The Brief | April 21, 2023

The Week in Impact Investing: Earth

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ImpactAlpha

TGIF, Agents of Impact! 

🗣 Visualize. On the eve of Earth Day, the youth group Fridays for the Future released an ad that used AI to depict world leaders, from US president Joe Biden to China’s Xi Jinping, as children, each holding a globe like a ball. “The Earth is not a toy,” the (real) youths chided, urging the elders to take real climate action. Images can sometimes sharpen the mind in ways that endless words and warnings cannot. An old-school image catalyzed the environmental movement and the very first Earth Day in 1970: the “Earthrise” photo of a small blue marble in the darkness of space. “To see the earth as it truly is, small and blue and beautiful in that eternal silence where it floats, is to see ourselves as riders on the earth together,” poet Archibald MacLeish wrote in The New York Times. Since then, mankind has spewed greenhouse gasses, destabilizing both climate and communities. Biden this week pledged $1 billion for the Green Climate Fund, far short of promises and needs. Climate envoy John Kerry floated a plan for a $50 million first-loss fund to catalyze $1 billion for climate solutions in lower-income countries.

In partnership with Vibrant Data Labs, ImpactAlpha this week launched the latest in a series of climate finance maps, the Climate Co-Investor Tracker. At the center of the web: early grants and loans from the U.S. National Science Foundation. Venture funding for climate tech has cooled, but loans and grants are picking up some of the slack, as Jessica Pothering reports (see below). Catalytic capital from Mastercard’s Center for Inclusive Growth has de-risked and primed models of inclusive finance, including an initiative by Accion around “embedded” finance, as Jessica also details. In China, climate and ESG investing is catching on, even as the country’s fledgling impact investing sector lags. In the US, Lafayette Square is bridging a gap in financing for middle market companies that can uplift low- to moderate-income people and communities, as David Bank and I report. In a guest post, Lafayette Square’s Damien Dwin urges more investment in often-forgotten places and workers. “If we don’t support the people who comprise the backbone of the economy, the economy will break for everyone,” he writes. If we don’t support natural ecosystems, life on this small blue marble will likewise break for all of us. – Amy Cortese

Other must-reads on ImpactAlpha:

📞 Next week’s Call: Heading for Change. As co-founder of GenderSmart (now 2X Global), Suzanne Biegel has been instrumental in building an ecosystem of gender-smart investors. For the last three years, she has connected gender and climate funders and entrepreneurs. As her health declines, Biegel has seeded Heading for Change, a collaborative endowment, with $1 million from her and her husband, Daniel Maskit, to advance gender-inclusive solutions to the climate crisis. This Call is intended for donors interested in backing a portfolio of catalytic investments and philanthropic grants. Join the impact investing community to honor the legacy of an original Agent of Impact. 

📣 Live: Good green jobs. Join ImpactAlpha and Jobs for the Future on LinkedIn Live to launch JFF’s Quality Green Jobs Regional Challenge with new funding to support quality green jobs, Thursday, April 27. RSVP 

The Week’s Podcast

🎧 On this week’s Impact Briefing. For Earth Day, Dianne Dillon-Ridgley joins host Monique Aiken to reflect on four decades of working at the intersection of finance, the environment and human rights. Dillon-Ridgley is chair of the Intentional Endowments Network, a network of more than 200 asset owners and managers. She has served on nearly two dozen US delegations to the UN, including at the 1992 Earth Summit in Rio de Janeiro. Plus, the headlines.

The Week’s Agent of Impact

Lourdes Germán, Public Finance Initiative: Tilting the $4 trillion muni market toward racial equity. Attorney and academic Lourdes Germán recognized early the power of public finance. She has spent years working at firms including Fidelity Investments and Breckinridge Capital Advisors in public finance. Most recently, she launched Public Finance Initiative to help market stakeholders prioritize values that include racial equity and environmental justice while steering capital toward schools, water systems and other determinants of health and well-being. Germán’s nonprofit is leading a wide-ranging effort to nudge the $4 trillion municipal bond market to address systemic inequities. Her nonprofit, Public Finance Initiative, is out with a framework for municipal bond issuers that elevates best practices for embedding racial equity in their issues. Denver’s Elevate and RISE bonds, for example, funded projects in neighborhoods across the city as part of a long-term plan to build a more inclusive and equitable economy. The strategy, says Germán, “speaks to what investors are telling us – that they want a stronger commitment that’s visible.”

