Greetings, Agents of Impact!
Featured: Impact Management
Impact reports from Tesla, Warby Parker and others tout climate and community solutions. Tired: ESG risk reporting. Wired: Reports on company impact. A growing number of corporations are going beyond accounting for their ESG risks to detailing the positive impact their products and services have on employees, communities and the environment. As Tesla wrote in its first impact report last year, “As the world needs to strive for a substantial positive impact, we won’t be referring to ESG in this report. Instead, we’ll talk about impact.” Among the tidbits in the company’s 2022 impact report: Tesla suggests that the accident rate for its vehicles on autopilot (mostly highway miles) is 80% lower than the US vehicle average.
Most companies have moved beyond glossy pictures of kids in fields of flowers to real goal-setting and measurable metrics, including solar installations in underserved neighborhoods (Sunrun), use of sustainability bond proceeds (Autodesk), vision and eye health (Warby Parker), and Scope 1 and 2 emissions reductions (3M). All of those mentioned are working to boost diversity and inclusion in their leadership and workforce. Social Impact World is keeping a running list of corporate impact reports. ImpactAlpha dug through more than 600 pages of impact reporting to pull out some highlights:
- Sunrun. The San Francisco-based residential solar-as-a-service company aims to install enough renewable energy systems to avoid at least 661 tons of CO2-equivalent over the systems’ lifetimes. In its 2022 impact report, Sunrun says it is on track to do so, with 21 million metric tons of CO2e avoided.
- Autodesk. Engineering software company Autodesk in 2021 issued a $1 billion sustainability bond to develop software products in sustainable water management, energy efficiency, and low-carbon and eco-material use. The company has been 100% renewably powered since 2016 through a mix of green energy and carbon offsets, per its latest impact report.
- Warby Parker. By the end of last year – its first full year as a publicly listed company – Warby Parker had distributed more than 13 million pairs of glasses through its “Buy a Pair, Give a Pair” program. Warby Parker’s impact report also covers the firm’s treatment of its more than 3,000 employees, its carbon footprint, and the impact of its products – in helping customers see better.
- 3M. The multinational materials conglomerate aims to reduce Scope 1 and 2 emissions by at least 50% by 2030 and 80% by 2040. Since 2019, the company has cut emissions by 37.8%, according to its latest impact report. The company is positioned “to create solutions not yet imagined as we strive to solve the world’s greatest challenges,” writes CEO Mike Roman.
- Keep reading, “Impact reports from Tesla, Warby Parker and others tout climate and community solutions,” by Dennis Price, Amy Cortese, Jessica Pothering and David Bank. Catch up on our earlier roundups of impact reports and follow all of ImpactAlpha’s “Impact Management” coverage.
Dealflow: Green Jet Fuel
Boeing inks deal to buy green hydrogen from Equatic. Equatic’s novel technology packs a one-two punch. It produces hydrogen from seawater via renewable-powered electrolysis. At the same time, it captures carbon dioxide from the air and stores it in the ocean, a natural carbon sink. The UCLA spinoff launched with $30 million of mostly grant funding from a mix of government agencies, foundations and an incubator. To avoid irreversible consequences of climate change, “we need truly disruptive carbon management technologies,” said BeyondNetZero’s John Browne, who chairs Equatic’s advisory board. Equatic’s costs, he added, “are low enough to allow unprecedented scaling and adoption globally.” Equatic, which operates pilot plants in Los Angeles and Singapore, hopes to get its carbon removal costs below $100 per metric ton by 2028.
- Catalytic purchases. Advance purchases by corporations such as Boeing play a key role in commercializing emerging technology and speeding declining cost curves (see, “Global corporations commit to carbon removal tech buys in South Pole-led initiative”). The aviation giant has agreed to buy 2,300 tons of green hydrogen fuel and the removal of 68,000 tons of carbon dioxide from Equatic, starting mid-decade. More than 90% of Boeing’s carbon footprint is Scope 3 emissions from the use of its commercial aircraft. The $62 billion company has pledged to make all of its aircraft sustainable fuel-compatible by 2030.
- Sustainable fuel boom. Companies working to produce greener jet fuels fall into two main groups. Equatic is an electrofuel producer. The other variety is biofuels. Utah-based CleanJoule raised $50 million, with backing from airlines like Frontier, Wizz and Volaris, to use agricultural waste and other biomass to make alternative jet fuel. The deal includes a purchase agreement for 90 million gallons, Axios reports.
- Check it out.
