The Brief: Reclaiming the ESG narrative, charging commercial EV fleets, clean energy in Europe, criminal justice impact, resilience risk in muni markets

The team at

ImpactAlpha

Greetings, Agents of Impact! 

👋 Hop on The Call. Join hundreds of other Agents of Impact on today’s Call to map opportunities for catalytic climate capital. Special guests MacArthur Foundation’s Debra Schwartz, BlocPower’s Donnel Baird, Shell Foundation’s Ashish Kumar, Jonathan Phillips of Duke University’s Energy Access Program, and Vibrant Data Labs’ Eric Berlow will explore capital gaps, and ways to bridge them, with ImpactAlpha’s Amy Cortese and David Bank, today, Sept. 14, at 10am PT / 1pm ET / 6pm London. Zoom right in (no RSVP required).

Featured: ESG Backlash

Reclaiming ESG as pro-business and pro-worker. The culture wars have come for sustainable investing. The anti-ESG movement is well-coordinated and unlikely to fade from the spotlight, especially as the political field heats up ahead of November’s midterm elections in the U.S. So how is the sustainable investing community – which has generally remained above the political fray – expected to respond? A growing number of investors, asset managers, state treasurers and other advocates for a more transparent, equitable and accountable economic system are paving the way, says Fran Seegull of the U.S. Impact Investing Alliance.

  • Call out political posturing. ESG, for environmental, social and governance, refers to an assessment framework for risk and opportunity that is widely accepted and growing in popularity among investors and companies. The anti-ESG campaigners are in fact “anti-risk-assessment,” says Andrew Behar of As You Sow. “Being a fiduciary means that you have taken a vow to look at risk from all sides on behalf of a hard-working individual who has entrusted you with their nest egg.”
  • Understand real-life implications. The anti-ESG movement “threatens to undo much of the progress made by the impact and sustainable investing communities, and could have tangible negative consequences both on public policy and on people’s lives,” says Chris Jurgens of Omidyar Network (for background, see, “Riskwashing: How the crusade against ESG is hurting businesses, taxpayers and retirees”). For the Long Term’s Dave Wallack calls the coordinated campaign among state legislators “a dangerous attempt to change the rules that govern the responsibilities that fiduciaries have to their beneficiaries.”
  • Reclaim the narrative. The politicization of policies addressing climate-related risks and corporate disclosures – and recent judicial rulings striking down the authority of regulatory agencies – suggest future challenges. Most Americans, across political divides, see the value of ESG in “enabling businesses and investors to make better decisions, and empowering people to shop, work and invest in ways that align with their values,” according to the opinion research firm GQR. That’s especially true when it comes to public expectations of how corporations should treat and empower their workers. “Uniting the voices of investors, business leaders, the climate and economic justice communities, and other allies to make this case” will be critical, Jurgens says.
  • Keep reading, “Reclaiming ESG as pro-business and pro-worker,” by Fran Seegull. The U.S. Impact Investing Alliance sponsors ImpactAlpha’s Policy Corner to help Agents of Impact “engage with government to create an enabling environment for truly impactful business and investment decisions.”

Dealflow: Electrify Everything

TeraWatt Infrastructure rakes in more than $1 billion for EV charging for commercial fleets. A lack of charging infrastructure for commercial vehicles is slowing the deployment of electric trucks. San Francisco-based TeraWatt Infrastructure launched last year to provide charging solutions for light, medium and heavy-duty commercial EV fleet operators. The company works with fleet partners in 18 U.S. states to finance, build and manage charging centers in strategic locations for their customers.

  • EV infrastructure. “Fleets are electrifying faster than ever, and we’ve been hard at work planning, building charging centers, and scaling up to make this transition easier for fleets,” said TeraWatt’s Neha Palmer. The huge raise “barely scratches the surface, as global investments in electric vehicle charging are expected to approach $1 trillion by 2040,” added TeraWatt’s Benjamin Birnbaum. The company will use the investment from Vision Ridge Partners, Keyframe Capital and Cyrus Capital to expand its platform with commercial fleet operators in the U.S.
  • Charging software. Separately, Copenhagen-based Monta raised $30 million in a Series A round led by Energize Ventures to meet the EV charging infrastructure challenge in Europe. Nearly 3,000 new public charge points need to be built weekly for Europe to reach its target of one million charge points by 2025, Monta’s Casper Rasmussen told ImpactAlpha. Monta provides charge-point installers, as well as EV drivers, with an online platform to keep track of activity at charging stations. Monta will use the investment to expand in North America.
  • Check it out

Energy Impact Partners raises €390 million for its first European fund. Europe leads the clean energy transition and is a key market for the low-carbon transition, says Hans Kobler of Energy Impact Partners. “We are seeing thousands of investable opportunities.” EIP will target growth-stage, high-impact tech companies contributing to safer, more flexible and cleaner energy sources. The fund is the first global expansion for New York-based EIP, which is known for investing in ready-to-deploy technologies. The firm added a $200 million early-stage climate tech fund in January. The latest raise comes as Europe faces increasing pressure to wean itself off of Russian oil and natural gas.

