The Brief | December 8, 2023

The Week in Impact Investing: The How

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TGIF, Agents of Impact!

🗣 General practitioners. Agents of Impact are getting pretty good at structuring deals, raising capital, measuring impact – and sharing their expertise. The COP28 climate summit underway in Dubai has highlighted the art of blending catalytic and commercial capital to bridge climate financing gaps (see Deal spotlight, below). Funds of funds are making a comeback as a way to deploy larger checks from global investors to smaller fund managers closer to the solutions, as Susan de Witt of the Collaborative for Frontier Finance explains. Next week’s Call will spotlight techniques for identifying hidden risks and opportunities in the $4 trillion municipal bond market (RSVP now), drawing on lessons from Atlanta to St. Paul, as Andrea Riquier reports. 

And the beat goes on. Tensie Whelan and her team at NYU share tools that limited and general partners in private equity funds can use to drive value through sustainability. On the new Impact(ed) podcast, Eric Horvath and Lucas Turner-Owens speak with Essma Bengabsia of the Annie E. Casey Foundation about how to engage historically marginalized communities in investment decisions. And this month’s Liist of actively raising impact funds, compiled by Jessica Pothering and Lucy Ngige, keys in on managers who are aligning their compensation with their impact performance. 

CapEQ’s Tynesia Boyea Robinson spoke with civil rights attorney Farhana Khera to share practical tips for navigating the post-affirmative action legal landscape, while Columbia University’s Cynthia Hanawalt and Denise Hearn dissect the antitrust claims being pushed by anti-ESG legislators. VentureESG’s Cessiah Lopez and Johannes Lenhard even provide a playbook for crypto investors to drive a more sustainable and socially responsible financial ecosystem.

All this shared knowledge, of course, is highly valuable for training the artificial intelligence. AI for climate has been the talk of COP28, as Amy Cortese and I report. By applying AI to meet the greatest existential threat facing humanity, we suggested, AI can absolve itself of being the greatest existential threat. Aligning AI with human intent is only the beginning. The real goal, says Erasmus.ai’s Daniel Erasmus, is social intelligence, “a community of learners and collaborators.” For that, the machines need only look to the wisdom and generosity of Agents of Impact. – David Bank

The Week’s Podcast

🎧 Impact Briefing. The numbers tell the story: overall attendance at COP28 is up threefold from last year – and the number of fossil fuel lobbyists is up fourfold. On this week’s podcast, Amy Cortese explores the tale of two COPs in conversations with Marilyn Waite of the Climate Finance Fund and Dawn Lippert of Elemental Excelerator, who share their experiences this week in the green and blue zones. Host Monique Aiken has the headlines.  

The Week’s Agent of Impact

Tzeporah Berman, Fossil Fuel Non-Proliferation Treaty: Winding down production to fulfill the Paris Agreement. The fate of fossil fuels presents a moment of reckoning for COP28 as national delegations debate the wording of a final agreement. “Phase out” in a non-starter, even as a growing number of countries and experts say that’s the only way to keep warming near 1.5 degrees Celsius? Even the weaker “phase down” is expected to be scuttled by Saudi Arabia and other oil-producing states, which prefer to talk about tripling global renewable energy by the end of the decade. Global COP agreements require consensus and are non binding, resulting in “rules that meet the lowest common denominator,” says Tzeporah Berman with the nonprofit Stand.Earth. Berman’s alternative: a Fossil Fuel Nonproliferation Treaty that would bind signatories to end new fossil fuel production, similar to how nuclear treaties have worked. At COP28, Colombia, Latin America’s fourth largest oil producer, became the latest nation to sign on, alongside 10 island nations, the European Parliament, the World Health Organization and dozens of cities (for background, see “New Climate Leaders: Winning with a green agenda”). 

The landmark Paris Agreement didn’t even mention fossil fuels. “We’ve had 30 years of climate policy and negotiations designed just to reduce demand,” Berman told ImpactAlpha partner Inside Climate News. “And it’s not working.” The world is on track to burn more than double the oil, gas and coal by 2030 than is allowed under a 1.5 degree Celsius scenario. Berman was spurred to activism in the 1990s by threats to an old growth forest in her home country Canada. She cooked up the nonproliferation treaty three years ago, with CarbonTracker’s Mark Campanale. The three pillars: ending the expansion of fossil fuels; managing the wind-down in an equitable fashion; and fast-tracking a just transition. That will require tax and trade agreements, debt relief and other global mechanisms to remove barriers. “We face an immense confrontation between fossil capital and human life. And we must choose a side,” Colombia’s President Gustavo Petro said in endorsing the treaty. “We choose the side of life.”

The Week’s Dealflow

Deal spotlight: Blended finance stars as COP28 seeks to unlock climate capital. Within the United Arab Emirates’ $30 billion commitment to Altérra climate fund is a $5 billion carveout that could represent an unprecedented infusion of catalytic capital. The Altérra Transformation Fund will provide risk-mitigation capital to incentivize private climate investment in least-developed countries and small island states. The other $25 billion is earmarked for the Alterra Acceleration Fund, which has already committed $6.5 billion to climate funds managed by BlackRock, Brookfield Asset Management and TPG. With the two funds together, the UAE aims to mobilize $250 billion in institutional capital for the transition to a net-zero economy. Blended finance – the layering of different sources of capital with different risk, return and impact expectations – is crucial for building markets and unlocking money for places and sectors it otherwise wouldn’t go. “In the absence of sufficient flows from North to South, getting leverage out of the pockets of blended finance is really vital,” the IFC’s Jamie Fergusson told Reuters.

