Greetings, Agents of Impact!
Featured: Institutional Impact
Keep Calm and Carry On: The British are coming for climate change. Can you see a Republican president meeting with global leaders urging urgent action on climate change? Not anytime soon. Yet in the U.K, where Conservatives have led the government since 2015 and a right-wing Prime Minister is beloved by his Tory base, such heresies barely raise an eyebrow. The U.K.’s prominence on climate change in part has to do with the fact that COP26 is taking place in Glasgow, Scotland (see Signals, below). Brexit notwithstanding, the people of the U.K., like most Europeans and unlike some Americans, actually believe climate change is real. But while U.K. institutional investors might be winning the political battle, they remain a long way from making substantive long-term investment changes, writes Imogen Rose-Smith in her latest Institutional Impact column. “They are not set up to make the kinds of massive changes our economy needs. Even seemingly minor changes can be too much for them.”
An exception is the £700 million ($960 million) Parliamentary Contributions Pension Fund, which invests for the retirement of members of parliament. PCPF has given a mandate to asset managers BlackRock and Schroders to switch to low-carbon index accounts. “That kind of direction from an asset owner is a big deal,” Rose-Smith writes. “And it costs the pension plan basically nothing.” Some local pensions are pursuing sustainability through alternative assets. London’s £11.5 billion “collective investment vehicle” – London CIV – last year, launched a renewable infrastructure fund seeded with £435 million from five anchor investors. In contrast, Glasgow, the host city of COP26, has been maddeningly cautious in redirecting its £27.5 billion Strathclyde Pension Fund, one of the largest ‘local authority scheme’ pension plans in the U.K. A vote in June signaled the pension plan would end investments in fossil fuel firms that fail to act on the climate emergency. But given an opportunity to take even the small step of moving assets to the Baillie Gifford Global Alpha Paris Aligned Fund, Strathclyde demurred. “Strathclyde’s actions amounted to a whole lot of nothing,” Rose-Smith says. “We’ll be bailing out the Glasgow Airport with dustbins and sandbags by 2050, but you do you, as they say.”
Keep reading, “Keep Calm and Carry On: The British are coming for climate change (so long as their asset managers do the heavy lifting)” by Imogen Rose-Smith. Catch up on all of Imogen’s Institutional Impact columns.
Dealflow: Smart Cities
2150 raises nearly €270 million to reimagine cities. The venture firm, launched earlier this year by Danish real estate fund manager NREP, is looking for tech companies making cities more efficient, sustainable and resilient. 2150 is targeting companies with the potential to each reduce a gigaton of carbon per year. Investors include the Norwegian sovereign climate investment company Nysno, Credit Suisse’s Climate Innovation Fund and both BMW Foundation and BMW Group. “Their investment allows us to actively seek brilliant entrepreneurs working on technologies that can have the scale of impact we need to achieve,” 2150 wrote in Medium post.
- Decarbonization investing. 2150 has made five investments in North America, Europe and Asia, including U.S.-based Aeroseal, which seals HVAC air ducts to increase energy efficiency; U.K.-based sustainable infrastructure management company Nodes & Link; Hong Kong’s Ampd Energy, which makes energy storage systems for construction sites; Swedish carbon accounting firm Normative; and Canadian low-carbon concrete startup CarbonCure.
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LeapFrog leads CarDekho’s $250 million raise for its online vehicle marketplace in India. Jaipur-based CarDekho partners with fintech lenders and insurance companies to provide flexible financing and transparent pricing for new and used vehicles. Three out of every four vehicles are purchased by customers earning less than $10,000 per year. “Mobility, via cars and two-wheelers, is proven to massively improve healthcare, education and employment opportunities for emerging consumers,” wrote Andy Kuper of LeapFrog Investments, which led CarDekho’s latest round. The round, which includes $200 million in equity and $50 million in debt, values CarDekho at $1.2 billion. Check it out.
Dealflow overflow. Other investment news crossing our desks:
- Rubio Impact Ventures (formerly Social Impact Ventures) closes its €110 million ($127.5 million) second fund to invest in Dutch impact ventures (for background, see “Agent of Impact, Willemijn Verloop”).
