The Brief | January 3, 2024

The Brief: G for governance in 2024

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In today’s Brief:

  • G for governance in 2024
  • Renewable energy in Africa
  • Biofuels infrastructure 
  • Conservatives and climate action

Featured: Looking Ahead

In 2024, G for ‘governance’ is the key to environmental and social impact. This year, consumers, communities, employees and regulators will be asking organizations to assess whether and how they are confronting environmental and social threats, Mondiale Impact’s Laurie Spengler and Rosemary Addis write in a guest post on ImpactAlpha. Mondiale works with boards and other leaders “to accelerate the governance response” on climate, sustainability and social equity. “We’ve observed mounting disappointment and frustration with the pace and scope of efforts taken by financial and business actors to deploy resources aimed at addressing climate and inclusion challenges,” the authors write.

  • ESG is not impact. The shift from measurement to management of social and environmental impacts “moves us away from a backward-looking compliance and reporting approach,” say Spengler and Addis. “To keep momentum moving in the direction of meaningful impact, organizations should continue to interrogate what we mean by impact, which impacts matter most, and how this informs decision making.” In climate actions, an impact-oriented approach that anticipates the broader socio-economic implications of each potential pathway “will be more effective than uni-dimensional responses that only focus on cutting carbon and methane.”
  • Board imperatives. Three questions every board should be asking: Where are we in our transition – and are our goals ambitious enough? How can we ask different questions to move beyond compliance and deliver net positive impacts across the strategic agenda? And are we enabling and encouraging people throughout the organization to put energy, resources and priority on strategic opportunities for impact? “Leaders will continue to be asked to account for both how their organization has avoided doing harm and where their organization is having a positive impact,” the authors say.
  • At stake in 2024. ImpactAlpha’s look-aheads for the new year spotlight opportunities to play climate offense to scale up and phase out, expand ownership to build wealth and bridge divides, apply a climate lens to investing in emerging markets and find alpha in impact in public and private markets.
  • Keep reading,In 2024, G for governance is the key to environmental and social impact,” by Mondiale Impact’s Laurie Spengler and Rosemary Addis. 

Dealflow: The Transition

AXIAN Energy secures $30 million from EAIF for renewable energy in Africa. The former oil gas distributor will acquire and develop utility-scale solar projects in Senegal, Madagascar, Mozambique, Tanzania, Rwanda and other countries. The loan from the Emerging Africa Infrastructure Fund will “propel our transition to renewable energy,” said AXIAN’s Benjamin Memmi, and support AXIAN’s goal of developing more than 460 megawatts of renewable generation capacity in Africa over the next decade. With higher interest rates and construction costs, “developers in emerging markets need more than ever the support of financiers to think outside the box in order to address the many obstacles faced,” said Tidiane Doucoure of EAIF.

  • Green infrastructure. EAIF is a $1 billion infrastructure financier under the Private Infrastructure Development Group that is funded by European countries and the World Bank to provide debt for infrastructure projects in Africa and Asia lacking strong private investment flows. For example, EAIF committed the bulk of Zambia’s $53.5 million green bond to finance up to 200 megawatts of solar and other renewable energy projects. The firm said it was able to scale back its $50 million commitment to $20 million when the bond attracted local private investors, including South African bank ABSA.
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Ara Partners takes a majority stake in USD Clean Fuels to expand green fuel infrastructure. Houston-based USD Clean Fuels develops and manages terminals to transfer renewable diesel, ethanol, sustainable aviation fuel and other green fuels between trucks and trains. Renewable natural gas and other fossil fuel alternatives are part of the climate plans of California and other states, but they carry their own climate risks, including methane leaks. As part of Ara’s purchase, USD Clean Fuels acquired the West Colton Rail Terminal, a biofuels terminal in California.

