September 9, 2022 | The Brief

The Week in Impact Investing: Stepping Up

The team at

ImpactAlpha

TGIF, Agents of Impact! 

🗣 Material matters. BlackRock got the headlines it likely wanted from its rebuttal to attorneys general in 19 states, including Texas, which has put the asset management giant on a blacklist for “boycotting” energy companies. “BlackRock takes on red states,” read The New York Times’ headline. “BlackRock strikes back at ESG critics,” said Axios. Read further and BlackRock’s defense looks more like capitulation: the giant asset manager touts its investments of “hundreds of billions of dollars” in oil and gas. That may have been the real intent of Texas Comptroller Glenn Hegar, as Ryon Harms detailed this week on ImpactAlpha. “He forced the firm to highlight information, even if it was already public, that no doubt will disquiet many of its clients who believe climate risk is investment risk.”

The contretemps points to the danger of setting up BlackRock as the defender of ESG, shorthand for the environmental, social and governance factors that were long excluded from investment decision making. The practice of ESG investing is subject to diametrically opposite critiques: as a toothless box-ticking exercise with no real impact, and the vanguard of a global conspiracy to take down capitalism. The problem stems in part from the conflation of ESG with the broader ambitions of impact investing, which does seek to create positive social and environmental outcomes, such as economic opportunities for marginalized communities, lower emissions, healthier families. The Times’ Dealbook team contributed to the confusion by defining ESG as “the latest term for socially conscious investing.” Things aren’t made any clearer when information-services providers like Dow Jones follow the money – and their clients – into the ESG data business, even as the editorial pages of The Wall Street Journal, its flagship publication, leads the ESG-bashing charge, as David Bank reports.

“The topic of material risk disclosures by companies needs to be separated from legitimately different political views on how to address important problems like climate change,” says Oxford University’s Robert Eccles. Eccles, a Democrat, teamed up with K&L Gates’s Daniel Crowley, a Republican, to explore how to “turn down the heat” on the ESG debate and find common ground around materiality. Stuart Kirk, the executive famously ejected from HSBC after his May speech dismissing ESG, wants to fork the practice into consideration of material risks, or “inputs,” and pursuit of social or environmental goals, or “outputs.” The latter sounds like impact investing. ESG is simply prudent management of material risks, putting Texas and its allies on the pro-risk, anti-business side. But Hegar has a point that value judgements on what represents a positive outcome are inherently political, as seen by the low-carbon growth opportunities ushered in by the Democrats’ climate spending legislation, passed along party lines. With the battle joined, it’s on Agents of Impact to win on the merits. – Amy Cortese

🗞️ Don’t miss these ImpactAlpha stories from The (short) Week: 

  • September’s edition of The LiiST rounded up seven impact funds raising capital now.
  • Varuna’s Seyi Fabode charted three paradigm shifts for building resilient water systems in Jackson, Miss. and other U.S. cities.
  • Misfits Market acquired Imperfect Foods… Kapor Capital tapped outside investors for the first time to raise its $126 million third fund… And New Island Capital is winding down and moving its assets to Grounded Capital.

👋 Join next week’s Call: Mapping opportunities for catalytic climate capital. Duke University’s Jonathan Phillips, Shell Foundation’s Ashish Kumar, BlocPower’s Donnel Baird, and Vibrant Data Labs’ Eric Berlow will explore effective strategies for bridging climate capital gaps in emerging markets, low-income communities, climate adaptation and climate justice with ImpactAlpha’s Amy Cortese and David Bank, Wednesday, Sept. 14, at 10am PT / 1pm ET / 6pm London. RSVP today.

🎧 Impact Briefing. ImpactAlpha’s David Bank joins host Monique Aiken to preview next week’s Agents of Impact Call. Luni Libes of Realize Impact stops by to discuss impact funds featured on this month’s edition of The LiiST. Plus, the headlines.

The Week’s Dealflow

Deal spotlight: Clean energy financing for low- and middle-income countries. Emerging economies are helping lead the clean energy transition by attracting private investment to larger-scale renewable energy projects, the World Bank says. Morocco has the largest solar power plant in the world. India has the fastest renewable energy growth rate of any major economy. Governments with ambitious climate targets, investor-friendly regulations and which bring in global development financial institutions to mitigate risks can pave the way for private capital to enter. 

