The Brief: Sustainable personal finance, optimizing for impact, decarbonizing chemicals, opportunity fund in Pittsburgh, Catholic impact collaborative

Greetings, Agents of Impact! 

Tomorrow: Capitalism Reimagined: Universal owners, active stewardship and shareholder power. Join U.N. envoy Hiro Mizuno, Engine No. 1’s Michael O’Leary, The Shareholder Commons’ Sara Murphy, Illinois State Treasurer Michael Frerichs, and Zevin Asset Management’s Marcela Pinilla on Agents of Impact Call No. 30, tomorrow, Sept. 14 at 10am PT / 1pm ET / 6pm London. Last chance to RSVP.

• Background reading. Catch up on the players and the lingo with “Universal Owners,” “Long-term returns for universal owners require beta stewardship,” and “Companies scramble to get on the right side of Engine No. 1 – and of history.”

Featured: Impact Voices

Seven ways U.S. retail investors can invest and bank sustainably. Everyday investors, as well as large asset managers and institutions, are flocking to ESG and impact investing. Up to 95% of millennials are interested in investing sustainably, according to Morgan Stanley. That’s spurring startups as well as legacy financial institutions to introduce ESG and impact products that target retail investors. “This is the year when ESG investing by U.S. retail investors will really take off,” SustainFi’s Lana Khabarova writes in a guest post on ImpactAlpha. The founder of the ESG- and impact-focused personal finance site ticks off at least seven categories of investments where retail investors can deploy capital for impact. That includes sustainable farmland, through real estate investment trusts such as Iroquois Valley Farmland REIT and platforms such as FarmTogether or Steward. Offerings from CNote and Calvert Impact Capital let anyone invest in community development financial institutions. 

SustainFi counted a dozen robo-advisors and apps that offer socially responsible investing strategies, most of them launched over the past one to two years. Carbon Collective launched in late 2020 to focus on climate change investing. EarthFolio is an ESG-only robo-advisor offering a 100% fossil-free investment portfolio. Neobanks Ando Money, ATMOS and Climate First Bank launched in 2021 with banking options that pledge not to use customer deposits to fund oil and gas exploration. Crowdfunding platforms such as StartEngine, Wefunder and Republic let investors buy stakes in clean energy and cleantech startups and ventures led by diverse founders. Newer platforms such as Raise Green are exclusively focused on “green” investment options, such as solar or energy efficiency projects. Equity crowdfunding platforms like Mainvest and NextSeed let retail investors buy stakes in small local businesses like food trucks and restaurants. Says Khabarova, “The number of options available to investors who want to invest responsibly has never been greater.”

• Keep reading, “Seven ways U.S. retail investors can invest and bank sustainably,” by SustainFi’s Lana Khabarova. Catch up on all of ImpactAlpha’s personal finance coverage.

Managing investments to meet goals for impact – and expectations of regulators. Investors share a global to-do list with the U.N. Sustainable Development Goals. “Now, we all need to get better at achieving real impact on them,” Duke University’s Cathy Clark writes in a guest post on ImpactAlpha. The Center for the Advancement of Social Entrepreneurship, or CASE, at Duke’s Fuqua School of Business teamed up with the U.N. Development Programme to release “Impact Measurement & Management for the SDGs,” a free online training (with a certificate option) for global enterprises and investors. “We see this as a cost-effective way for organizations to train their staff, level-set their new hires, and increase their own effectiveness at addressing the U.N. SDGs,” says Duke’s Bill Boulding.

• Optimizing for Impact. CASE and ImpactAlpha will launch Optimizing for Impact, a multi-week selection of lessons and video clips from the course. We’ll kick it off with a 60-minute how-to on impact measurement and management on ImpactAlpha’s Agents of Impact Call, Tuesday, Sept. 28 at 10am PT / 1pm ET / 6pm London. Sign up here.
  
• Regulators are coming. In July, the Sustainable Finance Disclosure Regulation, or SFDR, became applicable to all companies doing business in the E.U. In the U.S., the SEC’s Gary Gensler says climate disclosure rules are coming, along with disclosure of employee and owner demographics, and diversity and inclusion in asset management.
  
• Industry standards. Familiarity with the emerging industry standards for impact management is becoming de rigueur for finance professionals of all kinds. CASE’s course integrates standards and frameworks from the Impact Management Project, the UNDP’s SDG Impact Standards, the Global Impact Investing Network, the International Finance Corp. and others.
  
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Sponsored by Morgan Stanley

​​The rise of sustainable bonds for affordable housing. Are sustainable bonds key in helping solve the U.S. housing crisis? Learn more.