Germán’s efforts to create a pipeline of issuers with strong racial-equity practices is helping shift the narrative around bond markets as a catalyst for change. The new framework follows convenings with more than 100 issuers from 34 states, as well as investors and investment banks, underwriters, bond counsels and rating agencies.

Backed by the Robert Wood Johnson Foundation, the collaboration includes the National League of Cities, the Urban Institute and the Initiative for Responsible Investment, Center for Public Leadership, Harvard Kennedy School, Urban American City, Ideas and Action, PFM Group Consulting LLC, PFM Financial Advisors, The Government Alliance on Race & Equity at Race Forward, and The Equity & Excellence in Public Finance Program at The Milken Institute (RWJF also sponsors ImpactAlpha’s Muni Impact coverage).

The stakeholders are thinking beyond muni markets to other sources of public finance, including federal funding that has an equity mandate. Capital stacks for infrastructure assets are diverse; roads, bridges, affordable housing, “they’re not just going to be funded by one thing,” says Germán. “If you can integrate equity across the way you think about the asset, and the way you think about its funding, holistically, that’s an even stronger intervention.” Public Finance Initiative is testing the guidance with a cohort of issuers. Says Germán, “They’re all thinking intentionally that there’s a deeper and different way to integrate racial equity.”

The Week’s Dealflow

Deal spotlight: The new, uncomfortable reality for climate tech VC. Last year, climate tech investing was a bright spot in an otherwise challenging fundraising market. The talk among startups at San Francisco Climate Week made clear the bright spot has dimmed. Data from Net Zero Insights shows climate funding suffered an even steeper drop than overall tech funding in the first quarter of 2023. Pitchbook called Q1 the worst quarter for climate VC in nearly three years. “Venture capital is going through a bloodbath, and it will affect some climate investments,” acknowledged Abe Yokell of early-stage climate tech investor Congruent Ventures. Valuations for later-stage companies were particularly hard hit.

  • Continuity funding. Congruent, which has invested in more than 60 climate tech startups since 2018, this week closed its $300 million “continuity fund” for follow-on investments in those companies. The fund allows Congruent to invest for longer, giving it more upside potential in promising technologies. It also addresses a funding gap for climate tech ventures at the early growth stage that predates last year’s venture funding downturn.
     
  • Beyond equity. Equity funding is crucial for startups as they’re building out products and business models, discovering market fit, and growing their teams, Yokell told ImpactAlpha. “But venture capital is just one part of the climate capital stack.” Debt and grants are playing a greater role as equity investments have fallen, Net Zero Insights’ research and ImpactAlpha’s new co-investment tracker suggest. The Inflation Reduction Act, the infrastructure act, and the U.S. Department of Energy’s Loan Office are “creating pull into the space and enabling other forms of direct and indirect support,” said Yokell.
     
  • Forging ahead. “Climate tech cannot escape the ebbs of flows of venture and the markets,” tweeted Taj Ahmad Eldridge of Include VC and Jobs for the Future. “However I do believe it’s strongly positioned to regain steam sooner than later – mainly because more than just VC is providing capital to cleantech founders.” Venture capital accounted for just $40 billion of the $1.1 trillion that financed climate tech last year. “Having a greater purpose and mission keeps things real for people in tough times,” Yokell said. “With all of the tech layoffs, a lot of tech talent is seeking greater meaning and realigning their choices and careers around the climate.”
     
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Agrifood investing. Secha Capital invested in South Africa’s FarmTrace will support… AgDevCo extended $8 million in mezzanine debt for avocado farming in Kenya… Aqua-Spark invested in sustainable aquaculture startups in Vietnam and Finland… Aavishkaar Capital invested in INI Farms, an India-based exporter of fruit and vegetables.

