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The Week in impact investing: Latin American solutions



TGIF, Agents of Impact!

The Week’s Agents of Impact

Agents of Impact: Scott Jacobs and Jigar Shah, Generate Capital. Cost curves for renewables are falling fast and everything needs to be rebuilt. Welcome to the resource revolution that Scott Jacobs and Jigar Shah spotted years ago. Jacobs and Shah founded Generate in 2014 and this month closed on $1 billion in financing. The capital will be invested in long-term sustainable-infrastructure-as-a-service to roll out solar, battery storage, electric vehicles, wastewater treatment, energy efficiency and other solutions that more than pay for themselves over time.

Shah, in particular, is known for being a step ahead in the transition to the low-carbon economy. He founded SunEdison, where he pioneered “no-money-down solar” and unlocked a multi-billion-dollar market. Jacobs co-founded the clean technologies practice at McKinsey & Co. The future is “democratized, digitized, decentralized and decarbonized,” he told ImpactAlpha. We already have the solutions needed to solve energy poverty, water scarcity and climate change, he says. “You don’t need to reinvent the world, you just need to rebuild it.” Generate owns and operates sustainable infrastructure for companies, schools and cities. Generate’s investors include AustralianSuper, Queensland Investment Corp., Railways Pension in the U.K. and AP2 in Sweden. “It matters a lot that they’re paying attention,” Shah told Greentech Media. “If we’re going to save the world from climate change, these are the guys who are going to have to weigh in on whether this is a good investment.” – David Bank

The Week’s Big 6

1. Latin American leadership. More than 600 impact investing doers and shapers convened in Mérida, Mexico this week for the tenth annual “FLII,” Latin America’s biggest impact investing gathering. Hot topics: solutions for refugees and migrants, making blended finance work and gender-lens investing. “Now is the time for Latin America to lead,” Refugee Investment Network’s John Kluge declared at the forum’s opening evening. More from Mérida:

  • Latin American experiments in conservation and regeneration. Mexico-based venture builder Neek Capital is creating a portfolio of companies around sustainable use of natural resources. It has launched two companies – Carne del Monte and Frescos – to transform “the entire production chain of livestock,” said Neek’s José Luis Castro. The Forest Stewardship Council is working with Latin America’s small farmers to improve forest management. Mexico City-based Loom Capital recently launched to invest in landscape regeneration. “There have never been in history so many funds to invest in environmental impact,” said Loom’s Héctor Martínez. “However, it is necessary to develop an investment ecosystem.”
  • Más.

2. Investment solutions to Latin America’s refugee crisis. Social and economic disruptions are dislocating millions of Central and South Americans and straining the resources of countries receiving the migrants. New impact vehicles could help. The Baja California Fund for Inclusion, designed with Refugee Investment Network, will target economic development to integrate refugees in Mexico. The World Refugee Council is backing a social infrastructure fund for housing, healthcare and other projects in Colombia, which has absorbed a wave of migration from Venezuela. Dig in.

3. The off-grid paradox. As off-grid energy providers grow, they appear to focus less on the poor. That’s one finding from Why off-grid matters,” from impact measurement firm 60 Decibels. The picture of the on-the-ground impact of solar lanterns, solar home systems, mini-grids, solar-powered appliances and clean cookstoves in developing markets is based on interviews with 35,000 off-grid energy customers of 49 companies in 17 countries. Get the scoop.

4. Undermining ‘stakeholder’ commitments. One of the first acts of new Wells Fargo CEO Charlie Scharf when he joined the bank last October was to sign onto the Business Roundtable’s new stakeholder-centric corporate pledge. In a guest post on ImpactAlpha, Shareholder Commons’ Rick Alexander writes that by ducking a vote on a resolution asking the bank to study becoming a benefit corporation, Wells Fargo is continuing to prioritize shareholders over other stakeholders, “giving the lie to much of the talk around the new purpose of corporations.” Come clean.

5. Diversifying foundation asset management. Pension funds, endowments, foundations and sovereign funds overwhelmingly select white and male-owned firms to manage their money. That homogeneity may be crimping returns, with data suggesting outperformance by gender and racially-diverse teams. Some foundations are reading the signals. A new Knight Foundation study found that firms led by women and people of color now manage an estimated $8.6 billion, or 13.5% of nearly $64 billion in assets held by 26 big foundations. “There’s a sizable interest among investors for investment manager diversity,” says Knight’s Juan MartinezMix it up.

6. Lessons from a ‘100% impact’ donor-advised fund. Some holders of tax-advantaged “donor-advised funds” are directing their principal toward impact investments. Over more than a decade, San Francisco-based RSF Social Finance has moved its roughly $70 million in DAF assets into impact investments. In a guest post on ImpactAlpha, RSF’s Shu Dar Yao shares the lessons of its “100% impact” fund. Read on.

The Week’s Dealflow

Financial inclusion. Brazil’s IOUU raises $1.3 million for peer-to-peer business lending… Inclusiv makes first credit union investment from Southern Equity Fund.

Food and agtech. Renewal Funds backs plant-based food company Hodo… India’s Clover raises $5.5 million for greenhouse-grown produce.

Climate and conservation finance. Jeff Bezos pledges $10 billion to fight climate change… Germany’s KfW adds $16.6 million to LatAm-focused eco.business Fund.

Institutional shift. New York pension shifts $800 million into responsible fixed-income funds… Solactive takes stake in German climate-analytics startup.

Returns on inclusion. Calvert Impact Capital and Urban Advisors clinch $19.5 million to back entrepreneurs of color.

Energy access. SunFunder invests $4 million in Nigeria’s Daystar Power.

Impact tech. Bringly raises early funds to boost sustainable delivery services.

The Week’s Talent

Alok Sharma, the U.K.’s Secretary of State for Business, Energy and Industrial Strategy, was named president of the COP26 climate conference in Glasgow in November… Jyotika Virmani was named executive director at the Schmidt Ocean Institute… Shuen Chan joins Legal & General as head of ESG of its real assets business… Michelle Dunstan was appointed global head of responsible investing and Sharon Fay assumes the role of chief responsibility officer at AllianceBernstein.

The Week’s Jobs

Citi is recruiting a VP-level sustainability and ESG program lead in New York… The Climate Leadership Initiative is hiring a director of operations in San Francisco… Nonprofit Finance Fund is looking for a New Markets Tax Credits analyst in New York… Bamboo Capital seeks a senior investment manager, an investment manager and a debt investment associate… Illumen Capital seeks a product manager in the San Francisco Bay area.

Aunt Bertha is hiring a community engagement manager in Austin… S2G Ventures seeks a managing director to lead its oceans and seafood venture investment team in San Francisco or Chicago… Sonen Capital is hiring a head of business development and an investment analyst in San Francisco… Veris Wealth Partners is recruiting a wealth manager in San Francisco… Iroquois Valley Farmland REIT seeks an investment coordinator in Evanston, Ill… Encore Renewable Energy is hiring a project developer/manager in Burlington, Vt.

Thank you for reading.

— Feb. 21, 2020

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