The Brief | September 24, 2019

The Brief: Retooling climate finance, transition bonds, battery-free energy storage, Open Road’s bridge loans, impact talent twist

The team at


Greetings, Agents of Impact!

Pulse checkImpactAlpha’s David BankImogen Rose-Smith and Dennis Price are hopping on a Transform Finance webinar this Thursday, Sept. 26, at 10 AM PT / 1 PM ET. What’s next after the Business Roundtable announcement? Why the rush of private equity into impact investing? Where’s the impact in Opportunity Zones? Join the conversation.

Featured: ImpactAlpha Original

Retooling finance to accelerate the low-carbon transition. You know we’re in trouble when investors and bankers are our best hope for climate action. With many global leaders effectively no-shows at Monday’s Climate Action Summit at the U.N., it falls to finance to declare an end to the fossil-fuel era and power up the zero-carbon future. “Acceleration is what we need,” said Michael Sabia, chief executive of Caisse de dépôt et placement du Québec, or CDPQ, the $245 billion Canadian asset manager. “We’re going to do it by increasing our investment in low-carbon assets like energy-efficient buildings, low-carbon transit, and renewables…This is just the beginning.” CDPQ is part of the “Net Zero Asset Owner Alliance,” a group of a dozen insurers and pension funds managing a combined $2.3 trillion that pledged to shift their portfolios away from carbon-heavy industries and invest more in clean energy and low-carbon companies and projects.

At the climate summit, global political leaders largely failed to make ambitious commitments to accelerate their nations’ transitions. China made no new promises and the U.S. did not even take the stage. President Trump made a brief appearance in the hall, but didn’t speak. Michael Bloomberg drew laughter when he thanked Trump for coming and added, “Hopefully our discussions here will be useful for you when you formulate climate policy.” Trump missed Greta Thunberg, the 16-year-old Swedish leader of the global student climate strikes that drew millions into the streets last week. “You are failing us, but young people are starting to understand your betrayal,” Thunberg said. “The eyes of all future generations are upon you. And if you choose to fail us, I say: ‘We will never forgive you.’”

  • Banking on climate. A group of 31 banks with more than $13 trillion in assets committed to “align their portfolios to reflect and finance the low-carbon, climate-resilient economy” in line with the Paris Agreement’s goal to limit global heating to well-below 2 degrees Celsius. The banks said they would “mobilize our products, services and relationships to help facilitate the economic transition necessary to achieve climate neutrality.” A total of 130 banks with $47 trillion in assets have signed onto the new Principles for Responsible Banking.
  • Green-weighted assets. The French bank Natixis, said it had implemented its “Green Weighting Factor,” which is intended to tip its capital allocations toward the objectives of the Paris agreement. The bank assigned colors ranging from dark brown to dark green based on deals’ climate impact as well as water, pollution, waste and biodiversity impacts. The ratings affect the bank’s risk-weighted assets, with green deals reduced by up to 50% and brown deals increased by up to 24%. By risk-weighted assets, half of the bank’s current portfolio is brown, one-quarter is green and on-quarter is neutral. Natixis said green-weighting will help the bank “support its clients in their ecological transition and to commit with them to a sustainable trajectory.”
  • Transition bonds. The Italian utility Enel SpA, the Italian energy company, this month launched a $1.5 billion “SDG bond” linked to the UN’s Sustainable Development Goals. “Green bonds have a limit,” Enel’s Ernesto Ciorra told ImpactAlpha. “They are used to finance a project, not for a business model. With the SDG bond we’re financing a sustainable business.” The European Bank for Reconstruction and Development last week raised $700 million with a climate resilience bond. “This is a major step forward in the development of capital market instruments that can crowd in private finance at scale for climate resilience,” ERBD’s Craig Davies said in a statement.

Keep reading, “Retooling finance to accelerate the low-carbon transition,” by Carol Clouse, Jessica Pothering and David Bank on ImpactAlpha.

Dealflow: Follow the Money

Hydrostor raises $37 million for battery-free energy storage tech. Storing energy from variable renewable energy sources like wind and solar is an ongoing challenge to the clean energy transition. Toronto-based Hydrostor is developing a system that uses heat, compressed air and a water reservoir to capture, store and then release generated energy. Its systems are designed to help electricity grid operators manage demand fluctuations and integrate renewable sources into their energy mix. The company has three utility-scale facilities underway in Canada and Australia and others planned in the U.S. and Chile. Sustainable infrastructure investor Meridiam led the $37 million debt and equity financing round, which will be used to complete construction on Hydrostor’s 5-megawatt Angas project in Australia. Elemental EnergyCanoe FinancialArcTern VenturesMaRS Catalyst Fund and Lorem Partners also participated. Check it out.

Open Road Alliance launches impact fund to provide entrepreneurs with short-term financing. The social impact lender is looking to raise $40 million to make low-cost bridge loans of up to $1 million. The fund would add to the $19.5 million Open Road Alliance deployed through its first loan fund. More.

Ecosystem Integrity Fund backs Complete Solar to accelerate U.S. home solar adoption. Complete Solar sells rooftop solar systems in the U.S. Northeast, California, Arizona and Utah. Sustainability-focused investor Ecosystem Integrity Fund led the solar company’s $9 million funding round to support distribution through partners, such as roofing companies. More.

Impact Voices: Pass the Mic

In impact talent twist, candidates are vetting employers’ impact bona fides. Financial institutions long accustomed to testing candidates for cultural fit and commitments now find themselves in the hot seat as candidates scrutinize the firms’ impact bona fides. “We are finding that top-tier impact investing candidates are now the ones doing the evaluating,” write Kate Shattuck and Gloria Mirrione of Korn Ferry in a guest post on ImpactAlpha. The search firm recently placed Kate Ahern, previously at Bain Capital, as head of ESG investing at Cartica. Candidates increasingly are pre-screening firms for their level of engagement and competency with environmental, social and governance, or ESG, investing at the top, as well as mid- and junior levels, say the consultants. “For top executives considering a move to a new platform in the impact space,” say Shattuck and Mirrione, “their reputation is on the line.” More.

Agents of Impact: Follow the Talent

Kresge Foundation names Aaron Seybert managing director of its social investment practice (see Seybert’s ImpactAlpha post, “Opportunity Zone skeptics and advocates can unite around mandatory impact reporting)… MCE Social Capital is hiring a portfolio manager in San Francisco and one in Barcelona… The Jewish Community Federation and Endowment Fund is looking for an impact investing manager in San Francisco… Unreasonable seeks a director of press and communications in Boulder… Project Heather opens consultation on the impact reporting methodology of its proposed Scottish-based stock exchange for impact investments.

Thank you for reading.

– Sept. 24, 2019