Greetings, Agents of Impact! Make sure to add these ImpactAlpha partner events to your calendar:
- Island Innovation presents “Island Finance Forum” with prime ministers Gaston Browne of Antigua, Frank Bainimarama of Fiji, Allen Chastanet of Saint Lucia, along with guests from BNP Paribas, the World Bank and Eastern Caribbean Central Bank, April 13-16. Register for free.
- Global Impact Investing Network hosts “Next Normal Now: Re-imagining Capitalism for Our Future,” including a fireside chat with Ford Foundation’s Darren Walker and the GIIN’s Amit Bouri, Tuesday, April 20. Register for free.
Featured: Institutional Impact
‘Fossil-fuel free’ endowments and pension funds are rarely free of fossil fuels. Here’s why that’s a problem. The pace is accelerating for commitments by institutional asset owners to go fossil-fuel free or reach net-zero carbon emission goals. The drumbeat will only get louder this fall in the run-up to COP 26, the U.N.’s global climate gathering, or Conference of the Parties, set for November in Glasgow. Investors as well as climate activists would do well to closely scrutinize such commitments. “Even leaving aside the debate over the efficacy of divestment as a climate strategy, the procrastination, and in some cases obfuscation, in purging fossil assets even from asset owners pursuing such a strategy undercuts the sincerity of their rhetoric,” writes ImpactAlpha contributing editor Imogen Rose-Smith, who dissects announcements from the University of Michigan, the Ontario Teachers’ Pension Plan and the University of California in her latest Institutional Impact column.
At UC, for example, chief investment officer Jagdeep Singh Bachher told the investment committee of the university’s regents back in May 2020 that “as of today, the endowment, the pension, and all of our working capital pools are fossil free at the University of California.” Except that the UC’s portfolios are not fossil-fuel free, says Rose-Smith, who spent two years as an investment fellow in the university’s investment office. “The UC’s current position that its fossil fuel exposure is ‘de minimis’ is an interesting way of admitting its CIO misspoke,” she writes. Also due for some scrutiny is the chest-thumping of environmental activists. Taking a victory lap, 350.org’s Bill McKibben, surmises that University of Michigan president Mark Schlissel “has watched as his peers at the University of California – the other candidate for America’s greatest public higher education system – divested, not to mention Oxford, Cambridge, and so many others. And it all sunk in.” For investors, the rhetorical bait-and-switch matters insofar as the risks of the carbon economy are dramatic and systemic. As for the activists, Rose-Smith writes, “It’s time to insist on complete transparency and not settle for headline-grabbing proclamations.”
Keep reading, “Institutional Impact: ‘Fossil-fuel free’ endowments and pension funds are rarely free of fossil fuels. Here’s why that’s a problem,” by Imogen Rose-Smith on ImpactAlpha.
Dealflow: Follow the Money
ZeroAvia aims to decarbonize air travel with hydrogen-powered engines. Before the COVID-related declines in air travel, aviation was on pace to be one of the biggest remaining carbon emitters by 2050. Hollister, Calif.-based ZeroAvia raised $24.3 million to help decarbonize the sector with its two-megawatt hydrogen-electric regional airplane. It has raised $74 million to date, including $21 million from public-sector investors (see, “ZeroAvia clinches $37.7 million to speed zero-carbon air travel”).
- Cleantech investors. Horizons Ventures, the investment arm of Hong Kong billionaire Li Ka-Shing’s foundation, led the round. “Flying on jet fuel comes with an environmental cost, and finding an alternative for the aviation industry is vital,” says Horizons’ Patrick Poon. Breakthrough Energy Ventures, Shell Ventures, Ecosystem Integrity Fund, Summa Equity and SYSTEMIQ also participated, along with British Airways, which has supported ZeroAvia’s research and development. Share this post.
Ecovative secures $60 million to produce fungus-based materials. The Greenland, N.Y.-based biotech company produces sustainable materials from fungus-derived mycelium for textiles, food and packaging. The investment will help Ecovative grow mycelium materials “better and faster at industrial scale,” the company said in a statement, including at Mycelium Foundry, its 35,000-square-foot facility in New York. Viking Global Investors led the Series D round, with participation from Senator Investment Group, AiiM Partners and Trousdale Ventures.
- Fungus among us. Boulder, Colo.-based Meati is using mycelium to make plant-based meat products. San Francisco-based MycoWorks uses mycelium to make durable, animal and plastic-free leather (see, “MycoWorks secures $45 million to scale alt-leather production”). Check it out.
Energy Capital Partners closes $1.2 billion Continuation Fund to finance Terra-Gen. ECP will use the funds to repurchase a 50% stake in New York-based Terra-Gen that it had sold to another one of its funds. Terra-Gen operates more than 1,600 megawatts of wind, solar and geothermal facilities in the U.S. and has 3,000 megawatts of projects underway, including the Edwards & Sanborn solar-plus-storage project in Kern County, Calif. Blackstone, Goldman Sachs, Partners Group Holding and Hamilton Lane backed the fund. More.
Dealflow overflow. Other investment news crossing our desks:
- CirrusMD raised $20 million from Blue Venture Fund, 7wireVentures, Drive Capital and the Colorado Impact Fund to connect patients and physicians via virtual healthcare.
- Florida-based green CDFI Solar Energy Loan Fund scored a $5 million line of credit from BankUnited to finance home retrofits in low-to-moderate income communities.
- Mastercard is investing $100 million in Kenyan mobile money business Airtel Africa, which secured $200 million from The Rise Fund last month.
- L.A.-based SDS Capital Group secured $10.3 million to build housing for people experiencing homelessness in South L.A.
Signals: Ahead of the Curve
Sustainable snapshot: Sustainable investing strategies account for 30% of all SPACs. Electric fleet company Proterra, greenhouse venture AppHarvest and India’s largest renewable energy company ReNew Power have gone public (or plan to) via special purpose acquisition companies, or SPACs. The universe of SPACs, a pathway for private companies to list on major stock exchanges, consists of 533 entities with a combined deal value of $171 billion. As of mid-March, 163 of these, or 31% based on deal value, pursue business strategies that are aligned either partially or entirely with sustainable investing strategies, according to data compiled by Sustainable Research and Analysis. ImpactAlpha is partnering with the New York-based company to provide timely market snapshots of trends and developments affecting the sustainable investing market.
- The breakdown. Health, ESG integration and new energy dominate sustainable SPAC offerings. Health sector SPACs, like Montes Archimedes Acquisition, total 79 with $18.6 billion in deal value. ESG integration has been adopted by 42 SPACs totaling $16.8 billion, including Ares Acquisition. New energy SPACs, such as Riverstone’s Decarbonization Plus Acquisition companies, make up 27 SPACs and $8.1 billion in deal value. Share this post.
Agents of Impact: Follow the Talent
Goldman Sachs names Megan Hogan chief diversity officer… Arctaris Impact Investors is recruiting a director of community impact and engagement… Community Investment Management is searching for both U.S. and emerging market-focused investment officers and other roles… Notley seeks a vice president of business development in Austin… Equality Fund is recruiting a senior manager of investment strategy in Ontario… Blue Haven Initiative is looking for a strategic analyst… REDF is hiring a senior loan associate in L.A. or San Francisco… Harmony Labs seeks a development director… Emerson Collective is looking for an associate/senior associate of energy and environment in Palo Alto… Techstars’ Startup Weekend, Sustainability USA will focus on the circular economy, climate resiliency and climate justice, Apr. 23-25.
Thank you for your impact.
– Apr. 5, 2021