The Brief | July 27, 2021

The Brief: Unlocking impact in emerging markets, AI for alt-protein, electric trucks, voluntary carbon markets, impact management

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Greetings, Agents of Impact! 

Impact Voices: ESG in Emerging Markets

Unlocking returns and sustainable growth in emerging markets. Homegrown companies and investors across Asia, Africa and Latin America are finding competitive advantages by riding sustainability and ESG trends. A trio of guest posts on ImpactAlpha explore how emerging market countries and companies are driving innovation, cultivating human capital, and generating profits from sustainability-seeking middle class consumers.

  • Emerging markets emerge as sustainability leaders. Companies from China and South Korea to South Africa and Brazil are emerging as leaders in sustainability trends. “ESG investing in emerging markets offers investors opportunities not only for corporate governance risk mitigation, but increasingly for alpha generation through the emergence of new sustainability leaders,” writes Liz Su of Boston Common Asset Management. Go deeper.
  • Funds of funds mobilize capital for African impact investing. Private equity funds that invest in other private equity funds are emerging as a much needed source of capital for first-time and smaller impact fund managers across Africa. Kanini Mutooni of the Draper Richards Kaplan Foundation highlights funds of funds like Oryx Impact that are “mobilizing private capital to investment sectors and geographies many private investors would otherwise consider too risky to invest in directly.” Check it out.
  • Better economic data can drive inclusive growth in Africa. Regular population censuses. Household data. Agricultural and enterprise surveys. Consistent and reliable data can better allocate resources as nations and investors look to private enterprise to contribute to inclusive growth, writes Teddy Roux of Entrepreneurial Solutions Partners in Cote d’Ivoire. Among his suggestions: Build and reinforce local capacity to collect private sector data on a regular basis. “Clear, shared and coherent strategies do not remove execution risk but tend to reduce it.” Dig in.

Dealflow: Plant-Based Food

Chilean plant-based food producer NotCo raises $235 million. The Santiago-based company created Giuseppe, which uses artificial intelligence to identify plant-based ingredients as substitutes for animal-based products. Its milk, ice cream, burgers and mayonnaise can be found in supermarkets in the U.S., Chile, Argentina, Colombia and Brazil. The company is expanding in Europe and Asia, and introducing new products in North America. Tiger Global Management led the round, with participation from DFJ Growth Fund, ZOMA Lab and Jeff Bezos’ Bezos Expeditions. British racing driver Lewis Hamilton and Swiss tennis player Roger Federer also participated. NotCo is valued at $1.5 billion.

  • Low-carbon transition. Spurred by the climate emergency, investments in alternative proteins are projected to reach $8 billion this year. Shifting to a plant-rich diet is considered one of the top five carbon-reducing solutions (see, “Plant-based startups are eating Big Food’s lunch”).
  • Dig in

Rivian rakes in $2.5 billion to commercialize electric pickups and SUVs. The Irvine, Calif.-based company plans to deliver its electric pickup trucks and SUVs to customers this fall and is building 100,000 electric delivery vans for Amazon. The new financing will be used “to scale new vehicle programs, expand our domestic facility footprint, and fuel international product rollout,” said Rivian’s RJ Scaringe. The investment round, led by Amazon’s Climate Pledge Fund, D1 Capital Partners, Ford Motor Company and clients of T. Rowe Price, brings Rivian’s total raised since 2019 to $10.5 billion.

Hartree Partners and Wildlife Works tap voluntary carbon markets to finance forest protection. The partnership is an example of how rising prices for carbon credits are making more conservation initiatives investable (see, “That feeling when investors realize carbon is going to $100 a ton sooner than they expected”). The partnership between Hartree, an energy commodities trader, and Wildlife Works, based in Mill Valley, Calif., aims to catalyze $2 billion through the sale of “verified emission reductions” on the REDD+ (for “reducing emissions from deforestation and degradation”) carbon marketplace. The 20 projects in Africa, Asia and Latin America will preserve at-risk forests and wildlife and create economic opportunities for local communities. With Hartree’s backing, “We can implement our just and inclusive climate, community and biodiversity solutions in many more forest communities where they’re desperately needed,” said Wildlife Works’ Mike Korchinsky.

  • Voluntary offsets. Once the projects are completed in 2023, the portfolio is expected to generate credits for emissions reductions of 20 million tons per year, or 600 million tons over its 30-year lifetime. The credits will be marketed by Wildlife Works’ partner Everland and Vertree, a joint venture between Hartree and impact investor SYSTEMIQ. Hartree’s commitment “will help give forest governments, landowners, and communities long-term financial confidence as they consider valuing their standing forests under REDD+,” said Everland’s Gerald Prolman.
  • Check it out

Impact management gets a boost from the Tipping Point Fund on Impact Investing. As the market for impact investments grows, “so too must the metrics, tools, and platforms used to measure and disclose impact to different stakeholder groups,” says Tipping Point Fund’s Fran Seegull, who also heads the U.S. Impact Investing Alliance. The fund awarded $3.3 million in grants to 16 organizations to develop and promote impact standards, verification, evidence and other impact management infrastructure.

  • Data wonks. Among the grantees, Adasina Social Capital will build a database to consolidate social justice data sets and impact metrics; CDP (formerly the Carbon Disclosure Project) will map the sustainability taxonomies of economic activities; and The Shareholder Commons will develop case studies of value-creation through an expanded view of materiality.
  • Who’s who. Also funded: 60 Decibels, Aspen Network of Development Entrepreneurs, B Lab, BlueMark, AssuranceMark and Ceres, Climate Disclosure Standards Board, Center for Innovation at the University of California Hastings Law, Global Impact Investing Network, Impact Capital Managers, Impact Management Project, PolicyLink, The Predistribution Initiative and Toniic Institute.
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Dealflow overflow. Other investment news crossing our desks:

  • Hamilton Lane reaches a $149 million first close on its second impact fund to invest in companies supporting the clean energy transition, sustainable processes, health and wellness, and community development.
  • Soltage closes a $130 million debt facility to finance a distributed utility-scale portfolio of projects across the U.S., led by Silicon Valley Bank.
  • Belgium-based Incofin closes a $60 million India-focused fund that will invest in the agrifood sector, financial inclusion and rural entrepreneurship.
  • The Royal Bank of Canada raises $750 million from a five-year green bond by working with broker-dealers owned by women, people of color and veterans.

Agents of Impact: Follow the Talent

Robert Wall, ex- of Federated Hermes, joins Lazard Asset Management as managing director and head of sustainable private infrastructure… Omidyar Network is recruiting a principal for its Reimagining Capitalism team in Washington, D.C… Mission Driven Finance is looking for an investor relations coordinator… Convergence is hiring an associate director of content and thought leadership and a digital communications associate in Toronto or Washington, D.C… Peloton seeks a senior manager of ESG strategy and operations In New York. 

CASE i3 Consulting Program at Duke University has opened applications on an impact investing or sustainable finance challenge for MBA student teams… The Principles for Responsible Investment is hosting a discussion with SEC chair Gary Gensler on climate, global financial markets and the SEC’s 2021 regulatory agenda, Wednesday, July 28 at 10:30am ET… Criterion Institute will host a Month of Action on financing reductions in gender-based violence Sept. 8-30.

Thank you for your impact.

– July 27, 2021