Greetings, Agents of Impact!
Featured: Institutional Impact
Speaking truth to power should not be career suicide for ESG professionals. The investment management industry is not kind to its whistle blowers, ImpactAlpha contributing editor Imogen Rose-Smith writes in her latest Institutional Impact column. Take Desiree Fixler, who spoke up about problems in her firm’s integration of environmental, social and governance factors – and, she says, got herself fired. Fixler was head of sustainability for DWS Group, the asset management business of Deutsche Bank. She was fired in March, a day before DWS claimed in its annual report that over half of its $935 billion assets under management are subject to ESG integration or screening. Fixler and some of her colleagues knew the figure was exaggerated and that the firm was struggling with ESG integration, The Wall Street Journal reported this month. “As chief sustainability officer, as a proponent of ESG, how could I not speak up on wrongdoing?” Fixler said. “Posturing with big statements on climate action and inclusion without the goods to back it up is really quite harmful as it prevents money and action from flowing to the right place.”
As it attracts assets at a record pace, ESG and impact investing finds itself in the crosshairs from two directions. The historic doubters, who questioned whether money could be made, have been replaced by new skeptics, who question whether the investment shift amounts really to anything in real-world change. Internal critics don’t want their complaints about execution to justify the entrenchment of the status quo. “Sadly, I don’t think the answer is to just ask people to be bolder, to put their jobs and reputations on the line for a business that, in all likelihood, will chew them up and spit them out,” Rose-Smith writes (if you do have a story to tell, ImpactAlpha’s lines are always open). But we can do better together. “Often, we know who is really doing good versus who is putting on a show, or worse. We can stop indulging the bullies and do a better job of supporting the true allies and champions.”
Keep reading, “Institutional Impact: Speaking truth to power should not be career suicide for ESG professionals,” by Imogen Rose-Smith on ImpactAlpha. Catch up on all of Imogen’s Institutional Impact columns.
Dealflow: Climate Tech
Chris Sacca’s Lowercarbon Capital raises $800 million for climate tech. It’s the first time Lowercarbon, run by Sacca, his wife Crystal Sacca and Clay Dumas, has taken in outside money. Lowercarbon raised the funds in a matter of days, turning away “flattering offers” in order to keep the fund small, Sacca writes. “There is massive unmet demand for climate investments, and humanity’s only shot is if we get as many people and as many resources focused on solutions.”
- Big bets. Lowercase Carbon’s portfolio includes green chemical maker Solugen, drone-driven restoration venture Dendra, and fusion startups Commonwealth Fusion and Zap Energy (see, “Long coming but slow to arrive, fusion energy approaches a milestone on path to commercial deployment”), as well Nitricity (see below). “There has never been a better time to start a company focused on emissions reduction or actively removing carbon already in the atmosphere,” Sacca says. “The total addressable markets are literally the biggest in history and we have no doubt that multi-trillion dollar market caps are just up ahead.” Sacca’s previous fund, Lowercase Capital, was an early investor in Twitter, Uber, Instagram and other tech standouts.
- Everyone in. Investors are pouring billions into climate funds (see, “TPG Rise ($5.4 billion) and Brookfield ($7 billion) raise the stakes for climate funds”). And that was even before the $1 trillion green-tinged infrastructure bill began to move through Congress (see, “Business leaders rally to US infrastructure bill to mobilize capital for climate solutions”).
Nitricity secures $5 million investment to electrify fertilizer production. San Francisco-based Nitricity is among a new crop of agtech ventures helping farmers break their reliance on synthetic nitrogen fertilizer, which is expensive for farmers and is a major contributor to climate change (see, “Pivot Bio rakes in $430 million to replace synthetic nitrogen in agriculture”). Nitricity’s technology and on-site farming hardware helps farmers save money by producing their own fertilizer using only air, water and electricity. The company claims the technology can prevent a billion metric tons of greenhouse gas emissions each year. Energy Impact Partners led the seed financing round, with participation from Fine Structure Ventures, Lowercarbon Capital and MCJ Collective. Share this post.