Clean energy. Bamboo Capital Partners will manage a $17 million fund to create access to clean cooking stoves in Burundi… Sunergy Renewables agreed to go public via a SPAC… The Global Energy Alliance for People and Planet committed $35 million in catalytic capital to a fund for clean energy projects in South Asia.

Fund news. Wire Group launched a second fund as it fully deploys its first… Two Sigma Impact raised $677 million to back “human capital-centric” businesses.

Impact management. S&P Global led BlueMark’s $10 million raise for impact verification and benchmarks.

Impact tech. nZero, a Reno, Nev.-based carbon management and accounting platform, scored $16 million… Respondology raised $11 million from SJF Ventures and others for its online content-moderation service… ChargeLab snagged $30 million in Series A financing for its EV-charging management software… Canada’s Flash Forest secured $11.4 million to speed forest replanting after wildfires.

Investing in health. San Diego-based Cortica raised $75 million from the Autism Impact Fund, Ajax Health and Deerfield Management to provide value-based care for children with autism.

Returns on inclusion. EVEN secured $2.2 million to help Black and Brown music artists retain equity in their creative work… Mansa, a free streaming service for Black cultural content, snagged $8 million… MassMutual invested $100 million in its second Catalyst Fund for diverse founders.

The Week’s Talent

Nick Hurd will succeed Ronald Cohen as chair of the Global Steering Group for Impact Investment. Cohen will become non-executive president and continue to serve on GSG’s board… Hugh Simpson, ex- of KPMG, joined Petra Funds Group as director of ESG… Hala Hanna, who has spent the last six years building MIT Solve’s global community, became its new executive director. 

Rebekah Saul Butler, ex- of The Grove Foundation, joined Gratitude Railroad as managing partner and co-CEO… Iain Watson, former head of power and utilities at National Bank Finance, was named country manager of Marathon Capital’s Canada operations… Ravtegh Aurora, ex of World Bank, joined Impact Capital Managers as an analyst… YPO awarded KOKO Networks’ Greg Murray its 2023 Global Impact Award.

The Week’s Jobs

💼 Share the week’s impact jobs. Want to post a job in The Brief? Drop us a note.

In New York

New York State Insurance Fund is looking for a senior ESG and sustainability lead… Crux Climate is looking to fill several roles in engineering, marketing, and markets and transactions… One Acre Fund is on the hunt for an investor relations manager… Blue Dot Capital is recruiting an ESG research and integration senior associate… Ford Foundation has an opening for a technology and society program officer.

Other US locations

The University of Pennsylvania is looking for a research specialist for an ESG initiative… Boston Consulting Group is hiring an ESG knowledge expert and team manager… Employee-owned Boston Trust Walden Company seeks a compliance associate… ECMC Foundation’s venture investing arm has an opening for a senior associate in Los Angeles.

Global locations

Standard Chartered is recruiting an ESG advisory analyst in London… Also in London, The Earthshot Prize, launched by Prince William, seeks a marketplace grants and philanthropy senior manager… Investing for Good seeks an innovative finance co-lead in Barcelona…

Acre seeks an ESG and impact investment senior analyst in Singapore… TIAA is hiring a private investment operations associate in Pune, India… Oikocredit is on the hunt for a regional capacity building specialist in Abidjan, Cote d’Ivoire… ResponsAbility is recruiting a climate-smart agriculture technical specialist in Lima.

Remote jobs

Decolonizing Wealth Project seeks a vice president of programs… Rippleworks Foundation has an opening for a portfolio manager… Agilon Health is on the hunt for a ESG and corporate citizenship senior director.

Common Future seeks a vice president of finance… Down Ballot Climate Partners is hiring a data products manager and a strategic partnerships manager… LISC is looking for an impact measurement and communications intern.

That’s a wrap. Have a wonderful weekend. 

– April 21, 2022