TGIF, Agents of Impact!
🗣 Fallout. Given how high it rose and how far it fell, it’s no surprise that some names familiar to ImpactAlpha readers have been burnt by the FTX meltdown. Temasek, the sovereign wealth fund owned by the government of Singapore and major investor in green infrastructure, decarbonization and impact fund managers like Leapfrog Investments, wrote down its $275 million investment in two FTX entities. Temasek said its belief in “the actions, judgment and leadership” of FTX’s Sam Bankman-Fried “would appear to have been misplaced.” Ontario Teachers Pension Plan is writing down $95 million in two FTX investments and said “no due diligence process can uncover all risks especially in the context of an emerging technology business.” The World Economic Forum at one point gave FTX good marks for governance (but has since scrubbed mentions of the company from its website). Bankman-Fried seems to be recanting his own role in “this dumb game we woke westerners play where we say all the right shibboleths and so everyone likes us.”
Just because Bankman-Fried talked up “effective altruism,” and some ESG investors (among many others) fell prey to the crypto craze, doesn’t invalidate the importance of environmental, social and especially governance factors in investing, as some critics would have it. For ImpactAlpha this week, Robert Eccles and Bhakti Mirchandani argue for assessing the negative impacts of all investments, including those that may advance one or more of the Sustainable Development Goals. Stanford’s Alicia Seiger and Marc Roston make the case for “emissions liability management” as a more straightforward and accountable approach to managing and reducing corporate carbon emissions. Social risks and racial equity are increasingly central to investments, even in once-stodgy municipal bonds, as we explored on this week’s Agents of Impact Call (see below). Investments in women-led agribusinesses, for another example, seem to correlate with greater profits, faster growth and lower risk at Root Capital, as reported Jessica Pothering.
For laid-off refugees from crypto, and tech companies more broadly, the Climate Finance Tracker on ImpactAlpha points to three gaps that need filing, in energy access, nature conservation and regenerative agriculture, Vibrant Data Lab’s Eric Berlow explained to me. As Amy Cortese wrote as COP27 wrapped up this week, a new narrative of unstoppable progress and immense opportunity is taking hold – not in crypto, but climate. – David Bank
🎧 Impact Briefing. Amy Cortese catches up with FullCycle’s Stephan Nicoleau, who is at COP27 in Sharm El Sheikh, Egypt, to talk methane, governance and catalytic capital. Host Monique Aiken has the headlines.
- Listen to this week’s episode, and follow all of ImpactAlpha’s podcasts on Apple, Spotify or wherever you listen.
🎮 Impact: The video game. ImpactAlpha has partnered with E-Line Media and the Ford Foundation to explore the potential of a mobile social game aimed at Millennial and Gen Z retail investors, now in their teens, 20s and 30s. Help us flesh out the intriguing possibilities in this brief survey.
The Week’s Call
Mispriced risks, investor demand and community power center racial equity in municipal bonds (video). Cities around the U.S. are raising low-cost capital in the municipal bond markets by highlighting intentional efforts to address long-standing racial inequities plaguing communities and posing material risks to jurisdictions. “In a market where there’s very little innovation, it’s exciting to see change and to be on the forefront of that,” said Public Finance Initiative’s Lourdes Germán on this week’s Agents of Impact Call. “We are seeing a wider set of practices emerging around racial equity,” added Germán, who introduced a new framework to elevate those practices.
- Muni impact. Germán joined Kimberlee Cornett of the Robert Wood Johnson Foundation, Tim Martin of NYC’s Office of the Comptroller, and Rob Fernandez of Breckinridge Capital Advisors to help kick off ImpactAlpha’s “Muni Impact” project, a year-long exploration of racial equity issues in municipal finance, made possible with support from RWJF.
- Equitable growth. “Growth has not been an equal opportunity for every community,” said Cornett, who, at the foundation, has funded the Public Finance Initiative and other efforts to develop research, data and tools to reshape muni markets around racial equity. The foundation’s long-term goal is to help communities “find the capital that they really need to get on a more equitable path to development.”
- Review and comment. Public Finance Initiative is looking for public comment on the draft framework, which is the result of nearly a year of convenings with more than 100 issuers from 34 states, as well as investors and investment banks, underwriters, bond counsels and rating agencies. “We’re centering the practices that we think are vital and emerging,” said Germán.
- Watch the video and read the recap.
The Week’s Dealflow
Deal spotlight: Empowering – and paying – communities to protect nature. A climate trend that’s gathering steam: pay-for-nature schemes, wherein governments, donors and private investors pay for the protection and restoration of natural resources and biodiversity. Incoming Brazilian president Luiz Inácio Lula da Silva has promised to halt wide scale destruction of the Amazon rainforest, in part by subsidizing credit to farmers that adopt sustainable practices. Brazil may even pay them to preserve forestland. Gabon, home to a large swath of the carbon-crucial Congo Basin, is turning to the voluntary carbon markets to finance forest conservation.