Fund for artisans backs Ilumexico to expand access to solar power for rural business. The RISE Artisan Fund of volunteer-based Realize Impact launched a climate investing strategy to help energy-poor artisans transition to clean energy to support their livelihoods and reduce their communities’ dependence on dirty fuels. The fund is investing in Mexico’s off-grid solar provider Ilumexico to help small-scale fishermen in Baja California Sur access solar-powered refrigerators to support their livelihoods. RISE Artisan Fund is co-investing with impact-linked lender Beneficial Returns. Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Germany-based KGAL Investment Management launches a renewable energy fund aligned with Europe’s new Sustainable Finance Reporting and Disclosure regulations.
- Nigeria’s Omnibiz raises $3 million to connect small retailers with consumer goods companies via a low-tech platform that relies on a mobile app and Whatsapp.
- Houston-based biotech company Cemvita Factory raises Series A financing to reduce the carbon footprint of heavy industry, like chemical manufacturing and mining.
- Woman-led lithium ion battery maker I-G3N secures $1.3 million to support solar adoption in South Africa.
- International Finance Corp. and FMO lend $50 million to I&M Bank to support Kenyan small businesses in the COVID recovery.
Signals: Impact Management
You have an impact investing strategy. What to call it? An emerging markets public equities portfolio that actively engages with investees to improve ESG performance. A U.S. environmental commodities strategy that trades carbon credits and finances emissions-reducing projects. And an investment fund targeting European real assets such as hospitals and affordable housing. All three products are deploying sustainable investment strategies. But which strategies should claim an “impact” label? And how does that differ from “ESG integration” or “thematic investing?” Truth in Impact from consulting firm Tideline seeks to parse the terminology. “We believe accurate self-classification, backed up by robust evidence and independent verification, is a critical part of any sustainable investment journey and essential to growing the sustainable investing space with integrity,” says Tideline’s Ben Thornley (disclosure: Tideline is a sponsor of ImpactAlpha).
- Zoom out. Impact investing still lacks universal standards for product and fund labeling. Capital allocators and regulators are on the hook to evaluate asset managers to ensure they can back up their claims with policies, practices, and processes. “Choosing a label sends a signal to the market about what kind of investment strategy you have,” write the authors. Tideline’s guide helps managers communicate their approach based on the degree to which they integrate intentionality, contribution, and measurement into their investment process.
- Impact labeling. Tideline’s framework builds on classifying efforts from the Global Impact Investing Network (Core Characteristics of Impact Investing) and Impact Management Project (ABC Classification and Impact Classes). In March, the European Supervisory Authority introduced regulation that requires investors operating in Europe to designate their funds in one of three categories according to their commitment to sustainability.
Agents of Impact: Follow the Talent
Cindy Tindell, ex- of NextEra Energy, joins TPG-backed Matrix Renewables as U.S. managing director… Marion Araque, ex- of All Raise, joins Kapor Capital as director of portfolio services… Andrew Hattori, previously with San Francisco AIDS Foundation, joins the East Bay Community Foundation as vice president of marketing and communications… BlackRock is recruiting a director of fundamental research for impact in New York… Confluence Philanthropy is looking for a climate finance director, an operations and finance manager and a digital associate… Planet FWD is hiring a head of business development in the San Francisco Bay Area… The European Central Bank is looking for a climate scientist…
Nonprofit Finance Fund is recruiting a loan officer… Participant Media seeks a community manager in Los Angeles… Capshift is looking for a product operations manager and an impact investing research fellow… Village Capital seeks an economic opportunity practice lead in Washington D.C… Open Society Foundation is recruiting a special advisor in New York… Sorenson Impact is hiring student fellows… The Lab is hosting “Climate Finance for Sustainable Agriculture,” Thursday, Aug. 26… Responsible Investor is hosting “Global perspectives on impact investing with Indigenous communities,” Tuesday, Sept. 28… Opportunity Finance Network opens nominations for the 2021 Ned Gramlich Lifetime Achievement Award for Responsible Finance
Thank you for your impact.
– Aug 16, 2021