Greetings Agents of Impact!
Join us today at SOCAP24 in San Francisco for the premiere of ImpactAlpha’s documentary: “Equity and ownership: Napoleon Wallace and the Reconstruction of Black wealth” (watch the trailer and read the backgrounder). And let’s catch up at our nearby happy hour and reception at 6pm PT today. – David Bank
In today’s Brief:
- Lessons from a sustainable agriculture bankruptcy
- Electrifying truck fleets
- Pay-as-you-go clean cookstoves
Featured: Institutional Impact
Failure of a California almond grower shows the unsustainability of some sustainable agriculture investments. Trinitas Partners had plans to transform the world with almonds. “The world had other ideas,” contributing editor Imogen Rose-Smith writes In her latest Institutional Impact column. The bankruptcy earlier this year of the California-based agricultural investment firm provides a cautionary tale for those seeking to capitalize on sustainable agriculture and other nature-based solutions. Burdened by approximately $188 million in debt, Trinitas’s farm management company, Trinitas Farming, and entities holding 7,856 acres of almond farms in California’s Central Valley filed for Chapter 11 bankruptcy in February, alongside Trinitas Advantaged Agriculture Partners IV, the investment vehicle supporting the project. Nature-based real assets, owing to their size, sustainability and return profile, are of particular interest to institutional asset owners. “But just because something is a natural investment does not always mean it is good for the environment,” Rose-Smith writes. “Or that it is a good investment.”
- Water rights. Trinitas’ founders did not have sustainability or agriculture backgrounds. Rather, they got their start in real estate. Their plan to transform a vast swath of California’s Central Valley into almond orchards, which relied on sweetheart water contracts, ultimately faltered under the weight of plunging almond prices, soaring interest rates, and escalating farming costs. Among the investors in Trinitas Advantaged Agriculture Partners IV is the Regents of the University of California, which made up 51% of the limited partnership. The firm’s bankruptcy underscores the risks that institutional investors face when writing large checks aimed at environmental impact, argues Rose-Smith. “It is unwise to have someone with a large amount of economic skin in the game be the one to dictate what a good natural capital deal is,” she says.
- Biodiversity summit. The scale of investment needed to preserve and protect the environment is massive. Annually, $7 trillion is invested in “activities that have a direct negative impact on nature from both public and private sector sources,” according to the UN Environment Programme. UNEP tallied only $200 billion that went towards nature-based solutions in 2022. This week, negotiators at the COP16 Biodiversity Summit in Cali, Colombia, are working to craft a plan to finance the Kunming-Montreal Biodiversity Framework, or GBF, which calls for halting and reversing biodiversity loss by 2030. The UN’s António Guterres warns that delegates “must leave Cali with significant investments in the GBF.” As COP16 enters its second week, new funding pledges have fallen far short of the billions needed.
- Robust monitoring. The funding gap suggests an opportunity for institutional-scale investments. But big projects like Trinitas are the ones “most likely to be beset by challenges and stakeholders with competing agendas,” Rose-Smith writes. Real progress requires investors to use robust monitoring mechanisms, including AI, to ensure that nature-based solutions genuinely benefit the planet while delivering viable returns. The challenge of finding deals that create real positive environmental impact with the scale and return profile that institutional investors seek may encourage corner-cutting, Rose-Smith suggests. “As investors wade into more nature-based solutions, we need far greater transparency and clarity around the important questions of what is actually good for our planet.”
- Keep reading, “Failure of a California almond grower shows the unsustainability of some sustainable agriculture investments,” by Imogen Rose-Smith on ImpactAlpha.
Dealflow: Deploy!
Climate United rolls out $250 million to electrify truck fleets. The coalition is using capital from its $7 billion National Clean Investment Fund award to buy up to 500 electric drayage trucks, which are the vehicles used at ports to move shipping containers. The trucks will then be leased to small fleet operators at ports, starting in Long Beach and Los Angeles. Climate United is working on the program in partnership with Forum Mobility in California, which operates electric truck charging centers in the state’s ports and along freight routes.
