Greetings Agents of Impact!
In today’s Brief:
- Meeting demand for impact accounting standards
- Carbon project financing in South Africa
- Curvepoint’s structured financing for climate companies
Featured: Impact Management
Impact accounting standards advance as investors demand interoperability. Accounting for social and environmental impacts the same way we account for profits, losses and asset values has been a longtime goal for advocates of informed and holistic decision making. “The vision and opportunity to create a more just and sustainable world, while supporting the role of business and markets as a key driver of it, lies at the heart of impact accounting,” says Daniel Osusky of the International Foundation for Valuing Impacts, which spun out of the Impact-Weighted Accounts initiative at Harvard Business School in 2022. Over the past decade, a loosely connected network of companies, investors, consultants, academics and nonprofits has “fostered interoperability of sustainability disclosures,” Osusky writes in a guest post on ImpactAlpha.
- Investor demand. Two-thirds of global investors surveyed recently by PwC want sustainability reporting to focus on impacts, and two-thirds of those investors prefer that information in the form of a monetary value. Private equity investors like Summa Equity and Astanor Ventures have used impact accounting to assess and compare the impacts of their portfolio companies. “We see impact accounting as a foundational tool for advancing a more stakeholder-centered economy,” wrote Summa about its adoption of impact accounting. “Year-over-year analysis can enable GPs to understand how the impact of their portfolios has changed over time or highlight strategic opportunities to increase impact.” Benchmarks, when available, can show how GPs’ portfolio companies compare against their peers.
- Impact metrics. The International Foundation for Valuing Impacts, with the Value Balancing Alliance, published an impact accounting framework earlier this year and is developing methodologies for greenhouse gas emissions, wages, water consumption, occupational health and safety, and other areas. For example, IFVI’s science-based estimate of the social cost of carbon – $236 per ton – enables companies to test impact scenarios and compare actual impact created and destroyed to financial costs (by that calculation, the social cost of ExxonMobil’s 122 million tons of CO2-equivalent released into the atmosphere in 2023 would be more than $28 billion – not including indirect “Scope 3” emissions). The Fresno County Economic Development Corp. is using the accounting methods to compare regional business performance across healthcare and hiring practices and is exploring tax incentives for companies based on their performance on those measures.
- Keep reading, “A decade in the making, impact accounting standards advance amid investor demand,” by Daniel Osusky of IFVI on ImpactAlpha.
Dealflow: Carbon Markets
Mirova, Temasek and Rubicon Carbon seek carbon credits from South African restoration project. Three institutional heavyweights are funding an initiative of Singapore-based Imperative to restore 250,000 acres of degraded land in South Africa’s Eastern and Western Cape provinces. The project will support the planting of spekboom, an indigenous succulent that can restore soil and sequester carbon. Imperative estimates the project’s sequestration capacity at 30 million tons of CO2-equivalent. The restoration project will also create local jobs in one of South Africa’s poorest and most remote areas. Imperative is verifying credits generated from the project under Vera’s VM0047 methodology.
- Carbon confidence. Voluntary carbon markets have gotten a bad rap from projects that lacked transparency and failed to deliver promised results. But the markets generate crucial funding for restoration projects that restore ecosystems and improve resilience. The US government this week released new rules for the voluntary markets aimed at boosting confidence and improving project standards. “Voluntary carbon markets can help unlock the power of private markets to reduce emissions, but that can only happen if we address significant existing challenges,” said Treasury Secretary Janet Yellen. She called on buyers to “prioritize reducing their own emissions” before turning to offsets.
- Project financing. Institutions and corporate alliances like Microsoft and the Frontier network have supported high-quality projects to offset emissions in their supply chains and help build the market. TPG-backed Rubicon Carbon teamed up with Microsoft and Carbon Streaming earlier this month to replant a tropical forest in Panama. Temasek is backing Imperative’s South Africa project through its GenZERO initiative. The project was the first investment of a partnership fund between Imperative and CrossBoundary’s Fund for Nature to usher early stage financing to nature-based carbon projects in emerging markets.
- Dig in.
