Greetings, Agents of Impact!
👉 Don’t miss next week’s call. ImpactAlpha is on the hunt for proactive strategies in the $4 trillion municipal bond market that deliver impact and address historic injustices. Join our conversation with Ryan Bowers of Activest, Diane Manuel of Adasina Social Capital, Eric Glass of Justice Capital and other Agents of Impact on next week’s call, “Investable opportunities in high-impact municipal finance,” Wednesday, Feb. 1 at 10am PT, 1pm ET / 6pm London. RSVP today.
Featured: Catalytic Capital
To catalyze climate capital, development finance institutions are pressed to ‘publish what you fund.’ Six trillion dollars. That’s roughly how much is needed annually to fight climate change and meet the U.N.’s 2030 Sustainable Development Goals. It’s also roughly the amount of development finance capital on balance sheets around the world. Political leaders from U.S. climate envoy John Kerry to Barbados’ Prime Minister Mia Mottley have urged reforms of development finance institutions, or DFIs, and multilateral development banks to free additional capital – on affordable terms – to finance climate mitigation and adaptation for countries on the front lines of climate change (for context, see, “Creative finance is needed to plug gaps in global climate funding“). But the lack of transparency in DFIs’ investment portfolios and their impact – especially in the area of catalytic financing – make it difficult if not impossible to determine whether such capital is achieving the intended outcomes. “Across the board DFIs are insufficiently transparent,” concludes the nonprofit Publish What You Fund in its first-ever “DFI Transparency Index.” “DFIs are not providing evidence of impact, data regarding [private capital] mobilization, or proof of accountability to communities.” For many institutions, it continues, “even basic information about their investments is not publicly available.”
- Questionably catalytic. “This is going to be a year where these institutions get a lot more power,” Publish What You Fund’s Gary Forster tells ImpactAlpha. “But we don’t really know what results we’re getting, or what they’re mobilizing from the private sector.” Indeed, tracking and disclosing the catalytic effect of their capital in crowding in private investments is where the DFIs scored poorest (for background, see, “Risk-averse development finance institutions are more often catalyzed than catalytic”). Says Forster: “The evidence of capital mobilization is not there.”
- Transparency index. Publish What You Fund assessed publicly-available data for 21 DFIs managing $2.1 trillion in assets, or about one-third of tallied DFI assets, and scored them from one to 100. The World Bank’s International Finance Corp. ranked the highest for overall transparency, with 54.5 out of the possible 100 points. The African Development Bank followed with 51.4 points and the Asian Development Bank with 46.5 points. The U.S. International Development Finance Corp. scored the highest of the bilateral institutions surveyed, with 38.2 points. The DFC made additional information available over the course of the research, the report notes, suggesting that transparency can be improved quickly. “The first step was to ensure that we are rigorously and systematically measuring the private capital mobilized for every deal that comes through DFC’s doors,” DFC’s Elizabeth Boggs Davidsen tells ImpactAlpha. Says Forster of DFIs’ engagement: “They realize that there’s a general opportunity—and corollary risk—around knowing what they’re doing and learning from it.”
- Keep reading, “To catalyze climate capital, development finance institutions are pressed to ‘publish what you fund,’” by Jessica Pothering on ImpactAlpha.
- Tune in this morning. Publish What You Fund will launch its DFI Transparency Index in a webcast, “How transparent are development finance institutions?” co-hosted by the Brookings Institution, today, January 25, at 9:30am ET. Speakers include Margaret Kuhlow of the U.S. Treasury Department, Elizabeth Boggs Davidsen of the DFC, Olivier Shingiro of the African Development Bank. Register for the webcast here.
Dealflow: Investing in Health
Breathe Well-being raises 500 million rupees for diabetes care and prevention. The Gurgaon-based health tech startup offers digital coaching in behavioral and lifestyle changes that help more than 10,000 Type 2 diabetes patients in India control their blood sugar levels and get off medications. Accel Partners, General Catalyst and other investors backed Breathe Well-being’s $6.1 million equity round to support the company’s goal of reversing diabetes for one million Indians by 2025. India is expected to have 100 million diabetics by 2030. Accel’s Radhika Ananth said Breathe Well-being is “a household name for Type 2 diabetes and pre-diabetes across tier two and three cities.”
- Global health inequality. Diabetes, a preventable and manageable chronic illness, is increasing in many low and middle-income countries, costing governments billions of dollars in medication and hospitalization expenses. In Mexico, where Type 2 diabetics are expected to double in number by 2050, Clínicas del Azúcar is helping low-income diabetics manage their disease more proactively and cost-effectively (see, “Clínicas del Azúcar’s one-stop diabetes centers marry health innovation with affordability”).
Scythe Robotics raises $42 million for ‘pay-as-you-mow’ landscaping equipment. Gas-powered equipment like lawn mowers and leaf blowers emit more than 240 million tons of pollutants each year, according to the U.S. Environmental Protection Agency. Colorado-based Scythe offers an autonomous, electric mower, the M52, to help landscape contractors green their operations. The mower’s battery can operate an entire day on a single charge; its sensors can identify surrounding objects, humans and animals. Scythe offers ‘pay-as-you-mow’ pricing to help landscape businesses finance the switch to electric equipment, which can cost three to four times more than gas-powered mowers. The new investment will help Scythe meet demand from commercial landscape businesses, starting with Texas and Florida.
