The Week in impact investing: Social climate

TGIF, Agents of Impact! 

• Roundup: Socializing climate action
• Agent of Impact: Philadelphia’s next impact leader
• Podcast: CDFIs and the green transition
• Deal spotlight: Green lending in India

🗣 Climate +. Global warming, thy name is Helene. The hurricane’s rapid intensification was fueled by the warming waters of the Gulf of Mexico, which this year are more than three degrees Fahrenheit hotter than normal. The storm may further upend the fragile market for homeowners insurance, disrupting the mortgage market and driving up the cost of housing. Climate change already is inflating the cost of groceries, as Andrew Behar of As You Sow reported in his latest Fiduciary Future column on ImpactAlpha. Water, housing, food, migration, security – all are now climate issues, as thousands of Agents of Impact made clear at hundreds of Climate Week events across New York. Climate adaptation, long neglected in favor of climate mitigation, emerged as the next big thing, perhaps because tech and tools for resilience and recovery become more valuable the worse things get (hat tip to Lightsmith’s Jay Koh, an early adaptation adopter, who is rolling out an integrated strategy for financing adaptation deals). 

The upside of the climate convergence is that investment opportunities cross climate from all directions. Climate + tech means that hundreds of ambitious founders are as likely to stake their startup dreams on climate as on AI or, better yet, AI for climate. At the MIT Solve Finals and ForClimateTech’s innovation showcase this week, I met entrepreneurs working on green cement, carbon capture, circular fashion and innovative uses of invasive seaweed (still, climate tech exits lag, a worrying sign). Dennis Price rounded up the female founders powering climate entrepreneurship in Latin America (and namechecked many more in this month’s edition of ImpactAlpha Latin America). Climate + development means that carbon credits, which have taken a hit as a strategy for offsetting emissions, are becoming a major source of funding for clean cookstoves, energy access, regenerative agriculture and other sustainable development priorities, as Amy Cortese reported. At E-Mobility Week in Nairobi, ImpactAlpha’s Lucy Ngige found startups using carbon credits to defray the costs of two-, three- and four-wheel electric vehicles. The Exponential Roadmap Initiative’s framework identifies climate solutions that can halve global emissions by 2030, noted Daniel Firger, Claire Wigg and Johan Falk.

Climate + gender means embracing the talents and voices of women to accelerate climate action. Jessica Pothering profiled six women-led funds that are capitalizing the commercialization of climate tech. “We need a lot more yeses,” Courageous Capital’s Laurie Spengler said in a rousing discussion hosted by ImpactAlpha, Heading for Change and UBS. “Keep pushing and pushing and pushing.” In her own reflections on the busy week, Climate United’s Beth Bafford acknowledged the gap between the providers of the billions needed to finance the low-carbon transition and those close to the communities where the projects are needed. “If we don’t address this gap, we’re going to start seeing a tension between those fighting to reduce emissions and those fighting to reduce inequality,” Bafford wrote. “These two challenges are linked and should be working in tandem, not at odds.” Climate + justice = impact at scale. – David Bank 

Don’t miss this weekend read:

• “Empowering young impact professionals to advance their careers and their impact,” by Roodgally Senatus. 

The Week’s Podcasts

🎧 This Week in Impact: Takeaways from a busy Climate Week NYC. Host Brian Walsh takes up ImpactAlpha’s top stories with editor David Bank. Up this week: The buzz around early stage climate startups, the continued need for bigger checks and bigger investable opportunities, and how carbon markets are financing sustainable development.

• Listen to the new episode of This Week in Impact. Get the podcast in your feed by subscribing on Apple or Spotify.

🏛️ Capitol Gains: City First’s Oswaldo Acosta on the leading role of CDFIs in the green transition. “We are all green banks now,” says City First Enterprises’ Oswaldo Acosta on the latest Capitol Gains podcast. The CEO of the Washington, DC-based community development finance institution joined podcast hosts Matt Posner and James McIntyre for a Climate Week episode on the intersection of community finance and clean energy in the rollout of the Greenhouse Gas Reduction Fund. “Our deep community ties give us the upper hand in ensuring this clean energy transition is equitable,” explains Acosta. 

• Keep reading, and listen to, “City First’s Oswaldo Acosta on the leading role of CDFIs in the green transition (podcast),” by Matt Posner and James McIntyre on ImpactAlpha. 

The Week’s Agent of Impact

Kafi Lindsay, ImpactPHL: Leading the next era of impact in Philadelphia. ImpactPHL, the Philadelphia-based nonprofit behind the annual Total Impact summit, has found a CEO in Kafi Lindsay. A lawyer turned banker turned community economic developer, Lindsay’s goal is “to create a powerful impact investing ecosystem in Philadelphia that can be modeled nationally,” she tells ImpactAlpha. Philly boasts at least a dozen locally-focused impact funds and investors, including Reinvestment Fund, Halloran Philanthropies, The Collective and Kensington Corridor Trust. ImpactPHL’s previous executive director, Cory Donovan, who will lead the organization’s economic engagement strategies, and angel investor John Moore founded the group in 2016 to support the development of the city’s impact ecosystem (see, “Stocking the pipeline of impact investments in Philadelphia”). Lindsay is connecting with ImpactPHL’s stakeholders, mapping out strategies to give the ecosystem a further boost, and doing the planning to build out “ImpactPHL 2.0.” 