Dealflow: Synthetic Biology

Solugen raises $357 million to decarbonize chemicals. The chemicals industry – think fertilizers, detergents, water treatments – is the third-largest producer of global carbon emissions. By replacing fossil fuels such as petroleum and natural gas with renewable feedstocks, Solugen aims to turn chemical production carbon negative. At its Houston-based “bioforge,” the company grows enzymes that convert sugars, air and carbon dioxide into chemicals. The financing round, led by Singapore’s sovereign wealth fund GIC and Baillie Gifford, values Solugen at more than $1.8 billion. “Solugen has the ability to make the building blocks for 90% of the chemicals industry cheaper, faster and more sustainable than petrochemistry can,” said Seth Bannon of Fifty Years VC, which led Solugen’s pre-seed round in 2016. If things go well, added Bannon, “Solugen will not only be the first carbon-negative chemicals company but also the world’s first trillion-dollar chemicals company.” Lowercarbon Capital, Temasek Holdings, Carbon Direct Capital Management and BlackRock-managed funds also participated.

• Follow the governance. Texas’ abortion ban and other restrictive social policies have made it harder to recruit talent, said Solugen’s Gaurab Chakrabarti, who is looking outside the state for expansion. “We’ve come to the conclusion, after talking to lots of candidates, that they want to join Solugen, but they don’t feel comfortable coming to Texas, so for us it’s become a no-brainer to have R&D facilities elsewhere,” he told Axios.
  
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Arctaris launches $20 million Opportunity Zone fund in Pittsburgh. The Boston-based fund manager partners with foundations, governments and other organizations to catalyze private capital for sustainable jobs, affordable housing and health infrastructure in underserved U.S. communities. “Arctaris’ funds put up 80% of the capital, and the local community, or in some cases state government or federal government, will put up the other 20%,” Arctaris’ Jonathan Tower told ImpactAlpha. The Opportunity Zone fund in Pittsburgh will invest in local businesses, clean energy, internet access and housing.

• Community finance. The Pittsburgh fund’s first investment in Black-owned home healthcare company S&K Holdings and its affiliate Family Choice Healthcare aims to create 325 jobs in Pittsburgh alone, said S&K’s Steve Taylor.
  
• Catalytic capital. The Richard King Mellon Foundation committed the first $4 million to launch the vehicle. Mellon’s Sam Reiman said he believes “private investment is the most effective way to create prosperity at scale.” Arctaris, which is primarily backed by institutional investors, committed the rest of the capital.
  
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Impact Engine and Mosaic back employee ownership at Zero Waste Recycling. Chicago-based Impact Engine is investing in employee-owned firms as a means to bridging wealth gaps (for context, see “These 12 impact funds are catalyzing transitions to employee ownership”). With Charlotte-based Mosaic Capital Partners, it invested in Zero Waste’s employee stock ownership plan, or ESOP, to “convert company ownership 100% into the hands of all employees at no cost,” wrote Impact Engine’s Priya Parrish. Zero Waste provides waste management services for U.S.-based manufacturing companies. More than 90% of its employees are Black, Indigenous and other people of color with low to middle incomes.

• Mission-driven investors. Impact Engine invested via Mosaic’s private equity employee-ownership fund. It believes the fund “will generate paradigm-based impact by setting an example for other private equity and credit investors to invest this way,” wrote Parrish. Other partners in the deal include Lafayette Square and Morgan Stanley Private Credit.
  
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Dealflow overflow. Other investment news crossing our desks:

• A risk-sharing agreement between BlueOrchard Finance and the Asian Development Bank will expand access to capital for microfinance institutions and banks.
  
• Bain Capital Double Impact invests $45 million Cotopaxi, a sustainable outdoor gear and apparel brand.

Signals: Faith-Based Investing

Catholic investors mobilize to steward church assets toward impact. With a new membership program and online investment platform, the Catholic Impact Investing Collaborative aims to accelerate the flow of Catholic financial resources toward impact investments. The collaborative has garnered commitments from more than 30 Catholic organizations with more $40 billion in assets (for context, see “Catholic institutions pledge to increase impact investments in climate action and social equity”). The 15 members include Catholic Relief Services, Mercy Investment Services, the OIP Investment Trust, the Franciscan Sisters of Mary and Ascension. The platform has sourced 20 private market impact investment opportunities.

• Shared vision. Congregations of religious women in the U.S. have for decades directed funding to undercapitalized communities. “Under the banner of impact investing, the collaborative is poised to write a new chapter on the Gospel call to care for people and planet,” says OIP Investment Trust’s Séamus Finn.
  
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Agents of Impact: Follow the Talent

Adam Riggs-Zeigen joins Founders First Capital Partners as head of member success and expansion advisory… Capshift is looking for a managing director of business development… CDC Group is recruiting a climate change executive and an impact executive for development impact management in London. 

In New York: Global Impact Investing Network has openings for a grants officer, an institutional impact investing manager and more; the U.N. is hiring a special assistant for the U.N. Capital Development Fund; Rockefeller Foundation is looking for a community experience lead; and Apollo Global Management seeks an impact measurement and monitoring associate.

The U.N. Gender and Development Forum will host “Transforming Finance, Investment and Entrepreneurship: A feminist viewpoint,” featuring Resilience Capital Venture’s Gillian Marcelle, Frontier Markets’ Ajaita Shah, Palladium’s Lauren Rawlings and others, Sunday, Sept. 26.

Thank you for your impact.

– Sept. 13, 2021