Greetings, Agents of Impact!
Signals: Ahead of the Curve
Biodiversity is the new climate change. Nature is an asset – and we are failing as asset managers. “The extent to which we have collectively degraded the biosphere has created extreme risks and uncertainties, endangered our economies and livelihoods, and given rise to existential risks for humanity,” writes University of Cambridge’s Partha Dasgupta, lead author of this week’s sweeping report from the U.K. government. The Dasgupta Review frames biodiversity in dollars and cents (or pounds and pence) to back up scientists who have been sounding the alarm, mostly unheeded, about species collapse and the runaway degradation of ecosystems. About half of global GDP – some $44 trillion – depends on nature, says the World Economic Forum. A decline in bees and other pollinators would affect crops worth up to $577 billion annually. Yet exactly zero of the world’s 75 largest asset managers have a dedicated investment policy on biodiversity, according to ShareAction. Dasgupta calls for an accounting system that values natural assets on par with produced capital and human capital. Biodiversity, the report says, enables nature to be “productive, resilient, and adaptable.”
- Shifting capital. The biodiversity crisis is being elevated in the run-up to a May summit in Kunming, China, where world leaders hope to solidify a Paris-style agreement for biodiversity (see, “Biodiversity summit aims to increase urgency and financing to avert ecosystem collapse”). Private sector funding for biodiversity is no more than $13 billion or so annually. An estimated $44 billion flowed to projects that led to deforestation in the Amazon and other ecosystems, part of the $2.6 trillion in financing by the world’s largest banks in 2019 for food, forestry, mining, fossil fuels and other sectors that are primary drivers of biodiversity loss and degradation.
- Innovative finance. Dasgupta challenged private markets to channel capital to restoration and conservation activities. Examples: EcoEnterprise Fund finances regenerative agriculture and conservation enterprises in Latin America. HSBC Pollination Climate Asset Management, a joint venture formed last year by HSBC and Pollination Group last fall, aims to mainstream natural capital as an asset class. San Francisco-based Intrinsic Value Exchange, converts natural assets like forests, soil, coral reefs and biodiversity into financial capital.
- Payments for ecosystem services. Governments can support natural assets through taxes on carbon or, as in Denmark, on pesticides, and with other fees and policies. Colombia is promoting payments for ecosystem services to help protect more than one million acres of biodiverse forests (see, “The surprising leader in the $36 billion global market for payments for ecosystem services”).
- Dig in.
Halving U.S. food waste is a $14 billion annual investment opportunity. Investors have discovered food waste. Imperfect Foods last month raised $95 million to distribute foods deemed too ‘ugly’ for supermarkets directly to consumers. Apeel raised $250 million last summer for its protective coating for fresh food. FoodMaven a year ago raised $10 million to link producers of over-supplied food to universities, restaurant groups and other large-scale users. Yet the total capital directed towards such deals barely makes a dent in the $14 billion needed each year through 2030 to achieve the U.S. goal of halving the amount of food going to landfills, incinerations, or down the drain, or left in the fields to rot. In Roadmap to 2030 and Insights Engine, the nonprofit ReFED analyzes seven actions in the food supply chain, 40 food waste reduction solutions and more than 700 organizations working to reduce food waste. ReFED projects that a $14 billion annual investment could yield $73 billion – a five-to-one return.
- Corporate finance. Roughly half of investments must come from retailers and manufacturers, producers, food services companies and restaurants. “There is a real return on investment to the adoption of these solutions, so it makes sense for businesses to put up the capital to either develop the solutions themselves or really to partner with solution providers,” says ReFED’s Alex Coari.
- Catalytic capital. Also needed: At least $3 billion annually in capital willing to accept more risk or potentially lower returns. Such catalytic capital could finance the upfront costs of trucking (Bondadosa, City Harvest); cold storage infrastructure for food donations (Cultivate Food Rescue, Fair Foods); technologies such as grinders or repackagers used in recycling and composting (Agrilab Technologies, BioCoTech America); and early stage food-waste tech like intelligent routing which can direct shorter-life product to closer destinations (elePlate, Fooding Forward).
