The Week in impact investing: Soft power

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ImpactAlpha

TGIF, Agents of Impact!

🗣 Art of the deal. Call it greenwashing. Or call it soft power. The presidency of the annual COP global climate summit is charged with pushing 190 fractious nations towards consensus on key actions to slow runaway warming and protect vulnerable countries from here-and-now climate catastrophes. That this year’s COP president is Sultan Al Jaber, the head of the UAE’s national oil company, complicates matters, as I reported this week. As the climate talks got underway this week in Dubai, reports suggested Al Jabar was using his position to pitch the UAE as an oil and gas development partner to other nations. Al Jabar refuted the allegations, but it’s clear his team has been busy. The UAE is said to be getting ready to anchor a nine-figure climate fund earmarked for the Global South. It has already spent some $200 billion on green energy projects around the world, as the FTreported. COP28 “is a key space for nations to shape their sustainability perceptions,” writes consulting firm Brand Finance, which in turn enables them to “affect the climate commitments of others.”  

The centrality of oil money in the green transition underscores the fact that some Western nations are increasingly unable, or unwilling, to pony up the billions necessary to meet climate goals. UAE and its oil-rich neighbors are stepping into the void. “Here’s an area where we actually might get something surprising and successful,” FullCycle’s Stephan Nicoleau told ImpactAlpha on this week’s Impact Briefing podcast. Other upbeat signals at COP28 include the prominence of climate tech innovation, as contributing editor Jordyn Dahlexplored in her report on efforts by New Energy Nexus and Riffle Ventures to strengthen climate tech ecosystems in emerging markets. And David Bank reported on a promising model for blending finance in the new $1.1 billion SDG Loan Fund that includes Dutch development bank FMOMacArthur Foundation and German insurer Allianz(see Deal Spotlight, below)

Researchers at NYU’s Stern Center for Sustainable Business spotted a need for tools to help private equity firms realize the value of sustainability, so they created one, as Tensie Whelan and Florent Nanse of NYU and Julien Marchese of Arthur D. Little explained. Ceniarth’s Diane Isenberg and Greg Neichin punctured some of the happy talk with a provocative roster of inconvenient truths from the $650 million family office’s decade of impact investing, including their disappointment with the level of impact-first commitments from other self-identified impact investing families. That’s the thing with soft power: actions must match rhetoric. On Day One of COP, negotiators agreed to operationalize a loss and damages fund to compensate low- and middle-income countries for climate disasters. The UAE put up the first $100 million, matched by Germany. The U.S. pledge? $17.5 million. – Amy Cortese

👋 Agents of Impact Call: Finding hidden impact and risk in municipal bonds. High-performing schools in low-income neighborhoods. Lead pipe abatement in cities with engaged citizens. Communities in the early stages of reversing downward trajectories and “spiraling up.” On the next Call in ImpactAlpha’sMuni Impact series, supported by the Robert Wood Johnson Foundation, learn how rampant mispricing of racial and climate risks in municipal bond markets opens the door for intentional investors to spot overlooked opportunities for impact. Join R. Paul Herman of HIP Investor, Kestrel’s Monica Reid, Activest’s Homero Radway, Court Street Group’s Matt Posner and other Agents of Impact, Wednesday, Dec. 13, at 10am PT / 1pm ET / 6pm London. RSVP today.

The Week’s Podcast

🎧 Impact BriefingImpactAlpha’s Amy Cortese speaks with Full Cycle’s Stephan Nicoleau at the start of COP 28 to hear what he’s expecting – and hoping for – at the global climate summit in Dubai. Host Brian Walsh has the headlines

The Week’s Dealflow

Deal spotlight: Blending global insurance assets for impact. The new $1.1 billion SDG Loan Fund is significant for the use of catalytic capital, in the form of a $25 million guarantee from the MacArthur Foundation and a $111 million first-loss reserve from the Dutch development bank FMO. Equally significant is whose capital is being catalyzed. “All investors in the fund are European insurance companies that are sustainability shapers in their respective countries,” said Nadia Nikolova of Allianz Global Investor, the asset management arm of the German insurance giant that was the largest provider of senior capital for the SDG fund. Insurance companies worldwide manage more than $41 trillion in assets. And, together with pension funds, they represented the largest increase in allocations to impact investing, with a compound annual growth rate of 32% between 2017 to 2022, according to the Global Impact Investing Network.

  • Big ambitions. Allianz, the rare insurance company with a dedicated development-finance team, took the initiative to create the SDG Loan Fund, teaming up with FMO to submit a proposal in response to the MacArthur Foundation’s call for projects demonstrating the use of catalytic capital. “It was private-led. It had very big ambition and scale, at $1 billion dollars. And it had a very sizable chunk of investment committed at the time. That was extremely unusual,” MacArthur’s Debra Schwartz told ImpactAlpha (disclosure: MacArthur Foundation leads the Catalytic Capital Consortium, which supports ImpactAlpha’s coverage of catalytic capital).
     
  • Systemic risks. The awareness of insurance companies’ about climate risks is perhaps to be expected, given their exposure to such risks in their underwriting businesses. A survey last year by Nuveen found that insurers also expressed stronger commitment to social impacts and diversity, equity and inclusion than corporate or public pension fund investors. Insurers haven’t quite sworn off the fossils, however. As of 2019 – the most recent data available under California’s insurance-industry disclosure rules – U.S. insurers held $536 billion in fossil fuel-related assets. Some companies told researchers they have since made “huge changes” in how they loan to and invest in such assets – which may show up in future disclosures.
     