  • Partnership model. EIP plans to implement its collaborative model in Europe to “make it easier for European technologies to access the North American market,” said Kobler. The firm has a coalition of more than 50 partners, including utilities, tech firms, real estate owners and others committed to the low-carbon transition. EIP says its coalition has facilitated more than 350 contracts worth over $1 billion in business for portfolio companies.
  • Climate finance. EIP has backed 11 companies in Europe, such as German solar systems provider Zolar, portable batteries developer Instagrid, and Greenly, a Paris-based carbon management company whose platform EIP uses to track its Scope 3 footprint. The $389 million European fund received commitments from global institutional and impact investors including Microsoft’s Climate Innovation Fund, French utility EDF Group’s corporate venture arm EDF Pulse Ventures, Nysno Climate Investments and Shell Ventures.
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Dealflow overflow. Other investment news crossing our desks:

  • British International Investment-backed Endure Capital, in Egypt. secured $50 million for its venture fund’s first close to invest in early-stage impact startups in Africa. BII plans to deploy $100 million for local startups in Egypt.
  • Morocco’s UM6P Ventures backed South Africa-based De Novo Dairy to produce lab-grown dairy products using precision fermentation (for context, see, “Morocco’s UM6P Ventures backs U.S. and Israeli food tech startups“).
  • German agtech startup Klim raised $6.6 million, led by Green Generation Fund, to help farmers transition to regenerative agricultural practices.
  • JusticeText scored $2.2 million to improve judicial outcomes for low-income criminal defendants by making video evidence more transparent.

Signals: Muni Impact

To manage climate risk, municipal bond insurer taps data on community vulnerability. Public finance investors buy hundreds of billions of dollars in municipal bond issuances each year, providing much needed capital for schools, roads, energy utilities and other critical infrastructure. Many, if not most, of those purchases are blind to mounting risks from extreme weather events and their disproportionate impact on vulnerable communities. Assured Guaranty, a major insurer of U.S. municipal bonds, has partnered with the intelligence platform UrbanFootprint to create Municipal Bond Insights, a data tool for assessing ESG risk in the municipal bond markets. “The ability to integrate climate and community vulnerability data will help to ensure that we are prepared to manage risk from these growing threats,” says Assured’s Dominic Frederico

  • Community resilience. Resilience to climate change is more than a levee. Insuring municipal bonds requires pricing long-tail risk over decades. “Understanding the extent to which the community is not just at risk, but the extent to which the community is resilient to that risk, is mission critical,” UrbanFootprint’s Joe DiStefano tells ImpactAlpha. UrbanFootprint’s data platform tracks bottom-up indicators of a community’s ability to respond to climate threats, such as the portion of a community under economic stress, unemployed, renting homes, or elderly. Once weaknesses are known, Assured can work with communities to address vulnerabilities and reduce default risk.
  • Hook or crook. Community resilience is increasingly a target of regulators and a directive for federal investments in clean energy and energy efficiency, clean transit, sustainable housing and other sectors. The California Public Utilities Commission, for example, requires utilities to address affordability issues in energy, water and broadband projects. Public finance investors won’t act on climate and community risk overnight, says DiStefano. “There’s a learning curve that you can get through by actually exposing people to defensible, deep data.”
  • Keep reading, “To manage climate risk, municipal bond insurer taps data on community vulnerability,” by Dennis Price on ImpactAlpha. 

Agents of Impact: Follow the Talent

TBLI Group’s Robert Rubinstein joins Sustainable Network as a part-time advisory board member… Connecticut Green Bank seeks a manager/senior manager of clean energy finance in Stamford… UNICEF USA is hiring an impact investing associate/senior associate in New York for its impact fund… Boston Consulting Group is looking for an associate or consultant for climate and sustainability… Sorenson Impact is recruiting a director of fundraising… Environmental Defense Fund seeks a liaison for community engagement with historically Black colleges and universities.

Thank you for your impact!

– Sept. 14, 2022