based fund in San Diego to reach a more racially diverse set of borrowers. The effect: The impact investment firm reached more military families, immigrants and women. “Where we can look for opportunities where others see risk is the biggest part of our work,” Mission Driven’s Lauren Grattan said.
  • On today’s agenda.Financing Climate Justice,” with Doug Sims, Omar Blayton, Kerry O’Neill and Cathie Mahon at 10:45am ET; “How Sustainable Investing Goes Mainstream,” with Jessica Matthews and Joshua Levin at 12:40pm ET; “Innovative DEI Investment Opportunities,” with Akasha Absher, Rachel Robasciotti, Jennifer Pryce, Makisha Boothe and Aron Betru at 3:15pm ET; and “State of the Field and Practice of Impact Investing,” with Fran Seegull, Cathy Clark and Monique Aiken at 4:15pm ET. Here’s the full agenda.
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Agents of Impact: Follow the Talent

ImpactAlpha partner event: Next week’s Next Normal Now series from the Global Impact Investing Network takes up the topic of regeneration with Brawn Capital’s Scott Reinhart, Business Oxygen’s Siddhant Raj Pandey and Camco Clean Energy’s Laura Lahti. Their breakout session: “Investing in clean air to restore, heal and rebuild.” RSVP today.

Melinda Wright, ex- of Walton Family Foundation, joins Cambridge Associates as global head of diversity, equity and inclusion… Rick Hampson, ex- of Citizens Bank Michigan, joins Arctaris Impact Investors as a principal to expand the firm’s ESG and impact investing practice in Ohio and Michigan… Include Ventures is hiring a principal, a senior associate and a junior associate (see “How climate tech investments can create health and wealth in Black and Brown communities”).

JustLeadershipUSA is looking for a director of programs and impact in New York… Global Partnerships seeks a senior credit officer in Seattle… California Black Freedom Fund is recruiting an executive director… SolarFi is looking for a chief operating and financial officer in Atlanta… Kopernik is hiring for a visual communications officer and other roles.

Thank you for your impact.

– Oct. 19, 2021