Greetings, Agents of Impact!
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In today’s Brief:
- Climate + affordable housing
- Community crisis management
- Corporate AI transparency
Featured: Climate Finance
‘Green bank’ partnerships center affordable housing in climate action. The path to greenhouse gas reductions leads through housing, which is responsible for at least 20% of US emissions. “Green features make housing developments more sustainable, healthier, cost-efficient and affordable for residents,” writes Robin Hughes of the Housing Partnership Network, a network of more than 100 housing and community development organizations. Even before any awards have been made, the $27 billion Greenhouse Gas Reduction Fund, aka the “green bank” that is part of the Inflation Reduction Act, has “energized dynamic new alliances, with new investment funds and financing tools coming online as well,” Hughes says in a guest post on ImpactAlpha (see, “Managers vie for the mandate to stand up a national ‘green bank’”). “We are seeing the beginning of a transformational shift in the way we build, operate and finance housing in this country, with an explicit focus on investing in people and communities that are and will be most adversely impacted by climate change.”
- Coalition-building. The Justice Climate Fund, founded by the Community Builders of Color Coalition, is applying for $12 billion under the National Clean Investment Fund, the largest facility in the Greenhouse Gas Reduction Fund. It’s also applying for $4.4 billion from the Clean Communities Investment Accelerator facility for low-income lenders. The Housing Partnership Network joined the coalition in October, drawn to Justice Climate Fund’s commitment “to ensuring that resources not only flow to disadvantaged communities, but that those communities are at the table in designing and delivering solutions,” Hughes writes. Other green bank coalitions centering green affordable housing include Climate United, which brings together Calvert Impact, Community Preservation Corp. and Self-Help, and Power Forward Communities, a coalition of Rewiring America, Enterprise Community Partners, Local Initiatives Support Corp., United Way and Habitat for Humanity International. The US Environmental Protection Agency expects to announce its Greenhouse Gas Reduction Fund selections in March.
- Blended finance. Housing Partnership Networks’ Housing Sustainability Fund connects community development financial institutions, or CDFIs, with public, private and philanthropic dollars to support green affordable housing from acquisition and pre-development financing to bridge and term loans. The green bank collaborations “demonstrate a commitment across the field of community development to lead and drive green financing for the housing sector, regardless of the outcomes of the Greenhouse Gas Reduction Fund competition,” Hughes says.
- New narrative. Green bank financing is an opportunity to flip assumptions about investing in “disadvantaged” communities, Hughes argues. “Too many conventional investors look at affordable housing as a high-risk sector (it’s not). They might think of green features as expensive bells and whistles that can be cut to manage development costs (they aren’t). And they may view high-poverty communities as incompatible with sound investment practices (no again),” she writes. “Investments in low-income communities – especially when done with partners who understand this work – have a decades-long track record of delivering on financial and impact objectives, benefiting both residents and investors.”
- Keep reading, “‘Green bank’ partnerships center affordable housing in climate action,” by Robin Hughes of Housing Partnership Network on ImpactAlpha.
Dealflow: Mergers and Acquisitions
Bridges Fund Management sells stake in UK energy retrofitter AgilityEco. The London-based impact investor acquired a “significant minority stake” in AgilityEco in 2019 to accelerate residential adoption of heat pumps and smart home-energy meters and reduce energy costs for low-income households in the UK. AgilityEco says it delivered such services to nearly 37,000 households between April 2022 and March 2023, saving each household £2,625 (about $3,300) in lifetime energy costs. Bridges is selling its stake in the company to infrastructure services firm M Group Services. Bridges said its investment will generate a 3.4x return and 40% internal rate of return.
- Finding alpha. Bridges’ investment in AgilityEco was made through Bridges’ “Evergreen” fund, backed by Big Society Capital. Bridges says it helped AgilityEco reach B Corp status and implement an employee benefit trust, through which roughly two-thirds of AgilityEco’s employees acquired shares in the company. “AgilityEco has been a blueprint for Evergreen’s strategy of providing patient capital to support growing, highly impactful businesses to scale their outcomes and deliver attractive commercial returns,” said Bridges’ Tom Biddle.
