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The Week in impact investing: Risk, adjusted



TGIF, Agents of Impact!

The Week’s Agent of Impact

Josu Jon Imaz, Repsol. It was the write-down heard ‘round the world. Spanish energy company Repsol this month became the first oil and gas major to commit to net-zero emissions by 2050. That meant a $5 billion write-down – for starters – in fossil fuel assets. The write-down sent ripples through the oil industry and beyond. In case there was doubt about intentions, Repsol will link executive pay to decarbonization goals. Repsol, which is valued at $24 billion and operates in 37 countries, is dwarfed by Exxon and Chevron, and CEO Josu Jon Imaz is not a household name. But an accounting tweak vaulted the Madrid company to climate leadership – and turned up the heat on the laggards. “He’s thrown down the gauntlet,” said Carbon Tracker Initiative’s Mark Campanale (last week’s Agent of Impact – sensing a trend?) Energy companies that are proactive and work down to-be stranded assets with write-downs – and project shutdowns – will spare shareholders sudden shocks later. A week after Repsol’s announcement, Chevron wrote down its oil and gas assets in the U.S. and Canada by $10 billion, but without a corresponding net-zero plan. 

Imaz has led Repsol since 2014. The net-zero strategy affects exploration and production to refining, transportation and derivative products like chemicals. “Every time we see a company taking true leadership, it’s always because the CEO is driving change,” said As You Sow’s Danielle Fugere. “This is the full package – Repsol is showing its commitments as well as its plans to achieve those commitments.” Imaz is well known in Spain’s Basque country, where he studied chemical science and worked at Mondragon, the giant Basque cooperative. He has had roles in the Basque government’s Ministry of Industry, Trade, and Tourism and the Basque Nationalist Party and joined Repsol in 2008 with its Petronor unit. Impact and ESG investors now make up 30% of Repsol’s institutional shareholders. Imaz told analysts on a recent quarterly earnings call, “We have the conviction that the energy transition is an opportunity to create value for our shareholders.”

The Week’s Big 5

1. China is making the market for electric vehicles. More electric vehicles are sold in China than the rest of the world combined, thanks to aggressive government incentives for buyers. Subsidies are winding down, but adoption is ramping with supportive infrastructure, like a nationwide network of chargers, and mandates for foreign carmakers to get on board. Leading the charge

2. Exxon’s climate risks. A New York judge let off ExxonMobil on charges it deceived investors with its accounting for the cost of future climate change regulations. But as oil and gas peers like Chevron and Repsol write-down billions of dollars in “stranded assets,” Exxon’s reckoning may yet be coming. The real cost of risk

3. India’s social stock exchange. India’s planned social stock exchange promises to diversify capital available to millions of social enterprises. Like other social stock exchanges, India is grappling with how to maintain accountability to impact while improving access to finance. Here’s the gist.

4. Inclusive venture capital. The foundation is being laid for a bigger shift toward inclusive and sustainable enterprise. The recent swell of diversity-lens and alt-venture capital investment activity even includes a trade association, Builder Capitalist, for investors using startup-friendly financing structures. Village Capital and UBS are developing a directory of such investors. Market making.

  • Financing founder diversity. More than 90% of entrepreneurs don’t take equity investments. “When you open up your model to work for more of that 90%, you’re opening yourself to a pool of entrepreneurs that is by definition diverse,” says RevUp’s Melissa Withers. The investment firm saw a 10x increase in the racial and gender diversity of its portfolio when it switched from equity to debt.

5. Mitigating privatization risk. Private capital is flowing into historically public domains, like highways and water systems. Private entities promise efficiency but their involvement raises issues of accountability and democratic control. “Will we still have the right to know?” and “If a private company thinks they can make money, why can’t we?” are among the 10 questions impact investors and civic leaders should ask, Transform Finance and In the Public Interest suggested in a webinar. Check it out.

The Week’s Dealflow

Climate finance. Renewable energy investment bank Greentech Capital to be acquired by Nomura Holdings… Spring Lane Capital closes $156.5 million to fund sustainable facilities… Lightning Systems secures $41 million to help commercial vehicles go electric… Übermorgen Ventures raises $20 million to invest in climate startups.  

Locavesting. Novel Growth Partners closes $12 million fund for Midwest startups… Kendeda Fund backs Atlanta-based community impact fund… 1859 Ventures launches $5 million fund for Portland’s startups.

Returns on inclusion. Plexo Capital seeks “inclusion alpha” with new $42.5 million fund… Operator Collective taps operator wisdom and capital for $45 million fund… Ada Ventures raises $34 million to back Europe’s diverse tech founders. 

Growth markets. Israel’s Zora Ventures reaches first close for early-stage impact fund… Africa Development Bank kicks off $270 million fund for impact startups. 

Circular economy. The Renewal Workshop raises €5 million to help fashion brands go circular… FoodMaven closes $15.3 million to fight food waste. 

Farmer finance. Consonance backs AFEX to help capitalize smallholder farmers… Trading platform for small farmers Farmshine scores $250,000. 

Financial inclusion. Hastee secures £208 million to bridge U.K. workers’ wage gap… SaverLife secures $1.5 million to boost employee saving. 

Alt-capital. Earnest Capital makes revenue-based investment in FirstBase. 

Education and jobs. Impact Engine backs human resources startup Plum.

Impact tech. Franklin Templeton leads investment in Proof of Impact.

The Week’s Talent

Edwin Macharia was elected incoming global managing partner at Dalberg Advisors… Caprock’s Matthew Wetherly-White lifts the hood on how he invests his own money… Diana Kapp, author of Girls Who Run the World, is the first guest on Line of Sight, a new podcast from Santa Clara University’s Miller Center for Social Entrepreneurship, hosted by Thane Kreiner and Don Heider.

The Week’s Jobs

The Kauffman Foundation seeks a program officer of knowledge creation and research in Kansas City… Aspen Network of Development Entrepreneurs is hiring a Brazil chapter manager in São Paulo… Good Finance is looking for a digital marketing and communications officer in London…. Closed Loop Partners is looking for a senior project director in New York… Ecosystem Integrity Fund seeks an investor relations manager in Seattle… Net Impact is hiring a senior marketing manager, a senior finance associate, and a people operations associate in the Bay Area… Design Impact is looking for a researcher in Cincinnati.

Thank you for reading. 

– Dec. 13, 2019

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