Greetings, Agents of Impact!
Signals: Ahead of the Curve
Sustainability is the new new thing at the Consumer Electronics Show. Last January, some 170,000 attendees and 4,400 exhibitors flocked to Las Vegas for the annual Consumer Electronics Show. The lighter carbon footprint from the millions of air miles saved by this year’s virtual CES was complemented by a raft of climate-friendly tech debuts amid the usual gaming headsets and wireless gizmos.
- Electric everything. General Motors previewed a dozen or so new electric vehicles, including the EV600 electric van and the EP1 electric pallet for warehouses. It also showed off an electric vertical take-off and landing “Cadillac” air taxi. GM’s Mary Barra touted an “an all-electric future” with 2021 as GM’s “turning point to electric vehicles and a net-zero carbon future.” For self-charging EVs with built-in solar cells, check out Germany’s EV Sono Motors and Lightyear One in the Netherlands.
- Air to water. Exaeris Water Innovations’s AcquaTap is a portable device that pulls clean water out of the air. The company says the product can produce up to five gallons of water a day. GoSun, known for solar-powered ovens, launched a solar-powered water purifier for drinking, bathing and cooking.
- Smart homes. Schneider Electric was among the companies featuring smart home tech to address demand for sustainable, smart and efficient homes. “Our homes are expected to become the single largest greenhouse gas emitters over the next decade,” said Schneider’s Manish Pant. The company’s new Square D Energy Center integrates and manages electricity from solar panels, energy storage and the utility grid (listen to, “Shutdown accelerates shift to digitized, decentralized, decarbonized electricity”).
- Plug in.
Short takes. A few of the reports and data points crossing our desks:
- Optimizing outcome efficiency. New allocation strategies that integrate impact objectives alongside financial return goals can optimize for both. The Global Impact Investing Network explores investment decision-making strategies at Anthos, IDP Foundation, Incofin, UBS and UBS Optimus Foundation, and Vox Capital.
- Inclusion alpha. State Street will vote against directors of companies in the S&P 500 and FTSE 100 that fail to disclose the racial make-up of their boards. This year, companies must disclose the data to the $3.1 trillion asset manager. Beginning next year, State Street will vote against nominating and governance committee chairs of companies without at least one board member from an under-represented community.
Dealflow: Follow the Money
Canadian pension fund backs Taylor Guitars’ conversion to employee ownership. The Cajon, Calif.-based guitar manufacturer is now 100% owned by its more than 1,200 employees through an Employee Stock Ownership Program, or ESOP. “We’ve always wanted employees to have a stake in the successes they help us achieve,” said Bob Taylor, who founded the company with Kurt Listug in 1974. The $100 billion Healthcare of Ontario Pension Plan provided the majority of the capital, one of the first times a pension fund has directly funded an employee ownership conversion. “Pension funds and other institutional investors could really help unlock pathways for the conversion of large companies like Taylor,” said Jon Shell of Canada’s Social Capital Partners, which also invested.
- Employee ownership. In the U.S., ESOPs qualify companies for tax benefits based on the percentage of employee ownership. There are other structures for employee ownership as well: KKR is distributing equity stakes at its manufacturing companies (listen to KKR’s Pete Stavros in the podcast, “This private-equity giant has distributed more than $500 million – to hourly employees”). Instead of corporate buyouts that undermine local economies, “social impact investors could become the agents of a sweeping economic transformation anchored in broad-based employee ownership,” Democracy Collaborative’s Jessica Rose and Soros Fund Management’s Hilary Irby wrote on ImpactAlpha. The Taylor deal, says Chartwell Financial’s Ted Margarit, who advised on the transaction, “is a case study on how ESOPs can be viable investment opportunities for institutional investors looking to make a real impact.”
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Daystar Power raises $38 million to expand commercial solar power in West Africa. Mauritius-based Daystar Power builds and manages commercial and industrial solar installations in Nigeria, Ghana, Togo, Senegal and Cote d’Ivoire. The E.U.’s African Renewable Energy Scale-Up facility provided a guarantee, helping crowd in Denmark’s Investment Fund for Developing Countries, Morgan Stanley Investment Management, France’s Proparco and STOA Infra & Energy.
- Proof point. Even with a guarantee, Daystar’s round demonstrates growing investor appetite for commercial and industrial solar in Africa. Early investors got an exit last year when CrossBoundary Energy sold its portfolio (see, “Proof point for Africa’s commercial solar market – and catalytic capital”).
- Carbon lock-in. Africa’s electricity generation is set to double by 2030, but fossil fuels will continue to dominate unless governments phase out subsidies and national and international financial institutions stop funding fossil fuel projects, according to the journal Nature Energy.
- Ramp up.
Coral Vita secures $2 million to help corals adapt to climate change. Healthy coral reefs foster biodiversity and provide food, income and protection for more than 500 million people. But pollution and climate change are expected to kill 90% of the world’s coral in the next 30 years. Coral Vita’s on-shore coral farms are breeding tougher varieties to withstand climate shocks (see, “New models for financing reef restoration in the Caribbean and beyond”). Builders Collective led the seed round, with backing from the Sustainable Ocean Alliance, Yale University and individual investors.
- Ocean tech. Coral Vita is investing in 3D printing and robotics. “We’re launching R&D projects not just for restoration, but protection,” Google X’s Tom Chi, a Coral Vita investor, told TechCrunch.
- Check it out.
Deaflow overflow. Short takes on funding news crossing our desks:
- DFC pledges $150 million to guarantee the Women’s Livelihood Bond series. The commitment is part of the U.S. International Development Finance Corp.’s effort to mobilize $1 billion for women’s economic empowerment in Asia and $6 billion globally (see, “With billions as bait, development financiers seek to hook private investors on gender-lens investing”).
- Apple invests $100 million in racial equity initiatives. The tech giant made the first commitments from its Racial Equity and Justice Initiative, announced in June. Apple invested $10 million in Harlem Capital and a $25 million in Clear Vision Impact Fund. It is also funding Propel Center, a learning hub for historically Black colleges and universities, in partnership with Atlanta-based Southern Company. Apple is developing its own coding academy for students in Detroit.
- Social Finance invests $5.8 million in Alchemy Code Lab. The educator provides software development training and job placement. Social Finance invested via its Career Impact Bond fund, which launched last year (listen to the podcast, “Career impact bonds transfer risk to investors as the future of work arrives“). The investment will support Alchemy’s income share agreements, which let students pay for the program after securing well-earning jobs.
- The Rise Fund acquires renewable energy company Element Markets. Houston-based Element Markets helps corporations meet sustainability goals by securing renewable natural gas, as well as carbon and emissions credits. TPG Growth’s Rise Fund acquired a majority stake.
Agents of Impact: Follow the Talent
President-elect Joe Biden nominated Samantha Power, former ambassador to the U.N., as administrator of USAID… Maëlle Gavet, previously with Compass, joins Techstars as chief executive officer… Patricia McCarthy, ex- of Common Future, joins Candide Group as managing director. Candide named Hope Newsome, previously with Virtus LLP, as chief compliance officer and promoted Laurika Harris-Kaye to portfolio manager… New Forests names Adrian Williams, ex- of AMP Capital, as chief financial officer.
BLCK VC is recruiting an executive director… The Interfaith Center on Corporate Responsibility seeks a deputy director… One Acre Fund is hiring an associate writer in New York… Prime Coalition is looking for summer fellows… Applications are open for the U.K.-South Africa Tech Hub and Future Females’ accelerator for female founders of greentech startups.
Thank you for your impact.
– Jan. 14, 2020