  • Green finance. Pay-as-you-go solar provider Bboxx this week acquired peer PEG Africa to expand its business in West Africa. U.K. development agency British International Investment made a $25 million loan to Nepal’s NMB Bank to boost the bank’s renewable energy lending, specifically for hydropower. Italy’s development finance institution Cassa Depositi e Prestiti, or CDP, provided a $100 million loan to Africa Finance Corp. for renewable energy, energy efficiency and climate resilient infrastructure projects. And the World Bank-funded Off Grid Electricity Fund, which aims to electrify more than 140,000 Haitian households by 2024, invested in Paon Bleu to expand solar lending in Haiti’s rural areas.
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Impact tech. Beehive Industries scored $2.1 million to provide software to municipal and private organizations to manage water and sewer resources and broadband infrastructure… CcHUB backed nine fintech startups in Rwanda… Recurve scored $18 million in Series B funding for “virtual power plants” that are helping reduce stress on the grid during periods of high energy demand… Bridger Photonics raised $55 million to help oil and gas companies track and reduce their methane emissions.

Battery storage. SK ecoplant, the environmental unit of South Korean conglomerate SK Group, invested $50 million in Massachusetts-based Ascend Elements for EV lithium-ion battery recycling… U.K.-based Mobile Power snagged £1 million from All On to provide batteries-as-a-service in underserved parts of Nigeria.

Green infrastructure. Clean energy and battery storage developer Pathway Power secured $36 million from the Forest Road Company’s climate-focused infrastructure investing initiative… SparkCharge raised $30 million in Series A financing to expand its on-demand electric vehicle charging business in the U.S.

Clean energy. Copenhagen Infrastructure Partners raised €3 billion for energy transition fund… Flair snagged $7.6 million from Lowercarbon Capital and Active Impact Investments to make smart heating and cooling products for homes.

Low-carbon transition. Germany’s Liefergrun scored $12 million to decarbonize last-mile delivery… Neutral Foods snagged $12 million from investors including Breakthrough Energy Ventures for its “zero-carbon” dairy products.

Education and skills. Equitable Facilities Fund closed $230 million in social bonds for underserved charter schools.

Investing in health. Novant Health invested $25.5 million for community impact and health programs in North Carolina.

The Week’s Talent

John Podesta, who served both Bill Clinton and Barack Obama, will return to the White House as a senior adviser to help implement the $369 billion federal climate-change bill signed by President Joe Biden last month (see, “Eight ways the Inflation Reduction Act is resetting the climate table”)… Lara Metcalf, ex- of The Social Entrepreneurs’ Fund, joins the Draper Richards Kaplan Foundation as managing director… Amalia Kontesi, ex- of JPMorgan Chase, joins Google as head of social impact communications for Europe, the Middle East and Africa… Sarah Kaplan is promoted to partner at Cutting Edge Counsel.

The Week’s Jobs

National Community Investment Fund seeks a director of impact in Chicago… Washington Farmland Trust is looking for an operations and finance manager in Seattle… Acre is recruiting a director of impact investments in New York… Chan Zuckerberg Initiative is hiring a manager of special projects in Redwood City, Calif… Common Impact is looking for a chief program officer… Women for Women International seeks a mid-level gifts officer in Washington, D.C. 

The Sobrato Organization is looking for a senior investment associate in Mountain View, Calif… BlackRock seeks a sustainable investing research and strategy associate in New York… Environmental Defense Fund is recruiting a remote manager of climate research and analysis… New Markets Support Company is looking for an asset management associate and a fund accounting manager in Chicago. 

Big Path Capital seeks a remote investment banking analyst… Calvert Impact Capital is looking for a risk management analyst, preferably in Washington, D.C… US SIF seeks an events and marketing manager… RS Group, a Hong Kong-based family office focused on sustainable development, is recruiting a director and an associate director of investments… Stanford Impact Labs seeks a full-time program manager.

That’s a wrap. Have a wonderful weekend. 

– Sep 9, 2022