  • Climate alpha. Texas-based Ara raised $1.1 billion in 2021 its second industrial decarbonization fund. “We have high conviction that the green molecules economy – whether it’s renewable fuel feedstocks or biofuels – offer disproportionate opportunity for returns and impact,” said Ara’s George Yong.
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Dealflow overflow. Investment news crossing our desks:

  • Egypt’s e-commerce company MaxAB is merging with Kenya’s Wasoko, which offers online inventory, logistics and financing for informal retailers. (Wamda)
  • Ava DuVernay, a Black filmmaker, raised $38 million for her new film Origin, based on Isabel Wilkerson’s book, Caste. Funders included the Ford Foundation and nonprofits backed by Melinda French Gates, Laurene Powell Jobs and other philanthropists. (Forbes)
  • Indian electric vehicle fintech venture RevFin snagged $14 million in Series B financing, led by Omidyar Network India, which is closing up shop. (YourStory)
  • Boston-based Heranova scored $13.5 million in seed financing to address women’s health issues. The company is launching tests and therapies for endometriosis and bacterial vaginosis. (Heranova)

Impact Voices: Conservatives and Climate Change

The opportunity to engage conservatives on climate. Taxing carbon can drive emissions reductions. Technology is fundamental to the energy transition. We can, in fact, solve climate change. The “GOP Outreach Campaign” led by Oxford University’s Bob Eccles suggests such beliefs may run deeper among conservatives than liberals – at least the minority of them who see climate change as an urgent threat. “While conservatives focused on climate change regard it as serious of a problem as liberals do, they are more optimistic that we will be able to address it,” writes Eccles, a professor at Saïd Business School. “Liberals load heavy on doomsday. Conservatives load heavy on opportunity.” Disagreements over the role of fossil fuels and near-complete Republican opposition to US climate policies such as the Inflation Reduction Act notwithstanding, Eccles argues for bipartisan engagement, particularly in a US election year. Eccles’s piece has struck a chord with liberals as well as conservatives, based on the number of people he has heard from since the Dec. 31 post, he tells ImpactAlpha. “Most of the Republicans are working behind the scenes.” The left, he says, “should eat a little humble pie and initiate engagement.” Some surprising opportunities:

  • Conservatives and climate. The Conservative Climate Caucus in the US House of Representatives has 81 members including 11 from Texas and six from Florida. The mission of center-right think tank ClearPath is “to develop and advance policies that accelerate innovations to reduce and remove global energy emissions.” The R Street Institute’s Energy and Environment team, “seeks a cleaner environment through a combination of a thriving economy, well-founded science, and principles of market competition and limited government.” 
  • Tech vs. finance. Liberals generally see policy change along with finance as the keys to the energy transition. “Conservatives see technology as fundamentally essential to the energy transition,” says Eccles, including carbon capture, energy from nuclear, hydrogen, fusion and other moonshot technologies like cloud seeding and ocean iron fertilization.
  • Areas of agreement. Reducing methane emissions, a carbon tax, and good public policies are among the issues in which there is substantial agreement, “albeit with different views on what ‘good’ is,” notes Eccles. The House Climate Solutions Caucus contains 32 Republicans and 32 Democrats. US Congressional delegations to COP were “deliberately bipartisan,” Alex Flint of the Alliance for Market Solutions told Eccles. Flint told ImpactAlpha last fall, “We are having a climate conversation that is inadequate given the consequences that we are certain to face.”

Agents of Impact: Follow the Talent

Echoing Green is recruiting a vice president of finance and operations in New York… S2G Ventures seeks an attorney to work on its investments legal team in Chicago… The Bernard van Leer Foundation is recruiting a program coordinator of mission-related investments in The Hague… Luminate is hiring a narrative change analyst… Align Impact seeks an investment analyst intern… Impact Community Capital is looking for a managing director of investor relations and capital markets… Blue Forest is hiring a senior communications manager in Sacramento, Calif.

👉 View (or post) impact investing jobs on ImpactAlpha’s new Career Hub.

Thank you for your impact!

– Jan. 3, 2023