Impact muni bond: Improving water sustainability in Los Angeles. California, Arizona, Nevada and four other states in the Southwest last week agreed to cut water usage from the Colorado River by 14% over the next three years in exchange for more than $1.2 billion in federal funds. The deal comes as cities like Los Angeles feel the strain of increased demand for water, underinvestment in infrastructure, and climate change-induced drought. On cue, LA’s Department of Water and Power is issuing a $484 million bond to finance capital improvements to the water system. ImpactAlpha is highlighting the bond as part of our ongoing collaboration with HIP Investor to feature upcoming bond issues with social and/or environmental significance.
- Water sustainability. Almost $300 million of the city’s Capital Improvement Program will be allocated to recycled water production, including the 2035 Hyperion Program, which aims to recycle 100% of the water flowing through a water reclamation plant by 2035. HIP gives the LA-DWP an above-average impact rating of 65%, driven mostly by its water withdrawal efficiency and top-quartile performance for its 10-year water use efficiency.
- Join The Call. The next call in ImpactAlpha’s “Muni Impact” series, “How asset allocators are driving racial equity in municipal bonds,” features Harvard’s David Wood, Renaye Manley of the Service Employees International Union, and other Agents of Impact, Wednesday, June 14, at 10am PT / 1pm ET / 6pm London. RSVP today.
Dealflow overflow. Other news crossing our desks:
- E3 Capital and Lion’s Head Global Partners raised $48 million from development finance institutions for their E3 Low Carbon Economy Fund for Africa to invest in solar providers, EV startups, and other African ventures supporting low-carbon economic development. (TechCrunch)
- Proxima Fusion raised €7 million ($7.5 million) and is spinning out of Germany’s Max Planck Institute to deliver fusion energy by 2030. (EU Startups)
- Google Ventures joined a £5.3 million ($6.6 million) equity round for CUR8, a UK-based startup helping companies identify carbon removal projects to meet 2050 net-zero goals. (CUR8)
- FSD Africa Investments invested £1 million ($1.2 million) in Africa Climate Ventures, a Rwanda-based venture builder focusing on carbon tech and climate change mitigation in Africa. (FSD Africa)
Impact Voices: ESG Backlash
The mounting costs of the attacks on ESG investing. “The crusade against ESG investing is a roller coaster ride filled with intrigue, backroom deals and unforeseen consequences,” Manifest Social’s Ryon Harms writes in a roundup of recent news from the ESG battlefield. “From politicians funneling pension investments to personal donors, to lawsuits against divestment efforts, to impeachments of anti-ESG crusaders, the battleground of environmental, social and governance risk factors has never been so entertaining (or exhausting!).” A sampling of May’s ESG madness:
- Mouse trap. Florida governor and anti-ESG ringleader Ron DeSantis fueled his political ambitions by funneling state pension investments to funds connected to his political donors. The move cost public employees like teachers and firefighters about $10 billion from their retirement funds, according to David Sirota’s The Lever. More trouble: The week before DeSantis announced his presidential bid, Disney’s Bob Iger pulled the plug on a $1 billion office complex that would have held 2,000 new employees in Orlando.
- Overshoot. The Republican-led Oversight and Accountability committee staged a hearing on ESG practices with attorney generals from Utah and Alabama. Illinois’ state treasurer Mike Frerich was the lone ESG defender on the panel. The reviews ranged from “dazed and confused” to “Soviet-esque.” (For background, see “ESG fund managers are going too far, or not far enough, depending on who you ask”).
- Don’t say ‘climate.’ The state-chartered insurance associations for Florida and Louisiana – two states trying to limit insurers’ ability to price in climate risks – were forced to borrow $1.4 billion to pay the climate-fueled hurricane claims of insolvent insurers.
- Catch up with all the month’s ESG news.
Agents of Impact: Follow the Talent
Wanjiru Kamau-Rutenberg of Black Women in Executive Leadership joins the board of Autodesk Foundation… Illumen Capital is hiring a vice president of investor relations in Oakland… Impact-Linked Finance Fund is recruiting a board treasurer and board secretary… Palladium is hiring a director of financial inclusion in London… The Schumacher Center for a New Economics is hosting “Creating a global renewable energy commons,” featuring Stuart Cowan of Buckminster Fuller Institute, Naomi Davis of Blacks In Green, and David Sturmes Verbeek of Fair Cobalt Alliance, Thursday, June 15.
Thank you for your impact.
– June 1, 2023
