The Brief | June 26, 2023

The Brief: Inflection point for global finance, low-carbon building materials in Africa, upcycling seaweed, new sustainability disclosure standards

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Greetings, Agents of Impact! 

Featured: Innovative Finance

New global financial pact advances innovative financial solutions and commitments to system change. The World Bank agreed to pause debt repayments for nations hit by natural disasters. A $2.7 billion Just Energy Transition partnership will help Senegal grow renewables to 40% of its energy mix by 2030. And a global shipping tax to fund climate-resilience grants to low- and middle-income countries gained support. Yet the biggest achievement of last week’s Summit for a New Global Financing Pact in Paris may have been a zeitgeist shift in efforts to make global finance more fair and responsive to vulnerable countries burdened by debt loads, the pandemic and natural disasters. The summit, co-hosted by France’s Emmanuel Macron and Barbados’s Mia Mottley, elevated fragmented discussions into a conversation about “systems change and reform of the entire global financial architecture,” Lily Han of The Rockefeller Foundation told ImpactAlpha from Paris. “There’s no looking back.”

  • Power shift. The gathering, which took place outside of official global channels, gave voice to the rising anger and calls for change from nations that have contributed little to climate change but are most affected by it. The change in tone signals “a change in bargaining power,” Katherine Stodulka of climate advisory firm Systemiq told ImpactAlpha. “There can be no real change unless we fundamentally shift decision-making power and agency from North to South.”
  • Catalytic capital. A theme of the summit was how to squeeze more from existing development funds by unlocking more private capital. Each dollar of climate finance from multilateral development banks mobilizes just 30 cents in private financing. Summit organizers called for development-bank lending to be matched one-for-one with private finance to generate an additional $100 billion in funding. A $1 billion grant facility for green guarantees could mobilize $30 billion in private finance, according to the Blended Finance Taskforce. Norway is exploring how to use its windfall oil and gas profits to catalyze more private investment in climate mitigation in the Global South.
  • Keep reading, “New global financial pact advances innovative financial solutions and commitments to system change,” by Amy Cortese and Jessica Pothering on ImpactAlpha

Dealflow: Sustainable Materials

Kubik scores $3.3 million to turn plastic waste into low-carbon building materials. Buildings account for 40% of global carbon emissions. Nairobi-based Kubik is converting hard-to-recycle plastic waste into bricks, beams and jambs as a replacement for cement and steel building materials. Kubik’s Kidus Asfaw says the company’s products are low-cost and 5x less polluting than cement.

  • Growth financing. Kubik’s seed round saw participation from investors including Bestseller Foundation, GIIG Africa Fund, Savannah Fund, African Renaissance Partners, Satgana and angel investors. Kubik combines “positive social impact, circular economy, and low-carbon construction,” said Romain Diaz of climate tech investor Satgana.
  • Gender smart. Women make up the majority of Africa’s informal waste collectors, often working long hours in unsanitary conditions and earning less than $2 per day. “We want to help them become financially independent by empowering them through Kubik’s women-first agenda,” said Kubik’s Ndeye Penda Marre.
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Dealflow overflow. Other news crossing our desks:

  • Funds managed by Blackstone Infrastructure Partners made a roughly $1 billion equity follow-on investment in clean energy storage developer Invenergy Renewables. Blackstone previously invested nearly $3 billion in the company. (Invenergy)
  • Germany’s Focused Energy raised $82 million in Series A funding to commercialize nuclear fusion with an approach based on the “net energy” breakthrough achieved last year at the Lawrence Livermore National Laboratory. (Focused Energy)
  • UK-based Supercritical raised $13 million in round led by Lightspeed Ventures for its marketplace where corporations can purchase carbon removal credits and work toward net-zero goals. (Supercritical)
  • Minneapolis-based DUOS raised $10 million from Primetime Partners, SJF Ventures and a fund managed by Castellan Group to help adults age at home by connecting them with health plan benefits. (DUOS)
  • Puerto Rico’s Carbonwave snagged $6 million from Pegasus Capital Advisors and the Global Fund for Coral Reefs to make new materials and agri-inputs from sargassum, the brown seaweed that has overwhelmed Floridian and Caribbean beaches this year. (Carbonwave)

Six Short Signals: What We’re Reading

🇯🇵 Japan’s impact investing market. Japan’s impact assets under management totals 5.8 trillion yen, or $40.7 billion, representing a more than 4x increase over last year. Existing impact investors increased their commitments and new firms entered the market. (Global Steering Group for Impact Investment)

🇨🇴 Impact portfolios of Latin American families. Fifty-two of 65 high-net-worth families in Latin America surveyed have impact investments in their portfolios, though the investments ($1.2 billion in total) represent a small portion of their total assets. Nearly half of families struggle to identify adequate impact investment opportunities. (The ImPact)

Drivers of impact alpha. Harvard researchers dived deep into exits from Impact Capital Managers’ members to identify drivers of realized value at exit. Top of the list: being an impact-driven capital provider expands the opportunity set for investment and creates strong alignment with management early on. (Harvard Law)

🗺️ Blueprint for inclusive wealth. The Aspen Institute lays out a plan to increase by 10x the wealth of households of color and the bottom half of the wealth-holders in the US by 2050. On the agenda: seeding investment accounts at birth, increasing payment assistance for first time homebuyers, and scaling shared ownership strategies in business and real estate. (Aspen Institute)

🏛️ Stakeholder capitalism for conservatives. A national development bank, workers’ right to organize, and guaranteed demand for domestic production are among policy prescriptions in “Rebuilding American capitalism: A handbook for conservative policymakers.” (American Compass)

🍗 ‘No kill’ meat approved for sale. Upside Food and Good Meat received the go-ahead from the US Department of Agriculture to sell lab-grown chicken. (NPR)

Agents of Impact: Follow the Talent

Doug Miller, ex- of Zero Labs, joins Energy Peace Partners as director of market development… Eric Rice will step down as BlackRock’s head of impact investing later this summer… Sophie Purdom, the co-founder of Climate Tech VC, launches Planeteer Capital to invest in early-stage climate tech founders… Common Future seeks an impact investment managing director in Oakland. 

Microsoft is looking for an Atlanta-based senior manager for public policy in its office of responsible AI… 60 Decibels is recruiting a head for its Nairobi office… Symbiotics has an opening for an investment associate in Cape Town… Bestseller Foundation is on the hunt for an investment director and an investment associateAccion is hiring a program management and operations assistant in Bogota. 

Regenerative Capital Group, through a CEO-in-residence program, is looking to invest in up to six Canada-based entrepreneurs to launch new social enterprises… The International Sustainability Standards Board is releasing its harmonized corporate disclosure standards for sustainability and climate-related risks and opportunities at a conference in London today. 

Thank you for your impact.

– June 26, 2023