Greetings Agents of Impact!
In today’s Brief:
- Catalyzing federal climate funding
- Sustainable aquaculture
- Spoofing Vanguard’s climate commitment
Featured: Deploy!
How loan guarantees and catalytic capital can amplify federal ‘green bank’ funds. The federal Greenhouse Gas Reduction Fund, or GGRF, will shower $27 billion on green projects in communities across the US, especially underserved places that have been most impacted by fossil fuel pollution. Most of the funds will be channeled through community development financial institutions and other community lenders with roots in low- and moderate-income communities. But underwriting solar projects, energy retrofits and electric vehicle charging projects is a new area for many lenders, who are working furiously to prepare for the once-in-a-generation opportunity. The Community Investment Guarantee Pool, or CIGP, is one example of how catalytic capital can supercharge the federal funds. The federal climate investment is an “opportunity to prioritize finding new, effective models to provide equitable access to capital.” write Jim Baek of the Community Investment Guarantee Pool and Aaron Seybert of the Kresge Foundation in a guest post on ImpactAlpha.
- Catalytic capital. Kresge and Locus devised the guarantee pool in 2019 to demonstrate how simple loan guarantees could catalyze lending to small businesses, affordable housing, and climate financing in low-wealth communities (see “Funders pool $33 million in credit guarantees to catalyze community investments”). The fund aggregates guarantees from more than a dozen organizations, including Gary Community Investments, the Chan-Zuckerburg Initiative, The California Endowment and the Robert Wood Johnson Foundation (disclosure: Robert Wood Johnson Foundation sponsors ImpactAlpha’s Muni Impact coverage). No capital changes hands unless a guarantee is triggered.
- Amplifying impact. CIGP backstopped an $8 million loan from a group of community development financial institutions, or CDFIs, to healthy fast food chain Everytable with a $3.2 million guarantee last May. Earlier this month, CIGP extended a $500,000 guarantee to CDFI Foodshed Capital to support more loans and technical assistance to underserved regenerative farmers.
- Green pipeline. Just $4 million of CIGP’s guarantees have been for climate solutions, but the pool’s pipeline contains $66 million in climate-related opportunities. Some $5.5 million of that has already been approved by CIGP’s credit committee and could unlock $30 million of additional capital. “Guarantees make lenders more likely to launch new loan products or enter new markets,” write Baek and Seybert. “They can remove a layer of risk – perceived or actual – for lenders who have historically shied away from financing projects in low-income communities, including loans that support climate-related efforts.”
- Keep reading, “How loan guarantees and catalytic capital can amplify federal ‘green bank’ funds,” by Jim Baek and Aaron Seybert on ImpactAlpha.
Dealflow: Agrifood Investing
KAS snags $3 million for low-cost production of aquaculture ingredient. Astaxanthin is used in aquaculture feed to enhance the health and pigmentation of farmed fish and shrimp. Synthetic astaxanthin is cheaper than natural astaxanthin, but natural is higher quality and more sustainable. “Strong consumer preferences for natural inputs is expected to accelerate the transition to natural astaxanthin,” said Claude Kaplan of Kuehnle AgroSystems, or KAS. The Honolulu-based company’s fermentation process extracts astaxanthin from microalgae in closed tanks. Kaplan touted the company’s “ability to generate greater astaxanthin output volumes, quicker and at a reduced cost” compared to other methods.
- Commercialization. The global market for astaxanthin is valued at $2.3 billion and is projected to grow 17% annually. S2G Ventures led KAS’s Series A round. Other backers include sustainable aquaculture investor Aqua-Spark and Cavallo Ventures. “We need more companies like KAS that are solving core challenges in the value chain to ensure our food system is healthier and more sustainable for consumers and the planet,” said Aqua-Spark’s Lissy Smit.
- Check it out.
Green Climate Fund invests in India’s climate resilience via the Avaana Sustainability Fund. The Small Industries Development Bank of India is the main financing body for tens of millions of India’s small businesses. The bank manages roughly four trillion rupees ($48 billion) in assets. Its venture capital group secured a $24.5 million investment from the Green Climate Fund to invest in homegrown climate tech ventures that support India’s energy transition, resilient livelihoods and positive environmental impact. Green Climate Fund estimates that 85% of India’s population – the largest in the world – faces climate vulnerability. SIDBI’s Avaana Sustainability Fund is targeting a $120 million raise.
- Climate resilience. The UN-led Green Climate Fund, or GCF, has a portfolio of more than $13 billion in climate investments, focusing on the most vulnerable climate countries. Its anchor investment in Avaana Sustainability Fund follows more than $3.4 billion in new commitments from the US, Italy, Switzerland, Australia and other countries made at the COP28 climate summit in Dubai. GCF aims for a 50/50 split in its portfolio between mitigation and adaptation investments.