- Creation Investments, Omnivore, Northern Arc and others invest $30 million in ReshaMandi, an agri-marketplace digitizing India’s silk supply chain.
- San Francisco-based Lively secures $80 million for its digital health savings accounts to help Americans save for unexpected healthcare costs.
- Canada Pension Plan Investment Board, in partnership with Conservation International, commits $20 million to accelerate community-led, nature-based projects that produce carbon credits for the voluntary markets.
- SWEN Capital Partners leads €4.1 million ($4.8 million) financing round for Norway’s OptoScale, which makes monitoring software and sensors for fish farms.
Series: Optimizing for Impact
The five dimensions of impact (video). Impact is multi-dimensional. This week’s short video from the new Coursera course, “Impact Measurement and Management for the SDGs,” developed by CASE at Duke and the U.N. Development Programme explores how the Impact Management Project’s five dimensions of impact – what, who, how much, contribution and risk – add context to help investors and business leaders make better decisions. “Many investors told us they were already familiar with the ‘five dimensions’ from the Impact Management Project,” Duke’s Cathy Clark writes. “But when we asked them to name the five… let’s just say the answers varied.” Take a spin.
- ICYMI last week’s video: “Where are you on your impact management journey.”
Signals: Countdown to COP
Yawning ‘ambition gap’ threatens global climate summit. The International Energy Agency’s World Energy Outlook is full of stark warnings just 18 days before a make-or-break global climate summit kicks off in Glasgow. Current pledges and net-zero commitments by global governments fall 80% short of what’s needed to reach net-zero carbon emissions by 2050, an “ambition gap” of 14 gigatons of greenhouse gases. To stave off climate catastrophe, investment in clean energy infrastructure needs to triple, to $4 trillion per year, by 2030. “A wave of investment in a sustainable future must be driven by an unmistakable signal from Glasgow,” the IEA warns.
- Fossil fade. The agency declared in May that new fossil fuel investment should stop immediately. Under the IEA’s Paris-aligned net-zero scenario, carbon prices will hit an average $250 per ton in advanced economies by 2050. The report, says Andrew Logan of Ceres, is “a flashing signal to all fossil fuel companies: Under no circumstances will the future look like business as usual.”
- Corporate action. Support for the Task Force on Climate-related Financial Disclosures has grown by a third, to more than 2,600 organizations globally, according to the group’s 2021 status report. Global regulators increasingly are basing policies on the framework. (The U.S. Securities and Exchange Commission is expected to propose new mandatory disclosure rules by early 2022 and adopt them by mid-year.) Publicly traded companies are responsible for 40% of all greenhouse gas emissions, according to Generation Investment Management.
- ESG rules redux. The U.S. Department of Labor is (again) clearing the way for environmental, social and governance, or ESG, funds in government-regulated retirement accounts. Such accounts represent more than $10 trillion in assets and cover more than 140 million workers. The proposed rule, the “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” reverses Trump-era guidance and makes clear that climate and other ESG factors fall under “a fiduciary’s duty of prudence.” The new rule “is an important step towards ending the regulatory pendulum,” said US SIF’s Lisa Woll.
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Agents of Impact: Follow the Talent
Ex-Danone CEO Emmanuel Faber and Blue Hill co-founder David Barber join Astanor Ventures as partners… Andrew Zolli, ex- of PopTech, joins Planet as chief impact officer… Mastercard’s Center for Inclusive Growth is hiring a director of impact data science in New York… Global Partnerships is looking for a senior credit officer in Seattle and an investment analyst for its social venture fund in Nairobi.
Convergence seeks an associate director of blended finance knowledge in Toronto or Washington, D.C… Prime Coalition is recruiting interns in Cambridge… E Pluribus Unum is looking for a director of philanthropy and strategic partnerships in New Orleans… Project Entrepreneur, a project of UBS and Hello Alice, is offering $25,000 grants to 30 female founders of color.
Thank you for your impact.
– Oct. 14, 2021