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Dealflow: Follow the Money
Canada’s Svante raises $75 million to capture carbon at scale. The Vancouver-based developer of source-point carbon capture technologies will work to address emissions from cement manufacturing, blue hydrogen production and natural gas boilers. Founded in 2007, the company’s solid sorbent technology has halved the cost of capturing industrial carbon emissions.
- Climate tech investors. Svante has raised over $150 million to date. Its Series D round was led by Singapore’s Temasek, with participation from Chart Industries, Carbon Direct and Export Development Canada, Chevron Technology Ventures and others.
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AXA invests $11 million in Forest Carbon to restore wetlands in Indonesia. The French investment manager invested debt and equity from the AXA IM Impact Fund: Climate and Biodiversity. Bonds will be launched for each project, with an AXA fund as the first subscriber. The deal signals “the insurance industry is moving to not only account for risks from climate change, but also to invest in forest restoration projects that mitigate those risks,” Forest Carbon’s Jeffrey Chatellier told ImpactAlpha.
- Peatland restoration. The AXA deal will speed new projects to market, Chatellier said. Forest Carbon’s first project in Indonesia, the Sumatra Merang Peatland Project, has secured carbon offset buyers to restore a peatland forest as habitat for Sumatran tigers and other species.
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Temasek’s ABC World Asia backs Vietnamese oral health provider Kim Dental. The Singapore-based private equity impact fund, launched by Temasek in 2019, led a $24 million financing round for Kim Dental, a Vietnamese provider of affordable dental healthcare. Oral health “is often neglected and continues to pose a major public health concern in many developing countries,” said ABC World Asia’s David Heng. Kim Dental employs 120 dentists and dental surgeons, as well as 600 staff workers, across 19 dental clinics serving more than 23,000 Vietnamese patients monthly.
- Temasek impact. ABC World Asia made the investment via its inaugural $405 million fund. Last month, the fund backed Indian agtech CropIn’s Series C funding round (see, “Indian agtech venture CropIn raises $20 million”).
Frontier Nutrition snags $6 million to bring fortified snacks to Bangladesh. The New Haven, Conn.-based company sells low-cost, nutritious snacks, including lentil butter, chocolate, powdered drinks and biscuits in over 50,000 outlets across Bangladesh, which has one of the highest rates of malnutrition in the world.
- Food finance. Life sciences investment firm Adjuvant Capital led the Series B round, with participation from Singapore venture fund DSG Consumer Partners, Great Point Ventures, DSM Venturing, Beyond Meat’s Seth Goldman and others.
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Indonesia’s Green Butcher raises $2 million for plant-based meat. Green Butcher has a partnership with Starbucks Indonesia to roll out vegan-friendly beef across the country.
Singapore-based Teja Ventures and Unovis Asset Management led Butcher’s seed round to help the plant-based meat startup expand production and retail distribution, CEO Helga Angelina told DealStreetAsia.
- Asian market. North American and European ventures have scored the bulk of alt-protein investments to date. Hong Kong-based Green Monday raised $70 million last fall.
Agents of Impact: Follow the Talent
Satyam Khanna, ex- of NYU School of Law, is named senior policy advisor for climate and ESG at the Securities & Exchange Commission… Jon Shieber is TechCrunch’s new climate editor… Marguerite Casey Foundation seeks a people operations manager in Seattle… Spring Point Partners is recruiting an investment analyst in Philadelphia.
The Community Preservation Corporation is hiring a director of policy and advocacy and a construction portfolio associate in New York… mHUB is looking for an executive director for its MedTech Accelerator in Chicago…. The Center on Global Energy Policy hosts U.C. Santa Barbara’s Leah Stokes on the politics of the clean energy transition today at 3pm ET/12pm PT.
Thank you for reading.
– Feb, 4, 2021