ResponsAbility invests in India’s FarMart to streamline food supply chains. Gurgaon-based FarMart is working to improve the efficiency and cut waste from India’s food supply chains through a network of 3,500 local logistics providers and 3,000 mom and pop agri-retailers. The company claims its logistics orchestration reduces greenhouse gas emissions from food transit by 33% and has avoided more than 30,000 tons of food loss. Its service also provides income stability and new income streams for both farmers and retailers (listen to ImpactAlpha’s podcast with FarMart’s Samridhi Singh). FarMart inked $2.8 million from Switzerland-based responsAbility, which invested via its climate-smart agriculture fund. The capital will help FarMart “quantify carbon footprint reduction and provide capacity-building for farmers to promote sustainable agricultural practices,” a responsAbility spokesman told ImpactAlpha.
- Retail digitalization. More than two million small agri-retailers provide seeds, fertilizers and other critical farm supplies to India’s 150 million smallholder farmers. FarMart’s mobile app gives these retailers a digital upgrade; the company also supports them in serving as produce aggregation points for farmers, improving farmers’ market access and giving retailers an additional revenue stream.
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Dealflow overflow. Investment news crossing our desks:
- Green infrastructure investor Homecoming Capital backed US-based offshore wind developer Clean Energy Terminals with $50 million. (Homecoming Capital)
- Mexico’s Welbe Care raised $7 million to help small businesses provide healthcare access to employees who otherwise struggle to obtain basic care services. (Startups Latam)
- Czech startup Delta Green notched €2.2 million ($2.4 million) to link households using and generating power from solar panels, batteries, heat pumps and EVs into the electricity grid. (Tech.EU)
Signals: Climate Finance
Flexible financing to bridge a ‘missing middle’ for commercial climate solutions. There’s more than one chasm to cross when taking climate solutions to scale. Some investors are tackling the challenge of first-of-a-kind, or FOAK, projects for later-stage climate tech ventures building their first commercial plants. Other gaps exist in pre-development costs for infrastructure projects and project financing. But the “middle” that is missing from climate finance is even broader, says Brian Wayne of Curvepoint Capital, which this week announced its spinout from Aegon Asset Management, an arm of the Dutch insurance giant. With an anchor commitment from Transamerica, Curvepoint aims to provide structured capital for growth-stage climate tech companies. “There are companies that are doing things in manufacturing, that are enabling technologies for helping mitigate climate, that provide more operational efficiency to different businesses,” Wayne told ImpactAlpha. “Those don’t need project finance. That’s just a scaleup business itself, at the enterprise level.”
- Spinning out. The Curvepoint team built the Aegon Climate Capital strategy inside the $337 billion asset manager, also on behalf of Transamerica, an Aegon company. Over four years, the team did nine deals, deploying about $100 million. The team is relying on that track record as it sets out to raise as much as $250 million. James Rich, another Curvepoint founder, said in a statement that the spinout “marks a pivotal evolution in our journey to reshape climate finance.” Wayne said the opportunity has dramatically expanded with incentives under the US Inflation Reduction Act, demand from corporations that have set sustainability goals, and falling cost curves for core technologies. “There’s this snowballing effect that is taking place,” Wayne says. “That means that more companies that are at that growth trajectory need that kind of capital and are now investable.”
- Read on.
Agents of Impact: Follow the Talent
Lafayette Square launches the Lafayette Square Institute, which will be led by Antony Bugg-Levine as president… New Energy Nexus names Henri van Eeghen, a veteran of Cordaid, Mercy Corps and the Synergos Institute, to succeed CEO Danny Kennedy in August… Liz Landon, a former chief people officer at Fishawack Health, becomes chief people officer at Tides… Vanguard taps Salim Ramji, a former BlackRock executive, as CEO… Croatan Institute welcomes Lisa Wolf, the former CEO of US SIF, as a board member.
Karthik Venkataraman, previously with Bain & Company, joins Accion as chief operating officer… ImpactA Global appoints Clodagh Bourke, previously with Aptimus Capital Partners, as head of fundraising, and Lindsey Bass, formerly with Legal & General Investment Management, as head of marketing and strategic partnerships… Jorge Cruz returns to LISC as executive director of LISC Greater Newark…
Secha Capital hires Nina Verder, previously with Verder Group, as principal and operator-investor… Julia Ricaurte joins Latimpacto as assistant director… BlueHub Capital is recruiting a vice president of climate lending in Boston… BlueOrchard Finance seeks a private equity investment director in Singapore… Conservation International is hiring a blue carbon director… Alterna Impact is looking for an impact officer in Guatemala.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– May 30, 2024