- Reducing financing hurdles. The initiative is designed to support compliance with California regulations that require drayage fleets in the state to be electrified by 2035. About 80% of the more than 30,000 trucks in the state are run by small operators. “Electric drayage trucks cost less to operate, but high upfront costs make it difficult for independent owner-operators and small fleets to transition to all-electric,” said Climate United’s Beth Bafford (see, “Beth Bafford on Climate United’s $7 billion strategy to mainstream green lending“). The deal is the coalition’s second since it secured the National Clean Investment Fund award under the Environmental Protection Agency’s Greenhouse Gas Reduction Fund.
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BURN lands $15 million to electrify household cooking in East Africa. Households in the US are being nudged to switch to greener electric appliances with tax credits and rebates. In East Africa, they are being enticed with pay-as-you-go financing and long-term energy cost savings. Nairobi-based cookstove maker BURN Manufacturing makes a portable household induction unit to help households with reliable electricity connections upgrade from charcoal, firewood and other fuel-powered cookstoves. The smart induction stoves allow users to pay over time with online and mobile payments and track their electricity usage through a smartphone app. A $15 million loan from the European Investment Bank will support manufacturing and distribution of the electric stoves. BURN’s goal is to reach one million East African households.
- Climate + gender + health. Nearly 60% of Africa’s domestic energy needs still depend on charcoal and firewood. It’s a major cause of deforestation and health problems on the continent. The health impacts, due to smoke inhalation, disproportionately affect women and children. BURN says its electric stoves have been adopted by thousands of grid-connected households in Kenya and Tanzania that previously cooked with charcoal. “This investment by EIB will help us transition over a million low-income households to cooking with electricity, allowing them to cook on grids that are 80% to 95% powered by renewable energy,” said BURN founder Peter Scott.
- Cleaner, cheaper cooking. BURN’s cooking products also include ethanol, wood, briquette and LPG-fueled models to suit households with different levels of access to a reliable energy grid. A €10 million ($10.8 million) results-based financing investment by the Nordic Environment Finance Corp. last year supported BURN’s introduction of connected cooking devices that allow electric cooker customers to make weekly payments for their appliances. BURN says low-income urban households can save as much as 50% a week by switching from charcoal.
Dealflow overflow. Investment news crossing our desks:
- US civil rights organization NAACP launched a private investment unit, NAACP Capital, in partnership with Kapor Capital to raise and invest up to $200 million in diverse fund managers. (NAACP)
- German startup Vamo secured €7 million ($7.6 million) in a seed extension round for software that helps households connect and manage heap pump systems, helping households save on energy use and costs. (EU Startups)
- Delhi-based Arya.ag raised $19.8 million from the US International Development Finance Corp. to connect smallholder grain farmers to buyers. (Inc42)
- Ghana’s Oyster Agribusiness, which aggregates agricultural products from smallholder farmers for local and export markets, landed $2 million from Root Capital, RDF Ghana and Sahel Capital. (Citi Newsroom)
Agents of Impact: Follow the Talent
Transform Finance recruits Susan Ozawa Perez, formerly with Impact Investors, as a lead researcher… Anthony Bugg-Levine is stepping down as president of Lafayette Square Institute to create an impact investing advisory practice at Bugg-Levine Inc., the consulting firm his wife, Ahadi Bugg-Levine, launched in 2010… Impact Cubed brings on Geoff Moore of Impact And Inc. as a consultant.
Carissa Sanchez, a former consultant with Boston Consulting Group, joins Raven Indigenous Capital Partners as an investment associate… Opportunity Finance Network hires former impact investing intern Binderiya Usukhbayar as a credit analyst… New Majority Capital is looking for an acquisitions deal analyst in Boston.
Confluence Philanthropy is hiring a climate solutions program director in New York… Rutgers University’s Institute for the Study of Employee Ownership and Profit Sharing launches the University Consortium on Employee Share Ownership, with backing from the Ford Foundation, to advance the study and practice of employee share ownership.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– Oct. 29, 2024