The Brief | May 10, 2021

The Brief: Governance risk in Saudi Arabia, carbon removal, electric freight transit, first time funds in Egypt, ESG in Nigeria, sustainable packaging

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Greetings, Agents of Impact! Tune in this week to these ImpactAlpha partner events:

  • Tuesday, May 11. GenderSmart and VC Include are hosting the final “Capital Connect” to highlight regional gender-smart private capital vehicles, including one in the Middle East. Use code ImpactAlpha2021 for a 33% discount. Register now.
  • Wednesday, May 12. Impact Capital Forum and Outcome are hosting “Income Share Agreements: Can a New Education Finance Vehicle Promote Racial and Social Equity?” with a keynote from Indiana Senator Todd Young. Use code OUTMAY12 for a complimentary ticket. Register now.

Featured: Institutional Impact

How do you solve a problem like MBS? Saudi Arabia presents a governance risk impact investors can’t ignore. “For investors who assess countries, along with companies for environmental, social and governance, or ESG, factors, Saudi Arabia has long gotten a red flag for ‘G,’” writes Imogen Rose-Smith in her latest Institutional Impact column on ImpactAlpha. In 2017, Mohammed bin Salman Al Saud, widely known as MBS, swooped in as a modernizing influence with a promise of economic transformation and social change. Then, Saudi dissident and Washington Post columnist Jamal Khashoggi walked into Saudi Arabia’s consulate in Istanbul to secure paperwork he needed to marry his fiancee. She never saw him again. This February, the U.S. Office for the Director of National Intelligence declassified its report on the 2018 assassination, which found that MBS’s “absolute control” of security and intelligence make it “highly unlikely” Saudi officials would have tortured and killed Khashoggi without the authorization of the crown prince.

Despite the evidence, Saudi Arabia has remained a magnet for some ESG and impact investors. Honored guests at this January’s Future Investment Initiative, backed by Saudi Arabia’s Public Investment Fund and live-streamed from Riyadh under the theme “The Neo-Renaissance,” included BlackRock’s Larry Fink, SoftBank Group’s Masayoshi Son, Goldman Sachs’ David Solomon and Bridgewater Associates’ Ray Dalio. On the final panel was hedge fund manager Jeffrey Ubben, who has claimed to be redeeming himself with his new impact investment firm, Inclusive Capital Partners (see, “Agent of Impact: Jeffrey Ubben”). “Companies have lost [a sense of] place,” Ubben told the group. “I’m finding and I’m believing that purpose and place can be rediscovered and reestablished by these companies.” The Public Investment Fund has grown from $150 billion in assets in 2015 to about $400 billion today; MBS says the fund is on target to top $1 trillion by 2025. “The courtship of Saudi money is not likely to end well,” writes Rose-Smith. “Impact investors can’t say they weren’t warned.”

Keep reading, “How do you solve a problem like MBS? Saudi Arabia presents a governance risk impact investors can’t ignore,” by Imogen Rose-Smith on ImpactAlpha.

Dealflow: Follow the Money

Mitsubishi and South Pole partner to finance carbon-removal tech. Carbon removal technology that captures CO2 from the air, coupled with permanent storage, will be key to decarbonization efforts, according to South Pole. The Swiss climate project developer aims to procure at least $800 million worth of carbon removal credits by 2030 in a facility backed by Mitsubishi Corp. With current carbon removal technology costs ranging from $50 to over $400 a ton, the Next Generation Carbon Removal Purchase Facility “will provide a secure revenue stream for new carbon removal technologies to accelerate their development,” said South Pole’s Patrick Burgi, adding that the facility will “help drive down the price per ton of CO2 removed over time.”

Einride secures $110 million to expand electric freight transit in the U.S. and Europe. The Swedish company integrates electric and autonomous vehicles to move commercial products. The Einride Pod is a fully-electric driverless freight vehicle that the company says holds the global speed record for electric and autonomous freight (see, “Sweden’s Einride raises $10 million to green freight transit”). Einride will use the Series B financing to scale deployment with Coca-Cola, plant-based dairy company Oatly, European grocery chain Lidl, home appliance manufacturer Electrolux and other partners.

  • Clean tech capital. New investors in the round include Soros Fund Management, Temasek, Northzone, Maersk Growth and Build Capital. Existing investors include EQT Ventures, Plum Alley Investments, Ericsson, NordicNinja VC and Norrsken VC.
  • Check it out.

Dealflow overflow. Other investment news crossing our desks:

  • European Investment Bank invests €25 million ($30.4 million) in the State Bank of India’s NEEVII fund to support climate solutions from small and mid-sized businesses.
  • GIZ Egypt, Germany’s economic development group in Egypt, is launching a €100 million ($121 million) funding program for first-time fund managers helping to close the early capital gap for Egypt’s entrepreneurs.
  • The U.K.’s CDC Group helps Nigeria’s Uhuru Investment Partners reach a $113 million close for a growth-stage fund that integrates environmental, social and governance practices.
  • Oakland-based Renewal Mill clinches $250,000 from community finance development institution ICA to recycle food waste into new products.

Signals: Ahead of the Curve

Campbell promotes “circularity” yet continues to supply single-use packaging. Food packaging creates 680 million tons of global greenhouse gas emissions. Pressured by consumers and regulators, fast-moving consumer goods firms are changing their packaging strategy. Camden, N.J.-based Campbell Soup Company has set goals for “sustainable packaging to promote circularity” through supply, disposal and recycling processes. An analysis by Swiss impact ratings firm Impaakt, however, found Campbell used more than 400,000 tons of packaging in 2020, including nearly 40,000 tons of non-recyclable packaging.

  • Potential cost savings. One-fifth of plastic packaging could be replaced by reusable systems, generating $700 million annual material cost saving for the industry. Campbell used post-consumer recycled content in only about one-third of its glass, 38% of its corrugated packaging and 70% of its aluminum packaging. It still uses no post-consumer recycled content in plastic. “Campbell continues to supply single-use packaging, albeit of better quality, adding to global greenhouse gas emissions as a result,” writes Impaakt contributor Shanthi de Costa.
  • Impact ratings. Impaakt is a crowd-sourced platform that relies on a network of contributors to produce impact analyses and scores. The Impaakt team selects the best analysis from more than 500 submissions each week. ICYMI: “Despite climate pledges, Goldman Sachs continues fracking finance.”
  • Keep reading, “Campbell “promotes circularity” yet continues to supply single-use packaging,” by Shanthi de Costa on ImpactAlpha.

Agents of Impact: Follow the Talent

Greg Jones, ex- of CVC Capital Partners, joins LeapFrog Investments as head of investor relations. Alice Maltby, ex- of Apax Partners, joins LeapFrog as an investor relations officer… Amma Sefa-Dedeh of Stanbic Investment Management Services is named CEO of Impact Investing Ghana, the GSG’s Ghanian National Advisory Board… Teree Henderson, ex- of Partnership for Public Service, joins SoLa Impact as director of social impact (see, “Agent of Impact: Martin Muoto”)Judy McElroy of Fractal Energy Storage Consultants joins the board of directors at Community Energy.

ReFED is hiring a vice president of data and insight products, a research analyst and climate fellowImpact Engine is looking for a director of finance and operations and a senior associate of health equity in Chicago… Climate Leadership Initiative is recruiting a director of operations in San Francisco… SOCAPOpen is accepting submissions for session ideas for SOCAP21 in October.

Thank you for your impact.

– May 10, 2021