  • Changing the trajectory. Blending finance to address the climate crisis has been in worrying decline, falling to a 10-year low in 2022, according to the latest report from Convergence, the Toronto-based blended-finance network. Initiatives announced at COP28 may help change the momentum. At COP28, the IFC and other backers committed $825 million to Allied Climate Partners, a new fund to develop and de-risk climate projects in the Global South. The partners hope to draw in $11 billion in private capital to a portfolio where two of five investments are expected to fail.
  • Commercial capital. Hardest-to-Reach, Acumen’s new initiative to deliver clean energy products to first-time users in Somalia, Niger, Chad and more than a dozen other African countries, secured $65 million from the Green Climate Fund and commitments from Seoul-based Shinhan Bank, among others. Dutch development bank FMO last week put up $111 million in a first-loss reserve for a $1.1 billion SDG Loan Fund backed by Allianz and Swedish bank Skandia. It first needed its own risk hedge: a $25 million guarantee from the MacArthur Foundation.
  • Keep reading. 

Climate tech. British International Investment backed trio of climate tech funds in South Asia… Congruent Ventures raked in $275 million for its third climate tech fund… Estonia’s UP Catalyst raised €4 million to make “green graphite” for e-mobility batteries… Kenya’s Amini raised $4 million to help corporations green their supply chains.

Conservation finance. Investors earned a return on a “forest resilience bond” in California. 

Energy transition. Breakthrough Energy, Siemens and Chevron backed Malta Inc., a developer of long-duration storage for renewable energy… Copenhagen Infrastructure Partners is targeting $3 billion to build renewable energy projects in low- and middle-income countries… EnergyRe, a developer of clean energy projects, raked in $1.2 billion… Sunsave in the UK scored $6.8 million for its home solar + battery subscription model.

Financial inclusion. FINCA Ventures invested in health access and financial inclusion startups… Indian fintech venture ZestMoney, backed by Quona Capital and Omidyar Network, is shutting down after several failed acquisition bids.

Gender smart. Emerging fund managers scored nearly $30 million for Africa’s small businesses… The Climate Gender Equity Fund announced its first grants to three accelerators supporting women-led climate solutions in Africa… UK-based Bethnal Green Ventures reached a first close to back women-led “tech for good” startups.

Green infrastructure. Strong by Form and Cambium Carbon secured seed funding to decarbonize buildings with wood… The Russell Family Foundation offered up $3.5 million for sustainable food, energy and infrastructure.  

Investing in health. Women-led Clayful scored $7 million for a chat-based mental health app for children and teenagers… Chile’s ColaboraMed raised $1 million to launch a prepaid spending card linked to healthcare purchases.

Institutional impact. The World Bank will increase its climate finance allocation to $40 billion a year, or 45% of its funding, by 2025. 

Returns on inclusion. Morgan Stanley closed its Next Level Fund to invest in early-stage tech companies led by underrepresented founders.

Waste to value. Ares Management acquired Burnham RNG, a developer and owner of anaerobic digestion facilities that convert wastewater and agricultural waste to renewable natural gas.

The Week’s Talent

Citing poor returns, activist investor (and one-time Agent of Impact) Jeffrey Ubben is winding down Inclusive Capital Partners, the sustainable investment firm he founded three years ago… President Gustavo Petro of Colombia, Latin America’s fourth-largest oil power, signed on to the Fossil Fuel Nonproliferation Treaty (see Agent of Impact, above)… Latino Community Foundation appointed Julian Castro, a former Obama administration cabinet member, to CEO.

Cornelius Lee, ex- of Promise54, joined Equitable Facilities Fund as vice president of talent… Overdeck Family Foundation appointed Katelyn Fletcher, ex- of the Brookings Institution, as portfolio associate… Kauffman Foundation named Brandy Johnson, ex- of Compass Minerals, as chief people officer, starting in January… John Guzek, ex- of SES ESOP Strategies, joined Ownership Works as business engagement manager.

Macro named Reena Singh, ex- of The Walt Disney Company, as executive vice president… Antonia Chorschew, ex- of Ufenau Capital Partners, joined Blue Earth Capital as a fundraising and investor relations associate… The IFRS Foundation elected Emmanuel Faber to a second three-year term as chair of the International Sustainability Standards Board. 

The Week’s Jobs

US-based jobs

In Washington, DC, the IFC seeks a climate and sustainable finance investment analyst; the DFC has an opening for a catalytic investments vice president; World Resources Institute is looking for a carbon finance manager for its global restoration initiative; the Employee Ownership Expansion Network is recruiting a director of nonprofit operations; and Pollination has an opening for a nature and agriculture executive director.

In New York, Soros Fund Management is hiring an impact strategy analyst; Impact Capital Managers seeks a talent and diversity director; and Blue Meridian Partners seeks two directors… The American Heart Association is looking for a social impact associate portfolio manager in Dallas… Nonprofit Finance Fund seeks a housing loan program director in Boston.

International locations

In London, Goldman Sachs is looking for an associate of private equity sustainability investing, and Bates Wells has an opening for an impact finance solicitor… Save the Children Global Ventures is recruiting an innovative finance associate… New Spring Network is recruiting a sustainable finance consultant in the Netherlands… Partech has an opening for an ESG and sustainability intern in Paris… Mana Impact is on the hunt for an impact investment manager in Singapore.

Remote jobs

Private Equity Stakeholder Project is looking for a climate director… 2X Global is on the hunt for a certification associate and program manager… ImpactAssets is on the hunt for a remote investment product 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. 8, 2023