The Brief | September 12, 2024

The Brief: Sustainability on the runway at New York Fashion Week

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Greetings Agents of Impact!

🔌 Plugged In: Inside Wisconsin’s game plan to tap federal financing for the green transition. On Sherrell Dorsey’s next LinkedIn Live discussion, she’ll speak with Forward Together Wisconsin’s Mandela Barnes about how the nonprofit organization is connecting the state’s communities of color, working-class families, Tribal communities, and rural areas with once-in-a-generation climate funding under the Inflation Reduction Act. Barnes, Wisconsin’s former lieutenant governor, narrowly lost his 2022 race for the US Senate. Get Plugged In, Wednesday, Sept. 18, at 8am PT / 11am ET / 4pm London. RSVP today.

📞 Agents of Impact Call 64: Blending billions. The SDG Loan Fund, which raised $1 billion from the German insurance giant Allianz and Swedish bank Skandia, could serve as a model for efforts to put private capital to work for inclusive economic growth, reduced income inequality and other Sustainable Development Goals. Blended finance transactions hit a five-year high of $15 billion last year, but billion-dollar deals still represent a tiny fraction of all such transactions, which leverage guarantees, first-loss reserves and other forms of catalytic capital to crowd in appropriately priced commercial capital. Join MacArthur Foundation’s Debra Schwartz, Nnamdi Igbokwe of Convergence and other Agents of Impact for practical lessons in blending billions for renewable energy, sustainable agriculture, small business lending and health and education in emerging markets.

In today’s Brief:

  • Fixing fashion’s negative impacts
  • Climate strategies in public equities
  • Corporate water strategies and nature-based solutions
  • Digitizing merchants in the Middle East and North Africa

Ethical and inclusive are in style at New York Fashion Week. Celebrities including Rihanna and Madonna descended on New York City for Fashion Week, where venues from the Guggenheim Museum to basketball courts in Brooklyn served as backdrops for glittering parades of designer fashion. Ayesha Barenblat was not impressed. “It’s boring, y’all,” proclaimed Barenblat, founder of Remake, a San Francisco-nonprofit focused on conscious fashion. “It’s all about overproduction. It’s all about pump, pump, pump. Sell, sell, sell.” The ethical clothing entrepreneur celebrated a decidedly different kind of fashion at Remake’s annual “Walk your Values” show on a Lower East Side rooftop, where the models were fair-wage activists and indie designers styled in vintage, or “pre-loved,” ensembles. Fashion Week is finally waking up to the harmful effects of fast fashion and overconsumption: forced labor and poverty wages, mountains of discarded garments, and environmental degradation. That is spurring more designers and consumers to rethink how they make and buy clothes. Events like Remake’s sold-out show are early signs of a more sustainable, ethical and inclusive fashion industry, based on circularity, worker empowerment and the fresh styles of underrepresented designers.

  • Indigenous design. On another downtown rooftop this week, a hip crowd gathered for the Celebrating Indigeneity party showcasing Native American designers, hosted by the Decolonizing Wealth Project. DWP’s Edgar Villanueva started the gathering four years ago to provide a place for emerging Indigenous designers to meet amid the Fashion Week hubbub. The event has celebrated Native designers, including Jantay Kahm, Bethany Yellowtail and Naiomi Glasses, who was Ralph Lauren’s first artist-in-residence and has designed three collections for the brand. In May, the first-ever Native Fashion Week took place in Santa Fe, NM. “I see this as a narrative change opportunity, but also a wealth building opportunity for Natives in this industry and also for issues that we care about, like climate sustainability,” Villanueva, clad in an outfit of vegan leather made from cactus, told ImpactAlpha. Decolonizing Wealth Project supports Indigenous leaders and land stewards through its Indigenous Earth Fund, which makes grants to groups working on conservation and climate justice. 
  • Policy push. Many of the ethical fashion leaders see an opening for legislation to protect workers and mandate textile recycling. Remake, for example, has helped secure wages for workers and pushed for enforcement of fair wage laws. “The state of fashion is still largely broken, but we’re starting to see real momentum towards change,” said Rachel Kibbe of Circular Services Group, which advises brands such as Burberry and TheRealReal on strategies to reduce waste. Fashioning Accountability and Building Real Institutional Change, known as the FABRIC Act, would set minimum hourly wages for America’s nearly 100,000 garment workers and hold fashion brands and retailers, along with their manufacturing partners, accountable for workplace wage violations. The Americas Trade and Investment Act would allocate $14 billion in incentives for textile recycling and reuse to promote a circular economy. Kibbe calls the policy momentum “a real shift toward a more sustainable, ethical and inclusive fashion industry.”

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The essential role of public markets in the climate transition (webinar). The climate transition has been the dominant theme in impact investing in recent years, but almost always through a private markets lens – from new technologies at one end of the spectrum to giant infrastructure at the other. There has been a growing realization that innovation and scale also are available to investors in other parts of their portfolios. In public equities, for example, novel strategies are targeting technologies ready for scale, as well as companies with value-generating opportunities to raise their decarbonization game. In public debt markets, approaches are emerging to capitalize climate solutions with municipal bonds and tax credit markets.

