Greetings Agents of Impact!
In today’s Brief:
- Columnist Imogen Rose-Smith on Trump II
- Carbon credits from ecosystem restoration in Colombia
- Investing in the social determinants of health
Featured: What’s Next
Impact investors could find a place in the next Trump administration, if only the impact weren’t so negative. Never have there been so many impact investors in and around the orbit of a president-elect of the United States, proclaims Imogen Rose-Smith in her latest Institutional Impact column on ImpactAlpha. Vice President-elect JD Vance, of course, was once involved with Rise of the Rest, Steve Case’s once-prominent impact fund, and invested in once-darling AppHarvest (after laying low about their relationship, Case is touting their ties on X). Pershing Square’s Bill Ackman, whose foundation built an impact portfolio, came out last summer as a Trump supporter and soon went all in. “Vivek Ramaswamy, well, he has that whole weird anti-woke ETF platform (does that make him a negative-impact investor?),” Rose-Smith writes. Even Donald Trump, Jr. is joining his own impact-ish VC firm, to invest in conservative-leaning companies). And, of course, electric vehicle pioneer Elon Musk is now fanboy-in-chief for Trump and has been tasked, with Ramaswamy, to lead a new Department of Government Efficiency.
- Grasping at straws. As her readers know, Rose-Smith is not shy about expressing her opinions. “We already know that the second season of Apprentice: White House Edition is going to be worse than the first,” she writes. “There is next to nothing positive to be said about a second Trump administration.” Still, “The election result is not necessarily entirely bad news for impact.” Impact investing assets under management increased under Trump I. So did investment in climate tech. Coal power production dropped by a third. Trump signed important impact investing legislation, like Opportunity Zones. “There is no reason to think things like that can’t or won’t happen again,” Rose-Smith writes. And many of the underlying problems that propelled Trump into office are the same ones impact investors try to address. “Those problems – the cost of living, lack of affordable housing, a need for better and higher quality jobs, support for small business and enterprise – have to be tackled, with or without government funding.”
- Fiduciary future. During his first administration, Trump’s Securities and Exchange Commission restricted rules on shareholder advocacy, made responsible investing more difficult, and generally gave companies contributing to carbon pollution and injustice a pass. “That did not slow us down,” writes As You Sow’s Andrew Behar in his latest Fiduciary Future column. “Our response then, as now, is to unite as a community and stand firm against adversity.” Read Behar’s column and catch up with the Fiduciary Future series.
- Pottery Barn rules. Rose-Smith says she was devastated, but also strangely elated, after the results came in. “I feel like we’ve been trying to hold the wolves of crazy back from the door with a whip and a chair for at least six years. Now the fight is over. We lost. It’s almost a relief.” The Republican Party, she says, is under “Pottery Barn rules – if they break it, they own it.” A president and his coterie that campaigned on unrealistic promises will be the ones to deal with the consequences. “An unfettered Trump is going to be bad. But there will come a time when this is over,” she says. In the meantime, “We have an important role to play in making sure the values we believe in prevail.”
- Keep reading, “Impact investors could find a place in the next Trump administration, if only the impact weren’t so negative,” by Imogen Rose-Smith on ImpactAlpha.
- Call No. 66: New realities, new narratives. Rather than a post-mortem, let’s come together for the pre-vita, or “pre-birth,” of what comes next after the US election. On next week’s Call, we’ll stake out emerging efforts to protect hard-fought gains, expand the Ownership Economy, rally leadership for climate action, make common cause around green jobs and entrepreneurial revival, design AI for good and seize the coming disruptions for positive change. Join Antony Bugg-Levine, Rachel Robasciotti, Wilson Lester and other Agents of Impact to posit the possible, with David Bank and the ImpactAlpha team, Monday, Nov. 18, at 10am PT / 1pm ET / 6pm London. RSVP today.
Dealflow: Carbon Markets
Temasek and Trafigura back carbon credits from ecosystem restoration in Colombia. New international standards for a centralized carbon market were agreed to this week at the COP29 summit in Baku, Azerbaijan. In Colombia, Temasek’s GenZero decarbonization investment group is teaming up with Trafigura, an employee-owned oil and metal trading company, on a $100 million carbon credit project. The Brújula Verde project aims to restore land degraded from wildfires and agricultural activities in the country’s Orinoco River Basin. InverBosques, a forest management company, is handling the planting with a goal of nurturing 24 million trees. The new trees will remove and sequester carbon; carbon credits will be issued starting late next year. “It is a unique project which adopts a restoration bridge concept by reconditioning soil health through reforestation, which enables the reintegration of native species gradually,” said GenZero’s Hoon Ling Min. “This in turn supports the delivery of high-quality carbon credits, essential in broader efforts to build high-integrity carbon markets.”
