Type: Aligned Investments
Topic: Agriculture, Clean Transportation, Water
Status: Current
The transition to a sustainable economy requires new products and businesses in agriculture, food, transportation, and health. SSF capitalizes on this transformation by investing in growth-stage businesses leading the evolution.
Investment
Climate Solutions Fund II: $7.5 million; originated in 2014
Sustainable Solutions Fund III: $10 million; originated in 2019
Sustainable Solutions Fund IV: $10 million; originated in 2021
Rationale
Generation invests in broad sector and sustainability exploration to identify next-generation businesses and services. It zeroed in on remittances, money sent by immigrants to their families back home, as an area ripe for lower fees and improved technological efficiency. Used primarily by a population with less consumer power, remittances have historically been subject to unreasonable profit-taking.
Returns
Financial Returns: Fund is off to a good financial start having already exited its investment in Seventh Generation via an acquisition by Unilever.
Social & Environmental Impact: McKnight reviewed impact performance for 2016 but Generation considers its data confidential, however impacts are impressive. For example Generation recently led a $55 million fundraising round into California electric bus company, Proterra, along with BMW i Ventures. These buses eradicate diesel air pollution and, when combined with renewable electricity generation, provide a roadmap for more sustainable cities.
Lessons Learned
Providing transparency around private equity portfolio holdings and impact is challenging. These companies often strive to be quiet actors in dynamic markets.
Generation’s approach to measuring impact is ambitious, measuring key environmental, social and governance factors for all companies in the fund. Generation quantified “Scope 3” emissions — greenhouse gas emissions or savings from a company’s operations and its products. This is a gold standard for reporting, but it makes apples to apples comparisons with other investments difficult.
Photo Credit: Gift Habeshaw on Unsplash.
Disclaimer of Endorsement: The McKnight Foundation does not endorse or recommend any commercial products, processes, or service providers.
Last updated 10/2021