  • Compass series. Join Tideline’s Ben Thornley for a lively conversation with ScopeFour Capital’s Heather Beatty, Citi’s Jorge Colmenares, Congruence Capital’s Brett Hoff, and UBS’s Tetiana Kyslytsyna that will take a closer look at public market opportunities for impact investors committed to broadening the fight against climate change.
  • Register now for Tideline’s Compass Series conversation, “Climate transition: The essential role of public markets,” Tuesday, Sept. 17, at 8am PT / 11am ET / 4pm London.

Dealflow: Investing in Water

Earth Finance acquires Water Foundry to advise corporations on water strategies. Earth Finance launched last year with $14 million from investors to help corporations map their net-zero strategies. With the acquisition of Water Foundry, a Denver-based global water consultant that specializes in water scarcity and quality, Earth Finance aims to help corporate clients “understand how the changing landscape of water affects their operations [and] leverage water and nature as strategic assets on the balance sheet,” said Earth Finance’s Garrett Kephart. The deal follows Earth Finance’s acquisition of Molecule, in Seattle, to expand its domain expertise in renewable fuels and low-carbon transport. 

  • Water stewardship. Global companies such as Unilever, Coca-Cola and Amazon are launching “water stewardship” strategies. “Increasingly, corporations are understanding and quantifying the value of nature for their business,” said Water Foundry’s Will Sarni, who will join the Earth Finance team (watch the replay of last month’s Agents of Impact Call, “Water, long overlooked, is increasingly investable”). Now, big companies are building nature-based strategies. “We’re building these capabilities so that we can help them navigate the complexities of those decisions,” Kephart told ImpactAlpha.
  • Universal access. Separately, WaterEquity reached the $100 million mark for its Water and Climate Resilience Fund. The fund will make debt and equity investments in water supply and distribution and in wastewater treatment and reuse. It builds on WaterEquity’s four previous impact funds, which focused on household water access. Backers include Microsoft’s Climate Innovation Fund, Starbucks, Xylem, Gap Inc. and others. WaterEquity is aiming to reach 15 million people. The firm, which has $460 million in assets under management, was launched in 2016 by Gary White and actor Matt Damon to address underinvestment in water infrastructure. Two billion people lack access to safe drinking water, and 3.6 billion don’t have access to sanitation services and facilities. Achieving universal water, sanitation and hygiene, or WASH, access will require a total of at least $6.7 trillion by 2030. Share.
  • Keep reading. 

Paymob lands $22 million to scale merchant payments across the MENA region. Egypt’s Paymob launched in 2015 as e-commerce was taking off in the country. The company’s app provided merchants with otherwise limited access to digital finance a way of collecting payments online. It now provides e-wallets, credit and debit cards, and payment by QR code to more than 350,000 small businesses in North Africa and the Middle East. The latest equity round is an extension of a $50 million Series B it raised last year from Kora Capital, PayPal Ventures and other investors. British International Investment, FMO, EBRD Venture Capital, Endeavour Capital among the latest backers.

  • New markets. Nine out of every 10 Paymob customers are new to digital payments. “The payments landscape in Egypt and the broader [Middle East and North Africa] region is hugely exciting and seeing rapid growth as economies transition to non-cash payment methods,” said EBRD’s Bruno Lusic. Paymob is aiming to reach 450,000 merchants in Egypt by 2025 and to expand in Pakistan, the United Arab Emirates, Oman and Saudi Arabia.
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Dealflow overflow. Investment news crossing our desks:

  • FlexiLoans raised $34.5 million in equity from Accion’s Digital Transformation Fund, Nuveen, Fundamentum and Maj Invest to extend credit to micro and small businesses in India’s smaller cities. (Accion)
  • Brookfield Asset Management earmarked up to $1.1 billion from its $15 billion Global Transition Fund to help Infinium develop and produce “synthetic” sustainable aviation fuels made using renewable power and recycled carbon dioxide. (ESG Today)
  • Nori, a Seattle-based marketplace for carbon removal credits, shut down, citing a “stagnant voluntary carbon market and tough funding environment.” It follows the June closure of ocean-based carbon removal company Running Tide, in Portland, Maine. (Carbon Herald)
  • FSDAi’s Nyala fund invested in First Circle Capital, a women-led venture capital fund that invests in African fintech ventures. (FSDAi)
  • Mirova notched its first investment in South Africa, investing $15 million in solar power producer SolarAfrica. It invested via its $282 million Gigaton Fund for clean energy and climate action in emerging markets. (Mirova)

Agents of Impact: Follow the Talent

Inclusive Prosperity Capital promotes Claire Getman to senior associate… Ivy Jack of the Diverse Investing Collective joins Boston Impact Initiative’s investment committee… Groundworks New Mexico adds Alanna Phillips, previously with Nusenda Credit Union, as community engagement manager.

CrossBoundary is hiring an investment advisor in El Salvador… WaterEquity is looking for a head of infrastructure investments in London (see dealflow above)… Tapestry Community Capital seeks an impact investment manager in Toronto… Blue Forest has an opening for a remote Indigenous partnerships coordinator.

Trust Neighborhood’s Kavya Shankar, Brian Boland of Unlock Ownership Fund, and Todd Leverette of Apis & Heritage Capital Partners will join a virtual discussion on how ownership strategies can advance racial equity and close the wealth gap, Tuesday, Sept. 17… Sunday, Sept. 15, is the last day to apply for the Mastercard Foundation’s Fund for Alumni Startups in Transition.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Sept. 12, 2024