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Dealflow overflow. Investment news crossing our desks:
- Leonardo di Caprio invested in Spain-based SolarMente, which offers lease- and subscription-based rooftop solar. (TechCrunch)
- Excelsior Energy Capital sold a portfolio of 38 solar and solar-plus-storage projects to BlackRock, which acquired the assets via its $1 billion Evergreen Infrastructure Partners Fund. (Excelsior Energy Capital)
- LA-based direct air capture venture CarbonCapture secured $80 million from Prime Movers Lab, Amazon’s Climate Pledge Fund and the venture arm of oil major Aramco, among others. (Axios)
- Mitsubishi Corporation, Standard Investments, Prelude Ventures and Safar Partners backed geothermal energy producer Quaise Energy’s $21 million equity round. (Think GeoEnergy)
- Packfleet, an all-electric parcel delivery service in the UK, secured $10 million from General Catalyst, Voyager and other investors. (Reuters)
Signals: Climate Finance
Happy Returns: Elaborate spoof takes aim at Vanguard’s retreat from climate commitments. Climate change can be stressful, including for investors profiting from fossil fuels in the face of record-breaking temperatures around the world. Climate activists today are unveiling a comprehensive, if entirely fake, emotional support toolkit for helping investors sleep at night without changing their investments or their asset manager. The “Many Happy Returns Climate Adaptation Toolkit” is an early April Fool’s Day stunt aimed at clients and employees of Vanguard Group. “If you’re feeling overwhelmed by the effects of climate change, you’re not alone,” says the voice on the fictitious sustainability hotline (1-800-771-4401) for Vanguard customers and employees. “Sometimes our investments can impact the climate in ways we don’t prefer. And that makes bad feelings happen. But don’t worry, we’re here to help you resolve that discomfort.”
- Climate laggard. The $9 trillion asset manager has been in the sights of climate activists, especially since its 2022 withdrawal from climate efforts such as Net Zero Asset Managers (see, “Move over, BlackRock. Vanguard is the new target for climate activists“). A report from a German environmental group last year found that Vanguard is the world’s largest investor in fossil fuels, with a total of $269 billion in coal, gas and oil holdings. Vanguard has questioned “the applicability of net-zero approaches to the broadly diversified index funds favored by many Vanguard investors.” Vanguard did not respond to an email from ImpactAlpha seeking comment.
- Social engineering. The Happy Returns toolkit is the latest social satire cum performance art by the group Yes Men, which in 2019 duped some reporters with a fake letter from BlackRock’s Larry Fink. “Our projects are always revealed very promptly,” said one of the creators, Keil Troisi, who for the project used the stage name Jeff Walburn. Posing as Vanguard, Yes Men engineered its way into this week’s Wall Street Green Summit where another member presented the Happy Returns marketing campaign. The satire only gradually dawned on the audience. “We got punked,” the summit’s organizer, Peter Fusaro, told ImpactAlpha. Troisi also wormed his way onto local television station WBRE in Wilkes-Barre, Pa. In a paid segment with the station’s anchors, he introduced a colleague with a large goldfish bowl-like “Terradome” over his head to “simulate immersion in a robust temperate forest.”
- Changing of the guard. The Happy Returns toolkit was created in support of the broader activist campaign Vanguard SOS, which has been agitating against Vanguard for several years. After working on the project for almost a year, Yes Men saw an opportunity with last month’s announcement that Vanguard CEO Tim Buckley will step down by the end of this year. “We could tie in the idea of Tim Buckley leaving behind some kind of bullshit greenwash program in his place as a way to say, ‘Sorry, I basically only backtracked while I was here. I hope somebody else does better,'” Troisi said.
- Keep reading, “Happy Returns: Elaborate spoof takes aim at Vanguard’s retreat from climate commitments,” by David Bank on ImpactAlpha.
Agents of Impact: Follow the Talent
Pam Dippel Choney, a retired investment management professional, becomes Social Finance’s board chair… Low Carbon Investment Management names Annabel Wiscarson, previously with IFM Investors, as CEO of its investment management arm… Eliza Erikson, formerly with Omidyar Network and Calvert Impact Capital, joins Brown Advisory as partner and head of impact investing and advice… Selby Jennings has an opening for a private equity associate… Quantified Ventures seeks a climate finance associate director… The Principles for Responsible Investment is hiring a finance director.
Meta is recruiting net-zero strategy managers in Denver, Boston and other US cities… Mozilla Ventures is looking for an associate… World Wildlife Fund seeks an intern in Washington, DC… FMO is on the hunt for a sustainable finance officer in The Hague… Green Climate Fund is recruiting a chief strategy and impact officer and other roles… ImpactAlpha’s David Bank will moderate a panel discussion on AI, deep fakes and democracy on Tuesday, March 19 at CANOPY Menlo Park, Calif.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– March 14, 2024