- Demand and supply. “Commercial landscaping electrification represents a massive but undercapitalized decarbonization opportunity, tackling more than 40 million metric tons of CO2-equivalent emissions annually,” said Sameer Reddy of Energy Impact Partners, which led Scythe’s Series B round. Other investors include ArcTern Ventures, Alumni Ventures, Amazon’s Alexa Fund, True Ventures and Inspired Capital.
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Generate Capital raises $880 million to capitalize the green infrastructure boom. The San Francisco-based public benefit corporation’s latest funding round, disclosed in an SEC filing, comes as a wave of U.S. government funding from last year’s infrastructure and climate bills starts to flow. Generate is an investor, owner and operator of green infrastructure, from community solar systems to municipal wastewater treatment. “If we care about solving climate change in the time frame that is given us, we have to deploy, deploy, deploy the solutions we have today,” Generate’s Scott Jacobs told ImpactAlpha in 2021, when the firm secured a $2 billion balance sheet investment led by AustralianSuper and QIC. Share this.
Dealflow overflow. Other investment news crossing our desks:
- Bangalore-based Log9 Materials raised $40 million in Series B funding for its line of lithium-ion batteries.
- Australia’s Rumin8 scored A$25 million ($17.6 million) in a seed round led by Breakthrough Energy Ventures to make animal supplements that reduce methane emissions (ahem, “cow burps”) from livestock.
- Women-led Twinco Capital snagged $12 million in equity and debt funding, led by Quona Capital, to provide supply chain financing to small businesses in emerging markets.
- Fintech venture Zenfi raised $8.5 million to provide low-cost personal finance services to Mexican consumers.
Impact Voices: Policy Corner
The state of impact investing public policy – and opportunities for 2023. Invectives about “woke capitalism” aside, 2022 saw significant global regulatory progress toward more transparent and accountable capital markets, Fran Seegull of the U.S. Impact Investing Alliance writes in a guest post. “These developments in the United States and around the world have proven to be incredibly popular,” she says. “The field’s evolution has been driven by steady investor demand for impact and ESG products, increased focus on impact measurement and management, and of course, critical public policy developments.” Where do we go from here? “Drive toward more and deeper impact, taking care that the field scales with impact integrity,” Seegull says.
- Popular policies. The Securities and Exchange Commission has signaled that the final version of “the climate rule” – disclosure requirements for public companies on their climate risk exposures – could come in April. Likewise by April, says Seegulll, the S.E.C. has indicated it will act on a proposal on human capital management and workforce disclosures. To get their proposals across the finish line in 2023, “policymakers will need the continued support and engagement of champions in the private sector,” says Seegull. The majority of Americans believe companies should prioritize the economic security of their workers and be transparent about their impacts on society.
- Bipartisan support. Along with the CHIPS and Science Act (CHIPS) and the Inflation Reduction Act (IRA) the Biden administration announced new initiatives aimed at revitalizing underserved communities, including the cross-sector Economic Opportunity Coalition, the Interagency Committee on Community Investment, and the Treasury Department’s Federal Advisory Committee on Racial Equity. Even with a divided Congress, Seegull sees “bipartisan momentum around industrial policy in which the federal government acts to spur economic development and support strategic industries.”
- Congressional caucus. Congressmen Sean Casten (Ill.) and Juan Vargas (Calif.) will announce the launch of the Congressional Sustainable Investment Caucus at a press conference today at 1pm ET. The caucus includes Reps. Bill Foster (Ill.), Raúl Grijalva (Ariz.), and Emanuel Cleaver (Mo.). Lisa Woll of US SIF, Matt Patsky of Trillium Asset Management, and Delaware State Treasurer Colleen Davis will attend the press conference.
- Keep reading, “The state of impact investing public policy – and opportunities for 2023,” by Fran Seegull on ImpactAlpha. Catch up on all of ImpactAlpha’s Policy Corner coverage.
Agents of Impact: Follow the Talent
Carbon America names Cruz Gamboa, ex- of General Electric, chief commercial and financial officer, and Craig Spreadbury, ex- of Four Corners Petroleum, as chief operating officer… Climate Nexus is looking for an executive director in New York or Washington, D.C… Kapor Capital seeks a portfolio services director in Oakland… The Segal Family Foundation is recruiting a remote partnerships director.
Social Finance has an opening for a director of healthcare impact investments in Boston… The Alliance for Health Equity is recruiting a CEO in Philadelphia… Green City Force is hiring a chief development officer in New York… Accion seeks a remote director of public relations… Echoing Green is accepting applications for its 2023 fellowships… Climate Policy Initiative is hosting “Global landscape of climate finance: A decade of data,” today at 9am ET.
Thank you for your impact.
– Jan. 25, 2023