Indeed, place-based investing 2.0 was a key theme at this year’s ImpactPHL summit (see, “With collaborations and catalytic capital, place-based pioneers look to expand their impact”). One of Lindsay’s key objectives: driving more impact capital into Philly’s creative economy. “We’re looking at how we can get more investors into the arts and culture space, and looking at that as an economic generator,” she says. Another goal is growing Philadelphia’s green economy. “There are certain areas of the city that get hotter than other areas during the summer, and those are some of our poorer areas,” she says. “A lot of our muscle is around elevating the conversation on where impact capital can come in and help.” 

Lindsay previously led Philadelphia Mayor Cherelle Parker’s Office of Strategic Partnerships, mobilizing private, philanthropic and impact capital for green projects across the city. At PNC Bank, she oversaw $1 billion in loan and investment programs for nonprofits serving lower-income communities in greater Philly. As a senior counsel at the Philadelphia Housing Authority, she supported projects that revitalized over 100 affordable and mixed-rate housing units in the city. The north Philly native attended Howard University and its law school. She developed a passion for community-focused impact, particularly in “deeply impoverished communities” like the one she grew up in. “There are large portions of this city that are not afforded resources and opportunities, and there are spaces where impact capital can address that,” she says. At ImpactPHL, Lindsay gets to help steer that capital. 

• Keep reading, “Kafi Lindsay, ImpactPHL: Leading the next era of impact in Philadelphia,” by Roodgally Senatus on ImpactAlpha and share the story on Instagram.

The Week’s Deal Spotlight

Catalyzing capital for green lending to India’s small businesses. To encourage uptake of renewable energy, the Indian government passed a $9 billion subsidy program to support the adoption of rooftop solar. An additional $10 billion in financing is needed annually to help households and businesses make the switch. India’s financial institutions, from young startups to major banks, are clamoring to address the need. The latest: Gurgaon-based Two Point O Capital, which provides green loans to small businesses and rural enterprises for solar rooftops, energy efficiency equipment and wastewater treatment. Two Point O, launched earlier this year, has a “special focus on the underserved sectors such as rural and agriculture,” said Abhilash Sethi of agriculture-focused impact investor Omnivore, which led the company’s $6.3 million seed round. “By unlocking capital for distributed energy assets in rural India, the startup empowers businesses nationwide to embrace sustainability.”

• Catalytic climate capital. Catalytic capital is needed to test products, markets and distribution channels for small-ticket green lending. India’s most prominent player in small business finance, the Small Industries Development Bank of India, two years ago launched a program to facilitate billions of dollars in green lending to the country’s micro and small enterprises. It has deployed $1 billion through its Green Climate Finance initiative. With a $215 million commitment from the Green Climate Fund, the bank hopes to catalyze almost $4 billion to touch the lives of more than 11 million people over three years. “That is going to be one of the largest programs for micro and small businesses – not only in India, in the entire world,” said SIDBI’s Rajiv Kumar at a recent conference hosted by the Impact Investors Council in Delhi. In June, British International Investment partnered with Symbiotics on a second “green basket bond” to capitalize green lenders, with India as the biggest market.
  
• Blending billions. Blended finance structures like SIBDI’s are needed to finance the country’s massive green transition ambitions, adapt to climate change, and achieve its sustainable development targets. Such large-scale deals are rare in the $15 billion world of blended finance (see, “How commercial investors are streamlining blended fund structures“). India’s blended transaction volume reached $1.3 billion in 2022. The Global Energy Alliance for People and Planet, an initiative of the IKEA and Rockefeller foundations and the Bezos Earth Fund, is leveraging concessional capital and pooling commercial funding for battery storage development projects. India is looking to generate 500 gigawatts in renewable energy by 2030; nearly 50 gigawatts of battery storage capacity will be needed. “We hope these actions catalyze at least five to 10 gigawatts in the next two to three years,” GEAPP’s Saurabh Kumar said at the ICC event, adding, “The task ahead for India is something the world has never seen.”
  
• Read ImpactAlpha contributor Shefali Anand’s dispatch from Delhi and catch up on all of this week’s dealflow reporting on ImpactAlpha. 

The Week’s Talent and Jobs

💼 See and share more than a dozen new impact jobs posted this week on ImpactAlpha’s Career Hub and view hundreds of more jobs in impact investing and sustainable finance. Have a job listing to post? Submit it here.

Illumen Capital welcomed three new interns: Cornell University’s Femi Olonilua, Saadhvi Mamidi of UNC Chapel Hill, and Viridiana Santacruz of UC Berkeley’s Haas School of Business… JUST Capital tapped former PayPal CEO Dan Schulman as chairman of its board of directors, replacing JUST’s co-founder Paul Tudor Jones II… Carlos Martín, currently with Joint Center for Housing Studies, will become Resources for the Future’s research and policy engagement vice president in October.

Employee Ownership Canada added Social Capital Partners’ Jon Shell as a board member… Evrim Kirimkan, previously with Pontificia Universidad Católica del Perú, joined MCE Social Capital as head of credit risk… Kresge Foundation’s Joe Evans joined Opportunity Finance Network as climate finance senior executive fellow… Jack Wixcson, previously with PwC, joined Impact Charitable as a senior accountant… Climatize added Jim Goldmann, formerly with SolRiver Capital, as finance director. 

Bree Jones of Parity Homes became an Obama Foundation fellow… GSG Impact appointed Elizabeth Boggs Davidsen, previously with the US International Development Finance Corp. as its new CEO… Climate Asset Management tapped Andrew Dyson, previously with CAM’s co-owner Pollination, as non-executive chair… Aligned Climate Capital added Rachel Powlen, previously with NUImpact, as operations assistant, and Min Ah Chang, previously with David Shin CPA, as a part-time bookkeeper.

That’s a wrap. Have a wonderful weekend. 

– Sept. 27, 2024