The Brief | November 15, 2021

The Brief: Finding a sustainable bank, decarbonization tech, anaerobic digesters, revenue-based financing, carbon-market rules

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Greetings, Agents of Impact! 

🌍 Tomorrow’s Call: The disruption in small business financing in emerging markets. Enterprise software. Crowdfunding. Fintech. Crypto. A new crop of tech entrepreneurs and investors see small and growing businesses as a big and growing market (see, “How technology is disrupting small-business financing in emerging markets – in a good way”). Join Celo’s Daniel Kimotho, Pezesha’s Hilda Moraa, The People’s Fund’s Luyanda Jafta, and Lendable’s Daniel Goldfarb, in conversation with ImpactAlpha’s Jessica Pothering and David Bank, tomorrow, Nov. 16, at 8am PT / 11am ET / 7pm Nairobi. RSVP today. More background:

Featured: Sustainable Banking

How to find a socially-responsible bank. Just since the 2015 Paris climate agreement, big banks have facilitated nearly $4 trillion in fossil fuel financing. Many have all but abandoned low-income and communities of color. “Green” and socially-responsible banks are emerging to meet consumer demand for alternative places to park their money. Among the banks that rally around environmental, social, and governance, or ESG, goals are Beneficial State Bank, Mascoma Bank, Southern Bancorp and Sunrise Banks, as well as new entrants Ando, Atmos and Fair. “You can switch to a socially-responsible bank that lends to local communities or pledges not to fund fossil fuels,” SustainFi’s Anna Yen writes in a guest post for ImpactAlpha.

Screening for banks that are certified B Corps, members of the Global Alliance for Banking on Values or designated community development financial institutions, or CDFIs, is one way to start. Amalgamated Bank is a certified B Corp and a member of the global alliance of nearly 70 financial institutions that pledge to support sustainable goals. Bronx, N.Y.-based Spring Bank is a B Corp and a CDFI, providing financial services to underserved communities. Tradeoffs: Impact-focused Aspiration offers fossil fuel-free products, including checking, savings and investment accounts, but its services are online only. Climate First Bank invests deposits in solar projects and electric and hybrid vehicle loans, but its fee-free ATM network is entirely Florida-based. “Even if you are not ready to use a sustainable bank for all of your banking needs,” writes Yen, “you can always start with one account.”

Keep reading, “How to find a socially-responsible bank,” by Anna Yen on ImpactAlpha.

Dealflow: Clean Energy Transition

Energy Impact Partners raises more than $1 billion for its second fund. The New York-based manager scored commitments from Microsoft’s Climate Innovation Fund, media conglomerate Cox Enterprises and utility companies Southern Company and Duke Energy. For its partners, EIP sources innovative technology, business models and best practices for decarbonization, as well as deals (for context, see “Microsoft backs Energy Impact Partners to speed the low-carbon transition”). EIP’s Hans Kobler told ImpactAlpha the firm added 14 new partners. “Having those investors at the table gives us more insight, the ability to bring in revenue and the first dollars for entrepreneurs, and have more impact on more industries.”

  • Investment strategy. EIP will continue to focus on later-stage cleantech companies that can help its partners increase efficiency and reduce their carbon footprint. “Our partners quite frankly are some of the biggest emitters of carbon,” Kobler said. “We’ve got to help them come down quickly, but also reliably and affordably.”
  • Portfolio companies. EIP has backed 75 companies to date, including community solar provider Arcadia, emergency response platform RapidSOS, real estate ESG startup Measurabl, climate infrastructure software developer Urbint, and clean energy companies Moxion Power and Zap Energy this year. EIP’s second fund has already invested in more than a dozen companies.
  • Onward.

Bioenergy Devco secures $100 million to build biogas digesters in the U.S. The Annapolis, Md.-based company uses anaerobic digestion to produce renewable natural gas and sustainable fertilizer while reducing methane and carbon. The process uses microbes in oxygen-less tanks to break down organic materials such as food and animal waste. Bioenergy operates 240 anaerobic digesters, mostly in Europe. The credit facility from L.A.-based Irradiant Partners will allow Bioenergy to build more digesters in the U.S. Bioenergy has built more than 20 anaerobic digesters in the U.S. since 2019 and has facilities under construction in Delaware and Maryland. “There are nearly 10,000 anaerobic digesters in Germany alone. Here in the U.S., we have a few hundred,” Bioenergy’s Shawn Kreloff told ImpactAlpha. Dive in.

Dealflow overflow. Other investment news crossing our desks:

  • Founders First Capital Partners, which provides revenue-based financing for U.S.-based small businesses, scores $11 million from W.K. Kellogg Foundation, Melinda Gates’ Pivotal Ventures, MacArthur Foundation’s Arc Chicago and other investors.
  • South African fintech MFS Africa takes in $100 million in equity and debt funding from Goodwell Investments, Lendable and Norsad Finance.
  • Renaissance, a global edtech venture that provides math and reading lessons for PreK-12 schools, secures equity financing from Blackstone, Francisco Partners and The Rise Fund.
  • Johnson & Johnson Impact Ventures backs NextStep, which offers tuition-free training for workers looking to become certified nursing assistants. J&J Impact Ventures sponsors ImpactAlpha’s Investing in Health beat.

Signals: Carbon Markets

A global carbon market stirs to life, with new rules at COP26. With so much on the line at the global climate summit just wrapped in Glasgow, you can forgive people for doing their dinger. Weary COP26 negotiators reached agreements to step up emissions reductions, “phase down” coal, and increase funding to emerging market economies. Another advance: new rules for global carbon markets (for context, see, “Price of carbon rises along with sea levels, as market mechanisms emerge”). The carbon trading accord could “unleash huge investments by countries and companies” for sustainable projects in emerging markets, declared the We Mean Business Coalition.

  • Article 6. The rules clarify carbon credit accounting under the Paris Agreement to eliminate double counting of emissions reductions by parties on both sides of a trade. Negotiators compromised on what to do with millions of carbon credits put into circulation under the less stringent 1992 Kyoto Treaty. Credits issued after 2013 can be transferred – a move that critics said would allow 300 million “zombie credits” to dilute climate goals.
  • Two tracks. Nations as well as companies can trade credits, which could be key to meeting their Nationally Determined Contributions to emissions reduction. A centralized market overseen by the U.N. will facilitate trading between disparate systems. Wealthy nations, typically on the buy side, fended off stricter rules for bilateral trades. A transaction fee that will channel 5% of proceeds into an adaptation fund for developing countries does not apply to the nation-to-nation trades. Neither does a requirement to cancel 2% of newly issued credits to ensure that absolute emissions decline.
  • More.

Agents of Impact: Follow the Talent

Mercy Corps Ventures is hiring a director of operations and strategy… 60 Decibels has openings for analysts and for a senior business development manager for supply chains… Nia Impact Capital is looking for a financial analyst in Oakland… Apollo Global Management seeks an impact measuring and monitoring associate in New York.

The Responsible Asset Allocator Initiative of New America and the Predistribution Initiative are hosting “Benchmarking for Success in Sustainable Returns,” Thursday, Dec. 2… Johnson & Johnson seeks entrepreneurs, innovators and community-based organizations for its newly launched Health Equity Innovation Challenge… The Global Innovation Lab for Climate Finance is accepting applications for its next cohort through Dec. 22.

Thank you for your impact.

–Nov 15, 2021