The Brief | November 30, 2023

The Brief: Climate tech in the Global South, raising science-based climate targets, climate + health in Canada, sustainability tools for private equity

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Greetings, Agents of Impact! 

Featured: The Transition

With a startup accelerator, COP28 boosts climate tech in the Global South. Can rapid tech innovation disrupt slow-moving policymaking? World leaders and their envoys descending on Dubai this week for the COP28 climate confab will use the levers of policy to try to stave off catastrophic global warming. Their toolkit: national emissions reduction targets, voluntary pledges and government-funded climate aid – and now, disruptive startups. “Climate innovation often doesn’t get talked about at COPs,” says Tristan Tremschnig with the nonprofit New Energy Nexus, or NEX, which is partnering with the summit organizers to establish the NEX COP28 Climate Tech Startup Accelerator. The goal is to, well, accelerate climate tech startups leveraging innovative new technology, models and materials for the low-carbon transition. “We think of a wider climate circle as part of the solution mix,” Tremschnig tells ImpactAlpha

  • Regional ecosystems. At least 80 of the 100 startups selected for the accelerator, the first such program at a COP, hail from the Global South. “These places are going to determine the speed and scale of the transition,” says NEX’s Danny Kennedy. In addition to a Tech and Innovation Hub in the COP expo, organizers have designated a team to oversee technology partnerships. Innovate for Climate Tech, a coalition led by the United Arab Emirates’ Masdar City, China’s Tencent and Abu Dhabi-based accelerator Catalyst, aims to bridge North-South divides around climate action. “We’re seeing a lot of COP28 ripple effects in the tech community” in the Middle East and North Africa, says Jamil Wyne of Riffle Ventures, which is part of the coalition. “More funds, entrepreneurs, universities and other institutions are launching climate tech initiatives.”
  • Venture pipeline. Singapore-based Agros has found a ready market for its solar-powered water pumps among small farmers in Myanmar, Cambodia and Indonesia. The female-led startup analyzes soil and prescribes fertilizers. Also in the NEX cohort: Evre, based in India, makes charging stations for two-, three- and four-wheel electric vehicles (see, “Small vehicles have investors thinking big about India’s e-mobility transition”); Bangkok-based PAC Corp. has developed energy efficient water heaters and air conditioners; and Jordan-based Neurotech uses AI to more efficiently manage energy, including in refugee camps. The NEX cohort completed a five-week online bootcamp in the weeks before COP. This week they are connecting with advisors, investors – and climate policymakers. 

Impact Voices: Climate Action

How much science is there behind the Science Based Targets Initiative? Brazilian meat giant JBS committed to a net-zero climate target by 2040 back in 2021. The company, with estimated greenhouse gas emissions comparable to Spain, joined the Science Based Targets Initiative, a collaboration that has become the “gold standard” for corporate climate action. Companies use guidance from SBTi, which includes CDP, the UN Global Compact, World Resource Institute and the Worldwide Fund for Nature, to set “scientifically based” emission targets and validate that companies are on target. Almost three years on, Sao Paulo-based JBS “has not even reported its total emissions, much less produced a plan on how to reduce them,” writes Nusa Urbancic of Netherlands-based Changing Markets Foundation. Nonetheless, SBTi lists JBS as “committed” to “near-term” change and to “net-zero.” JBS is using SBTi “for greenwashing purposes,” says Urbancic.

  • Raising standards. SBTi’s approach to climate reductions is “half-hearted,” Urbancic writes in a guest post on ImpactAlpha, and has departed from “science-based foundations.” Guidance from the UN’s High Level Expert Group, in its special report released at last year’s COP, calls for companies to align their targets with the goal to limit global warming to 1.5 degrees Celsius, but SBTi allows companies to set higher targets for another five years.
  • Race to the top. Changing Markets Foundation and a group of more than 20 NGOs released an open letter in July calling for SBTi to adjust its standards to UN High Level Expert Group guidance. SBTi has not yet responded to the concerns outlined in the letter, or to outreach by Changing Markets, says Urbanic. By revamping its guidelines, the SBTi would reclaim its title as the gold standard on climate action, she says, “starting a race to the top for companies that have done the work and are contributing to a greener and safer future.”
  • Keep reading

Dealflow: Climate + Health

Vancouver Foundation anchors Spring Impact Capital to invest in Canadian health and climate ventures. Spring Impact Capital is looking to raise C$20 million (US$14.7 million) to invest in two dozen early stage health and climate tech enterprises in Canada. The Vancouver-based venture fund is the first investment vehicle of Spring, an impact accelerator aiming to democratize impact investing in Canada. Since 2014, Spring has incubated over 2,000 entrepreneurs, with funding from roughly 900 accredited and non-accredited angel investors. With the launch of Spring Impact Capital, “We saw an opportunity to build on that experience and momentum that we have been creating to support ventures, in particular, at the intersection of climate and health,” Spring’s Keith Ippel told ImpactAlpha. More than 10 limited partners have committed to the fund’s first close, said Ippel.

