Category: Newsletter

 

As you can learn from our recent webinar, sustainable finance continues to break records.  In 2021, Green, Social, Sustainability-linked bond issuance reached $1T.  $700B  flowed into ESG finance, representing a 200% increase in the last two years. In 2022, we expect this trend will continue and these figures will reach new heights.

Our Sustainable Investing webinar featured experts:

Our great panelists shared their insights into what stood out for them about the Impact Investing space:

• There are many niche fund manager sprouting globally across asset classes, and not just in climate, but also in diversity & inclusion, sustainable agriculture, regenerative economies, etc.
• The Labor Dept. in 2021 proposed a new rule that gives ERISA funds more flexibility to invest into ESG strategies which represent $45T in retirement assets.
• Many unicorns, zebras, and new funding emerged in 2021 in renewable energy, eMobility, battery recycling, impact measurement.
• 14 cents of every dollar invested in VC went to the climate tech space in 2021.

The panelists also share their opinions on where they think investors are most committed to impact and see the greatest opportunities in 2022:

• Custom Impact Investments: investors want to align portfolios with their vision for the future like improving access to clean water, climate action, and financial inclusion.
• More capital is being invested in circular systems such as alternative and lab grown meats, urban permaculture, carbon sequestration, green fashion.
• We see larger ticket sizes and numerous exits in sustainable verticals, attracting new entrants and more institutional capital.

Additionally, pressing needs of the impacting investing space were presented: Adaptation, Mitigation, and Climate Justice.  When we address mitigation, we can also aim to solve this by reducing corporate and portfolio carbon footprints  Note-worthy views were shared regarding how portfolio investors approach net-zero investing. We also covered the growing carbon credit market, and innovative applications in the DAO and NFT space.

Looking into the future, with the question of what should investors do to shift their assets into Climate Impact and ESG?

The panelists came up with a strategy to hone in on this budding investment avenue.

1.  Analyze real-world evidence-based sustainability strategies that are critical to the  team, fund, business, family office and all relevant stakeholders.
2.  Estimate the current carbon footprint and ESG risk of the portfolio.
3.  Define a cogent roadmap towards net-zero and reaching ESG and impact milestones.

To close out 2021, we want to thank all our friends and colleagues for their continued support and commitment to impact.  It has been a shift from the year before, where COVID-19 led to isolation, uncertainty and introspection.  We continue evolving towards a new normal.  The new normal may not yet be crystalized, but sentiment indicates an energized commitment to climate action, diversity and inclusion, and sustainable innovation. We see more private capital flowing into climate tech, particularly in venture capital and growth equity.  Sustainability managers continue to see inflows, with ESG funds hitting a record of 3.8T AUM in Q3. At imvest we continue to help investors and entrepreneurs build diversified investment strategies with a tilt towards climate action and mitigation. Traditional agriculture and land use account for 17-31 percent of global Green House Gas (GHG) emissions, as such it is critical that the private and public sectors commit to impact investment in solutions.   90 percent of the planet’s soil is at risk of degradation by 2050 due to traditional farming and industrial production.  The GIIN’s 2020 survey suggests only 9 percent of impact assets under management (AUM) are allocated to sustainable agriculture, though a majority of investors have signaled they will increase commitments. An important area within sustainable agriculture that needs protecting and attention is coffee.  Coffee is a drink that connects the entire world.  We drink over 500 billion cups of coffee per year and approximately 90 percent of coffee production happens in developing countries.  Coffee is also the second most traded commodity behind crude oil.  Unfortunately, the supply of coffee is increasingly at risk from the effects of climate change and as a result so are the livelihoods of all the farmers that cultivate the fruit. Fortunately, there are a growing number of impact finance players that are assisting farmers in preparing for a changing future including Root Capital, Finca Ventures, and Oikocredit.  Root Capital, for example, provides farmers with financing whose credit needs are too large for microfinance and perceived too risky for commercial banks. Kevin “Lucas” (our amazing teammate at imvest) co-founded Who Is Coffee to assist farmers in reaching the specialty coffee markets.  Lucas has traveled throughout Colombia speaking to many coffee farmers about the challenges of climate change and sustainable agriculture.  In the below video, coffee farmers Ana Maria and Alejandro speak about the challenges they face. In a future imvest newsletter we will be describing how these challenges mentioned by Ana Maria and Alejandro are being solved by governments and businesses in this sector.