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Armillaria acquires NeedsList to improve community crisis management. Armillaria, a Portland, Ore.-based design lab that works with community organizations, is acquiring North Carolina-based NeedsList, a crowdsourcing platform for humanitarian organizations in need of money, goods or volunteer hours. The acquisition will “fast-track Armillaria’s development of innovative tools and solutions to better address the growing climate, conflict and other complex challenges facing communities worldwide,” said NeedsList’s Amanda Levinson. Armillaria has worked with Zebras United to create a co-operative and non-profit structure, and is working with a network of fishing communities in Mexico to mobilize capital for marine conservation. Check it out.
Dealflow overflow. Investment news crossing our desks:
- Swap Energy, which manages a battery swapping network for electric two-wheeler vehicles in Indonesia, clinched $22 million in Series A financing. (Tech in Asia)
- A $20 million investment will help Kazakhstan’s Solva transition from a microfinance fintech venture to a licensed SME-focused bank. (Fintech Futures)
- The Tipping Point Fund on Impact Investing awarded $1.2 million in grants to five organizations, including Impact Frontiers and OpenEarth Foundation, for projects aiming to advance data, metrics and measurement in ESG and impact investing. (TPF)
Short Signals: What We’re Reading
Channeling AI for good. There may be a sense of inevitability about the path of digital technology, including artificial intelligence. But society “can steer, shape and govern digital technology in service of a democratic society,” writes Omidyar Network’s Mike Kubzansky, who suggests five questions to drive tech advances toward a positive vision of society. (SSIR)
Corporate AI transparency. Apple and Disney shareholders will vote on an AFL-CIO proposal that asks the companies to report on the impact of their use of AI on workers and society. The SEC rejected bids from the entertainment companies to exclude the AI transparency report. The largest US labor union has similar proposals pending at Comcast, Netflix and Warner Bros. (Reuters)
Exiting to the community. For most startups, exits occur through acquisition or public offering. E2C Collective has created a library of case studies on the diverse ways companies are cutting communities in on their exits. Chinese electric car company Nio sets aside stock for car-buyers. Defector Media created a co-op for employees who quit their previous jobs in protest. (Hackernoon)
Employer practices that boost economic mobility. Stable schedules. Training programs for low-wage employees. Pay raises that don’t exclude disadvantaged workers. MIT researchers reviewed 360 academic articles to identify workplace policies with a positive impact on the economic mobility of disadvantaged workers. (MIT Sloan School of Management)
Oil company earnings in a regulated world. Exxon told shareholders it will take a $2.5 billion write down on its California energy assets, citing the “state regulatory environment.” Also hit by aggressive regulation of polluting fossil fuels, Chevron expects to write down as much as $4 billion on its Golden State assets. (Bloomberg)
Agents of Impact: Follow the Talent
👋 The Call: Compensating impact fund managers for… impact. A growing number of impact fund managers are linking their carry to impact outcomes and awarding bonuses and promotions based on impact performance. Practitioners say such impact-linked compensation can deepen impact, improve accountability and differentiate funds – but it’s complicated. To explore the hows and whys (and why-nots) of “impact carry” and other incentives, join Aunnie Patton Power of The Impact, Bjoern Struewer of Roots of Impact and other Agents of Impact, Wednesday, Jan. 17 at 10am PT / 1pm ET / 6pm London. RSVP today.
Erika Karp his departing Pathstone to join the Aspen Institute as executive director of its Finance Leaders Fellowship program… US SIF hires Jun Han, former consultant at the World Bank, as research senior manager… Quantified Ventures promotes Alana Podolsky to associate director… Milken Institute promotes Troy Duffie to financial markets director… Prime Coalition seeks a partnerships coordinator in Boston… HCA Healthcare is recruiting a sustainability analyst in Nashville.
Invest.Green has an opening for a VP of investor and capital acquisition in Portland, Ore… The Earthshot Prize is on the hunt for a chief financial officer in London… Renee Ferrufino of the Women’s Foundation of Colorado, Tahoe Truckee Community Foundation’s Stacy Caldwell, and Seth Baker of the Van Wert County Foundation will share community foundations’ perspectives on the impact investing landscape in a webinar hosted by the Impact Finance Center, Tuesday, Jan. 9.
Thank you for your impact!
– Jan. 8, 2024