- Public experiments. This week, Germany committed €15 million ($15.6 million) to the U.N.’s International Fund for Agricultural Development to pilot pay-for-nature projects with farmers and rural communities in Brazil, Lesotho and Ethiopia. The government of Canada last year allotted $340 million to support Indigenous communities in protecting the country’s boreal forests – the largest intact forest ecosystem in the world. The Seychelles, Belize, Barbados and other counties are cutting deals to trim their debt burdens and free up funds to conserve natural resources. Next up could be Ecuador, which is discussing an $800 million debt-for-nature swap.
- Private-led models. U.K.-based Amazonia Impact Ventures has issued $5 million in impact-linked loans to rural businesses and cooperatives in Peru and Ecuador to protect forestland. Mexico’s Ejido Verde pays indigenous communities to plant trees for land restoration and sustainable agroforestry.
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Energy transition. DIF Capital Partners will invest €150 million in Stockholm-based Alight, a developer of subsidy-free solar projects in the Nordics… Alcazar Energy raised $336.6 million for its second fund to invest in utility-scale clean energy projects in emerging markets… EnCap Investments sold its stake in Jupiter, a utility-scale battery storage operator, to BlackRock… KKR bet $400 million on Serentica Renewable for clean energy in India… Philanthropic organizations committed $500 million for energy transition in emerging markets.
Low-carbon transition. Impulse scored $20 million for battery-powered induction stoves… Climate Adaptive Infrastructure raised more than $1 billion for low-carbon real assets… Indonesia aims to cut emissions with $300 million coal-plant deal… Singapore-based Wavemaker Impact raised $13 million in a first close to invest in low-carbon transition companies… Energy Impact Partners sealed $485 million early-stage climate fund… VoLo Earth raised $90 million for early-stage climate tech.
Agrifood investing. Katapult’s Africa accelerator zeroed in on food security… Mexico City-based Perfekto snagged $1.1 million to reduce food waste by selling imperfect produce… Sistema.bio clinched $10 million to supply farmers in East Africa with biodigesters.
E-mobility. Bangalore-based green mobility company Yulu Bikes secured a $9 million loan from the DFC… Berlin-based JUCR secured €31.2 million in a seed and debt funding round to build EV charging infrastructure in Europe… San Francisco-based Kyte, an operator of on-demand, shared electric vehicles, raised $60 million.
Financial inclusion. Blnk raised $32 million in equity and debt funding to help Egypt’s small merchants offer point-of-sale consumer credit… Brazil’s Agrolend scored $27 million in Series B funding to provide access to credit and equipment to smallholder farmers in Brazil.
Inclusive communities. Bank of America made an undisclosed investment in an Arctaris Impact Investors’ Opportunity Zone fund to invest in communities and racial equity in Connecticut… Dearfield Fund secured $7.5 million to help Black first-time homeowners make down payments.
Investing in health. Delhi-based BeatO raised $33 million to offer online diabetes prevention and management for patients in India… Rwanda’s Eden Care raised pre-seed funding to help African employers enroll their employees in health insurance and wellness programs… South Africa’s Contro secured pre-seed funding to provide telehealth services.
Circular economy. Closed Loop Partners and Brookfield launched Circular Services to curb landfill waste for municipalities and businesses.
Impact management. New York-based Fennel raised $5 million to provide retail investors with insights on the ESG practices of public companies in their portfolios.
The Week’s Talent
Pradeep Menon, former managing director of Refinitiv, joined real estate sustainability services firm Evora Global… Clean Energy Ventures promoted Peter Sopher to investment partner and Ted Dillon to chief operating officer… Ben Jealous, ex- of NAACP and Kapor Capital, became executive director of Sierra Club.
The Week’s Jobs
In the U.S.
Apollo Global Management is recruiting a summer MBA associate for climate equity in New York… Also in New York, Bitgreen seeks a project finance director… Women’s World Banking is hiring a principal in Boston… IREX is looking for a director of strategic partnerships in Washington, D.C.
National Community Investment Fund is hiring a senior impact analyst and several other roles in Chicago… Greater Cincinnati Foundation is looking for a manager of philanthropic partnerships… Climate Impact Partners has an opening for a key client communications manager in Charlotte, N.C… ECMC is looking for a senior brand strategist in Minneapolis.
Environmental advisory firm ICF is recruiting a senior consultant of sustainable finance in Brussels… Oikocredit seeks a global partnerships officer in Amersfoort, Netherlands… The National Endowment for Democracy seeks a grants officer for the Latin America and Caribbean regions.
Impact startup accelerator Social Alpha is hiring a content writer in Delhi, Bangalore or Mumbai… The Africa Enterprise Challenge Fund seeks a manager of impact and knowledge in Nairobi… Also in Nairobi, the International Rescue Committee is hiring an innovation strategy advisor and a senior communications officer for its impact partnerships.
BlueMark is hiring a remote senior associate of impact investing research… US Bank is recruiting a remote ESG risk professional… Paxos seeks a remote global investigations compliance associate… LISC is hiring a remote lending asset manager.
That’s a wrap. Have a wonderful weekend.
– Nov 18, 2022