Greetings, Agents of Impact!
ImpactAlpha Podcast: Returns on Investment
Mispriced climate risks signal investment shocks – and opportunities for action (podcast). The bigger the protests, the better for investors. In a counter-intuitive shift, the four million youthful climate-strikers who took to the streets last week may be more pro-business than recalcitrant heads of state at the United Nations intent on slow-walking climate action. The U.S., Brazil and Japan, for example, have not even asked to speak at today’s Climate Action Summit, where 60 or so countries are expected to present more ambitious carbon-reduction plans. By catalyzing a powerful political constituency, protesters may accelerate the low-carbon transition and soften climate shock. Keeping global temperature rise within 1.5 or even 2 degrees Celsius produces better returns for almost all investors. By forestalling action, climate skeptics make more likely a harder landing that, not incidentally, may tank investment portfolios.
The mispriced risks, and sometimes misguided analysis, of climate change is the subject of ImpactAlpha’s latest Returns on Investment podcast. The conversation around climate change has undeniably heated up (especially during Climate Week), “but we’re not seeing this reduction in investment in fossil fuels,” says roundtable regular Imogen Rose-Smith, now a contributing editor at ImpactAlpha. “The markets are not set up to think about risks they haven’t experienced before.” The longer policymakers and companies delay, the more rapid and disruptive the low-carbon transition will need to be. ImpactAlpha editor David Bank gets in the last word: “Thank god for the school kids and the young people who are marching this week, and thank god for voters next year, who might have a say in this. It’s got to be a change in direction.”
Keep reading, and listen in to, “Mispriced climate risks signal investment shocks – and opportunities for action,” the latest episode in ImpactAlpha’s Returns on Investment podcast.
Climate Watch. A sampling of Climate Week news:
- Businesses pledge to slash emissions. Nearly 90 major companies with a combined market cap of over $2.3 trillion agreed to work towards net-zero emissions by 2050. The companies’ emissions are equivalent to 73 coal-fired power plants, according to We Mean Business, which organized the pledge.
- Accelerated action. Amazon pledged to move even faster than the other companies, committing to a new “Climate Pledge” launched by Global Optimism to reach net-zero carbon emissions by 2040. Under pressure from employees, CEO Jeff Bezos promised to field a fleet of 100,000 electric vehicles by 2030 and committed $100 million for reforestation projects and to use 100% renewable energy by 2030. “If a company with as much physical infrastructure as Amazon—which delivers more than 10 billion items a year—can meet the Paris Agreement 10 years early, then any company can,” Bezos said.
Dealflow: Follow the Money
Splunk launches venture arm with $50 million impact fund. Data-analytics platform Splunk launched a venture investment arm that will include a $50 million “social impact fund.” Splunk Ventures also created a $100 million “innovation” fund for early stage data companies. The impact fund will invest in companies that use data to drive positive social impact, workforce development, equality and sustainability. “We firmly believe that data offers unparalleled potential to make the world better,” said Splunk’s Ammar Maraqa.
- Impact tech. Publicly-traded Splunk is the latest technology company to launch an impact-focused corporate venture fund. Salesforce Ventures has a $50 million impact fund. Orange Digital Ventures, the $185 million corporate venture fund of Orange, the French global telecom company, is exploring one (see, “SoftBank, Salesforce and Orange signal corporate venture capital’s tilt towards impact investing”).
- Beyond legacy. Legacy food corporations such as Tyson and Cargill are using venture capital to invest in more sustainable plant-based foods. The top five oil and gas corporate venture capital arms, including Shell Ventures and BP Ventures, have increased cleantech investment each year since 2015 (see, “Cleantech venture capital rebounds with smarter, more patient investors”).
TEAMFund closes $30 million fund to address non-communicable diseases in India and sub-Saharan Africa. The fund—Transforming Equity and Access for MedTech— is backed by more than a dozen med-tech and pharma companies and has invested in Bengaluru-based companies Forus Health and Tricog and Boston-based Jana Care. More.
FarmWise raises $14.5 million for sustainable robotic farming. Calibrate Ventures led the Series A, which was joined by agriculture company Wilbur-Ellis Co., Xplorer Capital, Alumni Ventures Group and existing investors. More.
Normative raises $2 million to let companies automate carbon reporting. The seed round for the Stockholm-based company was led by by Founders. SoundCloud co-founder Eric Wahlforss, Luminar Ventures and Wave Ventures also participated. More.
Signals: Ahead of the Curve
Thirty-two teams join MIT Solve’s “open innovation” cohort. Entrants in Solve’s latest challenge are offering solutions to promote the circular economy, community-driven innovation, early childhood development and healthy cities. Finalists include Mylea, a company making textiles from food waste; Elpis Solar, which is bringing solar-powered services to refugee communities; citizen journalism app Supercívicos; and environmental metrics trackers Blue Sky Analytics. Nearly 1,400 innovators responded to Solve’s call for applications. MIT launched the Solve initiative in 2015 and has brokered $12 million in grants and investments to 99 teams. This year, it launched a venture fund to provide additional support. “We continue to hear that financing is the biggest constraint,” Solve’s Casey van der Stricht told ImpactAlpha. The Solve Innovation Future fund, a donor advised fund, has raised $3.5 million towards a $30 million goal, and will make debt and equity investments of up to $200,000, using a standard set of terms to keep underwriting costs low.
- By the numbers. The annual competition has supported innovators from 32 countries addressing the future of work, brain health, indigenous communities, sustainable cities, and more. More than half—52%—are women-led teams.
- More than money. MIT’s Solve mentor and support network includes Laurene Powell Jobs, VEON CEO and former Xerox chairwoman Ursula Burns, and iRobot founder Colin Angle.
- Peer support. “We want to lean into the peer-to-peer support and Solver-to-Solver partnerships that are emerging,” says Solve’s Alex Amouyel. For example: Solve’s Indigenous Communities fellows have added Diné and Lakota language content to India-based Solver Purvi Shah’s open-access local-language children’s library, Storyweaver.
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Agents of Impact: Follow the Talent
New Profit seeks a portfolio manager in Boston… Social Finance is hiring an associate director in Boston, Austin or San Francisco… Defy Ventures is looking for an executive director for its northern California office… Chicago-based Greenprint Partners wins the private sector water prize from the US Water Alliance for its innovative stormwater infrastructure… Halcyon Incubator is accepting applications from social entrepreneurs for its spring 2020 fellowship program.
Thank you for reading.
– Sept. 23, 2019