The Brief | November 1, 2023

The Brief: Mandatory climate disclosure, digital credit for Mexico’s farmers, training surgical teams, sustainable cities, microfinance merger in India

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Greetings, Agents of Impact!

⚡ Plugged In: Local climate innovation with VertueLab’s Aina Abiodun. The head of Portland-based nonprofit climate tech investor VertueLab joins Plugged In host Sherrell Dorsey on LinkedIn Live to discuss how communities are driving climate innovation – and how climate tech benefits communities – next Wednesday, Nov. 8 at 10am PT / 1pm ET / 6pm London. RSVP today.

Featured: Policy Corner

California kicks off the era of mandatory climate disclosure. Corporations better start counting, and accounting for, their greenhouse gas emissions. California’s landmark climate disclosure law, signed into law last month, will apply to some 5,000 large public and private companies doing business in what is effectively the world’s fifth-largest economy. Under the EU’s Corporate Sustainability Reporting Directive, large publicly listed companies will begin reporting their emissions in 2025. And the US Securities and Exchange Commission could finalize its long-delayed rule for climate disclosure before the end of the year. The most controversial piece of all of the efforts: mandated reporting of “Scope 3” emissions generated by corporate supply chains and the end-use of their products (think: all the gasoline burned by automobiles). Such disclosure can help investors assess the material risks created by companies’ carbon footprints.

  • Scoping emissions. For most companies, Scope 3 emissions are 11 times larger than the direct Scope 1 and 2 emissions generated by their operations. For financial institutions, almost all of their emissions come from their portfolios. Critics charge that these indirect emissions are too burdensome to measure, or can be gamed (see, “How the SEC’s rules will – and won’t – solve climate change“). “Emissions enter the atmosphere only once, through Scope 1,” argues Stanford’s Alicia Seiger, who instead proposes “emissions liability management.” The SEC received some 16,000 comments from investors, corporations and stakeholders on its proposed rule, a large portion of them about Scope 3.
  • Field day for lobbyists. Pushback against the Scope 3 provisions could water down or delay the final California and SEC rules. “Really important issues have been raised around Scope 3,” the SEC’s Gary Gensler told The Wall Street Journal in September. “We’re going to have to think about what to do with Scope 3.” California Gov. Gavin Newsom has suggested that SB 253 needs “cleanup.” “Passing a bill and getting it signed into law is only the first step,” noted state Sen. Scott Weiner on a briefing arranged by the investor group Ceres, which backs such reporting. “We’re going to have to pay very close attention next year to make sure that any effort to undermine this is met with a lot of pushback.”
  • Divergent paths. In discussion with Gensler, Tom Quaadman of the US Chamber of Commerce, which opposes stronger climate disclosure, suggested Republican-led states could try to block climate disclosures, the way they have banned environmental, social and governance, or ESG, practices. That would leave companies in a bind. “There’s a role for the SEC to try to bring some consistency and comparability” to reporting standards, said Gensler. “That drives efficiency and capital markets because then investors get something consistent.”
  • Market for solutions. Hundreds of corporations already voluntarily measure their Scope 3 emissions, and there is a growing number of software tools to help them do so, writes Ceres’ Laura Draucker in a guest post on ImpactAlpha. “Private sector actors face a choice: be clear-eyed now about their exposure so they can take the prudent steps to address it—or deal with consequences that will be far worse.” Read her whole post.
  • Keep reading, “California kicks off the era of mandatory climate disclosure,” by Amy Cortese on ImpactAlpha

Dealflow: Financing Farmers

Verqor scores $11 million to provide digital credit to Mexico’s farmers. More than three-quarters of Mexico’s five million farmers do not earn sufficient income to live. Mexico City-based Verqor provides upfront credit to farmers to buy farm inputs, like seeds and crop treatments, and to rent machinery to improve their yields and incomes. Farmers repay the loans after they’ve harvested and sold their goods. The credit covers up to 90% of farmers’ costs.

  • Credit on-ramp. Verqor says more than half of its customers are accessing credit for the first time. It also helps farmers line up buyers. The company says market fragmentation and inefficiencies in Mexico makes it necessary to assist farmers across the agricultural value chain. Verqor landed $7.5 million in equity from Yara Growth Ventures, Accion Venture Lab, SP Ventures, Glocal and Amplifica Capital. An additional $3.5 million in debt came from Co_Capital and Addem Capital.
  • Alt-underwriting. Verqor assesses farmers’ ability to pay with remote plant monitoring, yield information, supply chain and weather trends and crop prices. “Verqor is creating a digital ecosystem that connects key agricultural players in Mexico while placing the needs of farmers at its core,” said Accion Venture Lab’s Amee Parbhoo.
  • Check it out.

Incision raises $7 million to provide online training to global surgical teams. An estimated five billion people don’t have access to safe or affordable surgical care if they need it. In remote and lower-income areas, lack of facilities, resources, staff and training limit the availability and quality of care. Netherlands-based Incision has developed an online academy of accredited video courses to support surgical teams worldwide, from setting up operating rooms and surgical protocols, to detailed surgical steps for individual procedures. Incision partners with more than 200 hospitals worldwide.

  • Investing in health. California-based healthtech investor Alafi Capital and Netherlands-based Dennendonck backed the first close of Incision’s Series B round. Existing backers include Rubio Impact Ventures (formerly Social Impact Ventures), a Dutch impact fund that invests in Netherlands-based social enterprises (see, “Agent of Impact: Willemijn Verloop”).
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Dealflow overflow. Other investment news crossing our desks:

  • Finland’s Kausal raised €880,000 ($930,000) in seed funding to help municipal government agencies “plan, track and coordinate” sustainability initiatives. The company works with more than 40 cities, including San Diego and Zurich. (Innovestor)
  • Indian microfinance company Fincare Small Finance Bank, a LeapFrog Investments portfolio company, is merging with AU Small Finance Bank to provide essential financial services to more than nine million people in India. (LeapFrog Investments)
  • France’s Amatera raised €1.5 million ($1.6 million) to breed climate-smart perennial crops, starting with a new coffee variety. (AFN)

Agents of Impact: Follow the Talent

Charlie Macdonald, ex- of Giant Leap Fund, joins Rubio Impact Ventures as an investment manager on the climate team… Patrick Rose of Corridor Title joins the board of Austin Community Foundation… The Ewing Marion Kauffman Foundation appoints W.K. Kellogg Foundation’s Carlos Rangel to its board of trustees… Aaron Hay, ex- of Federated Hermes, and Phil Cliff, ex- of M&G Investments, join UK-based Fidelity International as sustainable investing directors. 

Bank of America is recruiting a global renewable energy credit risk officer in New York… Nuveen is hiring a renewable energy investment associate in Charlotte, NC… Opportunity Finance Network is on the hunt for a senior associate of development services in Washington, DC… BlueMark has an opening for an impact investing business development analyst in London… Schneider Electric seeks an impact and ESG analyst in Singapore… BlueOrchard is looking for an associate impact manager in Peru.

The 10th annual Solar and Storage Finance USA Summit will be held at the New Yorker Hotel, Nov. 7-8… Lafayette Square’s Antony Bugg-Levine, Clara Miller of Heron Foundation, and Fran Seegull of the US Impact Investing Alliance will join a half-day event on creating opportunity-rich neighborhoods, Tuesday, Nov. 14 at the Federal Reserve Bank of New York.

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

Thank you for your impact!

– Nov. 1, 2023