  • Return on inclusion. The fund will invest through an inclusion lens, targeting women, Black and other founders of color. “When we’re thinking about digital health, mental health, sustainable food and agriculture,” said Ippel, “these are all areas where I think there’s an opportunity for venture funds to step more boldly into ensuring access for underrepresented communities.” Spring Impact Capital plans to write checks of $250,000 at the pre-seed and seed stages, with up to $750,000 reserved for follow-on funding.
  • More.

Conscious Investment Management secures A$50 million for social and affordable housing in Australia. Conscious Investment, a New South Wales-based impact fund manager, is seeking A$200 million (US$132.4 million) for its second Social Housing Fund to deliver 40,000 new social and affordable homes in Australia over five years. The fund will work with local housing nonprofit and government agencies, such as the Housing Australia Fund and National Housing Accord, to combine public-sector funding with private capital. “As governments increasingly look to partner with private capital in this space, we hope to be an early scale mover,” said Conscious Investment’s Matthew Tominc. Investors in the fund’s first close include Paul Ramsay Foundation and several other family office and foundation clients of Sydney-based impact consultant Australian Impact Investments, including Siddle Family and Snow foundations. Share this post.

Dealflow overflow. Other investment news crossing our desks:

  • ZeroAvia raised $116 million in Series C financing from Barclays Sustainable Impact, UK Infrastructure Bank and others for its hydrogen-electric aircraft engines. (ZeroAvia)
  • SparkMeter snagged $5 million from Honeywell Smart Energy to install low-cost energy metering systems in emerging market households. (SparkMeter)
  • Former KKR India CEO Sanjay Nayar is backing Peak Venture Advisors, a Mumbai-based climate tech venture fund seeking $250 million from institutional investors. (Bloomberg)
  • Veev, a company building modular homes to tackle the US’ housing shortage, will liquidate its assets in a process similar to bankruptcy. It had raised $600 million from investors including Fifth Wall Climate Tech and Khosla Ventures. (AP)

Impact Voices: Private Equity 

Equipping private equity managers to unlock value through sustainability. Private equity ownership of companies increasingly comes with responsibility to drive long-term viability, rather than short-term value-extraction. Sustainability strategies can unlock value within organizations, drive top-line growth, and tackle material risks to prevent future value destruction (see, “Private equity is leaving billions of dollars in sustainability value on the table”). So why then do so many PE firms miss the opportunity to use sustainability as a strategic lever? “They just need better tools,” write NYU Stern’s Tensie Whelan and Julien Marchese, and Florent Nanse of Arthur D. Little.

  • Management tools. The researchers have created a tool to help private equity managers assess strategic value drivers related to material ESG issues, define value-creating sustainability strategies, and provide monetization methods to showcase financial benefits upon exit. The tool, as well as one for private-equity investors, will be launched at NYU Stern’s conference on private equity and sustainability value-creation on Tuesday, Dec. 12. Be one of the first 20 people to register with the code ImpactAlpha2023 for $50 off the $149 ticket.  

Agents of Impact: Follow the Talent

👋 Agents of Impact Call: Finding hidden impact and risk in municipal bonds. Join R. Paul Herman of HIP Investor, Kestrel’s Monica Reid, Activest’s Homero Radway, Court Street Group’s Matt Posner and other Agents of Impact, Wednesday, Dec. 13, at 10am PT / 1pm ET / 6pm London. RSVP today

Doreen Kubu, ex- of ABNO Softwares International, joins Mercy Corps Ventures as a junior investment analyst… Felipe Passos, former senior accounting analyst at BlueHub Capital, joins Social Finance as a senior associate on its impact finance operations team… Impact Investing Ghana appoints Amma Gyampo, CEO of ScaleUp Africa, as a new board member… Florence Perramond, ex- of Planet First Partners, joins Blue Earth Capital as an analyst on its fundraising and investor relations team.

2X Global is looking for a remote program associate… The African American Alliance of CDFI CEOs seeks a policy and research associate… ImpactAssets is on the hunt for a new chief of staff… Symbiotics has an opening for a financial accountant in Switzerland… RBC is hiring an environmental impact senior director in Toronto… UBS is recruiting a head of carbon in Zurich and a voluntary carbon markets analyst in London.

👉 View (or post) impact investing jobs on ImpactAlpha’s new Career Hub.

Thank you for your impact!

– Nov. 30, 2023