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Agrifood investing. Investors committed $1.7 million to Aquarech to support fish farmers in Kenya… Planet Farms raised $40 million for vertical farms in Italy and the UK.

Climate tech. Former KKR India CEO Sanjay Nayar backed Peak Venture Advisors, a Mumbai-based climate tech venture fund seeking $250 million from institutional investors… Newheat scored €30 million ($33 million) to expand access to renewable heating in France… Singapore-based Climate Alpha scored $5 million for its software to help real estate, asset management and insurance companies predict and manage climate volatility.

Electric vehicles. Advanced Electric Machines scored £23 million to minimize extractive minerals in electric vehicles… HumanForest raised £17 million ($21.4 million) in Series A financing for the B Corp’s electric-bike sharing in London… In India, Baaz Bikes secured $8 million for its electric two-wheelers, batteries and network of swapping stations… ZeroAvia raised $116 million in Series C financing for its hydrogen-electric aircraft engines.

Energy transition. SparkMeter snagged $5 million from Honeywell Smart Energy to install low-cost energy metering systems in emerging market households… French nuclear startup NAAREA raised €60 million to build modular reactors. 

Impact fundraising. Conscious Investment Management secured A$50 million for social and affordable housing in Australia… Vancouver-based Active Impact Investments secured C$70 million (US$51.4 million) for its third early-stage climate fund… Vancouver Foundation anchored Spring Impact Capital to invest in Canadian health and climate ventures.

Inclusive economy. Kiwi raised $13 million in Series A funding to provide access to digital credit in India… Mission Driven Bank Fund secured $110 million for local lenders in low-income communities… Temasek Trust is acquiring MoneyOwl to reposition the company to provide financial services to essential workers, gig workers and youth… Veev, a company building modular homes to tackle the US’ housing shortage, will liquidate its assets in a process similar to bankruptcy… Australia’s White Box Enterprises clinched $12 million to create jobs for people in disadvantaged communities within local enterprises.

Investing in health. Cameroon’s Waspito raised $5.2 million in seed funding to mitigate Africa’s health worker brain drain by connecting patients to doctors virtually… Dutch B Corp. Naif secured €23 million ($25.2 million) from impact investor Future Business Partnership to make eco- and skin-friendly care products.

Low-carbon transition. Finland-based One Click LCA secured €40 million ($44 million) to develop carbon reporting and management solutions for construction and manufacturing… Singapore financial services firm DBS and H&M Group launched a loan program to decarbonize the operations of H&M’s suppliers.

The Week’s Talent

Doreen Kubu, ex- of ABNO Softwares International, joined Mercy Corps Ventures as a junior investment analyst… Felipe Passos, former senior accounting analyst at BlueHub Capital, joined Social Finance as a senior associate on its impact finance operations team… Impact Investing Ghana appointedAmma Gyampo, CEO of ScaleUp Africa, as a new board member.

Florence Perramond, ex- of Planet First Partners, joined Blue Earth Capital as an analyst on its fundraising and investor relations team… The Climate Investment Funds namedTariye Gbadegesin of ARM-Harith Infrastructure Investments as CEO, effective in March 2024. The first African to lead the multilateral lender, she replaces Mafalda Duarte, who left in July to lead the Green Climate Fund… AI Collaborative, a new initiative of Omidyar Group, appointedMartin Tisné, ex- of Luminate, as chief executive officer.

Ellen Maginnis, ex- of Volery Capital Partners, joined Predistribution Initiative as interim director of standards. Predistribution Initiative’s Victoria de Castro joined the UNDP’s Sustainable Finance Hub… Astanor Ventures appointed Thomas Nagy, ex- chief operating officer at 21st.BIO, as part-time operational partner based in Copenhagen… Hope Wandera, ex- of VU Venture Partners, joined Mercy Corp Ventures as an investment analyst… Calvert Impact addsLisa Winslow of Morgan Stanley Investment Management to its board of directors.

The Week’s Jobs

US Jobs

Pacific Community Venturesis hiring a director of applied research in Oakland, Calif… Sorenson Impactis looking for an operations and student engagement associate in Salt Lake City… Faith-based investor Inspire Investinghas an opening for a compliance officer in Idaho.

Social Finance Instituteseeks a policy writer in Washington, DC… Glenmedeseeks a Philadelphia-based sustainable and impact investing intern for next summer… New York State Insurance Fundhas an opening for an ESG and sustainable investing associate… Reinvestment Fundis looking for a commercial loan portfolio manager in Atlanta. 

Global locations

RBCis hiring an environmental impact senior director in Toronto… Symbioticshas an opening for a financial accountant in Switzerland… UBS is recruiting a head of carbon in Zurich and a voluntary carbon markets analyst in London… GenZerois recruiting an investment associate in Singapore… World Economic Forum’s open innovation platform Uplink is recruiting an investor community lead in Switzerland… UNDPis on the hunt for an impact investing and accelerator assistant in Jakarta, Indonesia.

Remote jobs

2X Globalis looking for a program associate… The African American Alliance of CDFI CEOsseeks a policy and research associate… ImpactAssetsis on the hunt for a new chief of staff… Locusis recruiting a senior analyst of impact investment services… Second Horizon Capitalis hiring a part-time impact and sustainability analyst… ECMC Groupis hiring an impact investment associate… Diverse Investing Collectivehas an opening for a manager.

💼Share the week’s impact jobs. View dozens of other jobs on our new job board. Want to post a listing? Submit it here.

That’s a wrap. Have a wonderful weekend.

– Dec. 1, 2023