- Carbon standards. The new global carbon market standards’ aim is to improve the integrity of carbon offsets in light of rampant greenwashing in voluntary markets. They include guidelines for developing and assessing carbon projects under the Paris Agreement Crediting Mechanism. Critics argue that the new standards don’t go far enough to protect human rights. “When operational, these carbon markets will help countries implement their climate plans faster and cheaper, driving down emissions,” said the UN’s Simon Stiell. “We are a long way from halving emissions this decade, but wins on carbon markets here at COP29 will help us get back in that race.”
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Tozero lands €11 million to extract lithium and other critical materials from waste. Tozero launched in Munich two years ago with a low-carbon way to extract lithium from battery waste. The hydrometallurgy process, which extracts metals from solid materials in water, can cut emissions by 70% compared to conventional lithium mining (for context, see “Battery recyclers are raising money and ramping up for retired EVs”). “Tozero’s innovative approach to battery recycling is exactly what Europe needs to secure key supplies in the global electrification race,” said Shin Nikkuni of NordicNinja, which led Tozero’s nearly $12 million Series A round. Participating investors include Japanese auto giant Honda, Atlantic Labs, Verve Ventures and Possible Ventures. Tozero has raised €17 million since 2022.
- Localizing lithium. Global demand for lithium – for lithium-ion batteries and other industrial uses – is expected to quadruple by 2030. Prices have fallen by more than 80% for the soft and silvery-white metal since late 2022 due to a slowdown in electric vehicle sales and excess supply from China. In Europe, which gets virtually all of its lithium from China, startups are building sustainable and circular lithium supply chains.
- Commercial scale. Tozero made its first recycled lithium delivery earlier this year, said co-founder Sarah Fleischer. Tozero will use the investment to build its first industrial plant. It expects to process at least 30,000 metric tons of lithium-ion battery waste annually by 2026.
- Check it out.
Dealflow overflow. Investment news crossing our desks:
- Sahel Capital provided a $1 million loan to Uganda’s Sukuma Commodities to double its coffee-sourcing capacity from smallholder farmers. (Innovation Village)
- Oceanloop, a German shrimp farming venture, landed a €35 million ($37 million) loan from the European Investment Bank to build a facility in Spain. (Aquafeed)
- UK-based Iwoca raised £200 million ($246 million) in debt from Citi and Waterfall Asset Management to offer small businesses loans of up to £1 million. (Financial IT)
Signals: Investing in Health
How hospitals are partnering with community lenders to invest in the social determinants of health. As nonprofit hospitals shift from volume-based to value-based care, a powerful opportunity has emerged to invest in the social determinants of health. Research indicates that less than 20% of health outcomes stem from clinical care; at least 80% is shaped by social and environmental factors. “By investing strategically in areas like housing, nutrition and workforce stability, hospitals can reduce healthcare costs, meet regulatory requirements, and address community health needs,” Ibrahim Rashid, a Chicago:Blend VC Fellow and impact investing consultant, writes in a guest post. Community development financial institutions, or CDFIs, are emerging as natural allies, providing low-cost, high-impact investments that advance population health goals and sustainable community benefits as mandated under the Affordable Care Act.
- Economic + community health. In Toledo, Ohio, ProMedica Health System partnered with LISC Toledo to establish a grocery store in a food desert. The Rutland Regional Medical Center collaborated with NeighborWorks of Western Vermont on the Healthy Homes Initiative to improve housing quality for asthma patients by replacing carpets and upgrading heating systems. “These partnerships reduce healthcare costs, fulfill obligations under the Affordable Care Act, and contribute to a more resilient healthcare system,” says Rashid.
- Social determinants of health investing. Health systems exploring impact investing face return expectations and liquidity constraints. Most hospitals maintain little cash on hand, limiting their operating portfolio to liquid assets. Other impact-investing assets are typically held in the hospital’s foundation or strategic asset pool. CDFIs’ returns, in the 1% to 4% range, fall short of the 10% to 12% returns in other private-credit investments. For hospitals wishing to invest in social determinants while meeting their fiduciary duty, Rashid suggests cash deposits and targeted CDFI debt purchases, promissory notes to facilitate community lending, cash solutions like CNote’s Impact Cash, and products from Calvert Impact Capital and others that distribute dollars across various vetted CDFIs.
- Keep reading, “How hospitals are partnering with CDFIs to invest in the social determinants of health,” by Ibrahim Rashid on ImpactAlpha.
Agents of Impact: Follow the Talent
Sustainable Capital Advisors adds Stacey Jewell, previously with Rewiring America, as a senior associate… Social Capital Partners welcomes Silas Xuereb, a researcher and policy analyst with Canadians For Tax Fairness, as a fellow… Bill Gates, d.light’s Nedjip Tozun, and Galvanize Climate Solutions’ Tom Steyer and Katie Hall are named on the TIME100 Climate list.
Community Vision is hiring a loan closing specialist and a vice president of strategic initiatives… Nonprofit Finance Fund is on the hunt for a chief financial officer… Systemiq has an opening for a sustainable finance strategy manager… Africa’s Green Economy Summit, organized by Vuka Group with support from South Africa financial services group Sanlam, will take place Feb. 19-21 next year in Cape Town.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– Nov. 13, 2024
