July 18, 2022
Amalgamated Bank, which was founded in 1923, began building climate lending and investment capacity in the 2010s. Image via Shutterstock/PL Gould
The past 12 months have seen a flurry of pledges, goals and " ambitions " from large banks around the world to, in some way, participate in the transition to a net-zero economy. Many leaders emphasize how difficult this work will be. But for other smaller, midmarket players, these sorts of commitments have been a point of differentiation for years. Amalgamated Bank, which was founded in 1923 and manages $6.6 billion in assets, stopped lending to fossil fuel businesses in 2016. Virginia Community Capital (VCC), a Richmond, Virginia-based community development financial institution (CDFI) with $190 million in assets, began building capacity to lend to commercial solar developments five years ago and specializes in helping installations worth as little as $50,000 get up and going. Dozens of other banks around the world have joined the Global Alliance for Banking Values (GABV), which requires its members to follow strict low-impact and sustainable practices. And some have become B Corps by demonstrating strong social and environmental performance. Many of these organizations are carbon neutral for Scope 1 and Scope 2 emissions, and have committed to minimize financed emissions (Scope 3) on their balance sheets. Many specialize in climate-focused lending. Many also prioritize transparency and quality in data reporting. The power of foresight
According to every source reached to report this story, that focus on values and addressing climate risk derives from one single factor: farsighted leadership. "Because environmental sustainability is one of our top priorities as a business, we have always had the executive support required to both pursue environmental lending and avoid resource extraction lending," said Jae Easterbrooks, vice president and relationship manager for Beneficial State Bank. The bank was founded in California in 2007 with a mandate to drive community development. Since launching, it has expanded its mission to pursue environmentally sustainable practices and, according to the latest available data, manages $1.25 billion in assets. When the top person says, ‘Let’s do this,’ everyone else says, ‘OK, we’ll figure out how to do it.’
Bill Greenleaf was hired by VCC in 2015 to work in energy efficiency lending. "I quickly discovered that no one in Virginia wanted a loan for energy efficiency," said Greenleaf, VCC’s senior vice president for real estate lending. "That market didn’t exist." But then an opportunity came to finance a small loan for a real estate developer. It was an existing customer, Greenleaf and his team did some initial underwriting, and they deemed the project to be low-risk. "That was all because our CEO Jane Henderson was interested in it," Greenleaf said. "When the top person says, ‘Let’s do this,’ everyone else says, ‘OK, we’ll figure out how to do it.’" 
Good intentions aren’t enough
Ken LaRoe knows the importance of leadership all too well. He founded First Green Bank in Lake County, Florida, in 2009 with a mission to maximize social and environmental impact. First Green went on to be one of the first North American banks to join GABV. It accumulated nearly $800 million in assets under management. But then investors wanted to cash out. "We were nine years in, my investors were getting restless," LaRoe said. "I respect all of them, many of them are friends. The bank that bought us [SeaCoast Bank] said they would continue at least a good bit of our values proposition and keep our people. And they didn’t do either." As of publication, First Green Bank still claims to be a member of GABV and a B Corp on its website, although it has lost membership to both organizations. The company declined an opportunity to comment. "I went through a period of deep depression," LaRoe said. "I asked myself, ‘Gosh, what just happened?’ In retrospect, I’m glad we sold because I wouldn’t have been able to do Climate First." LaRoe founded Climate First Bank in St. Petersburg, Florida, in June 2021. The financial institution provides lending for a range of sustainable ventures, including building retrofits, electric vehicle charging stations and even carbon offset purchases. With Climate First, LaRoe has been able to be even more intentional about impact. "[Environmentalism] has got to be in the institution's DNA," he said. "And that's not to say its profitability will suffer. There can be margin in the mission. I certainly hope that we are more profitable than traditional community banks. We were at First Green. It’s the same at every bank. I have investors, and I have a fiduciary duty." The company banks keep
One strong indicator of a bank’s DNA can be found in the organizations banks have joined. From a climate impact perspective, GABV sits on the most impactful end of the spectrum. The organization was founded in 2009 and counts 66 global members, including Amalgamated Bank and Beneficial State Bank. None of its members are among the world’s 100 largest banks; they collectively manage just over $200 billion in assets. To join, banks must commit to the organization’s six principles of values-based banking and meet its corresponding criteria . Many banks also apply to become B Corps, which requires they achieve a minimum score with the organization’s climate impact assessment and risk review. Amalgamated, Beneficial and VCC are each members, while Climate First’s membership is pending. Assessing impact continues to be a challenge for any banks that have lent to or invested in carbon-emitting businesses. The Partnership for Carbon Accounting Financials (PCAF), which currently counts 287 members (including Amalgamated, Beneficial and Climate First, along with many of the world’s largest institutions), was launched in 2019 to address this need. Finally, the Net Zero Banking Alliance (NZBA) formed last year as the banking division of the Glasgow Financial Alliance for Net Zero (GFANZ). Members who join the alliance pledge to align their investment and lending portfolio with "pathways to net zero by 2050," set intermediary goals and publish absolute emissions every year. One-hundred fourteen banks so far have made this pledge, including Amalgamated, Beneficial, Climate First and many of their larger competitors. Because of our move toward this type of lending, we are sounder as a bank, we do better with regulators. We’re better lenders overall. Many banks that have joined the NZBA, however, have yet to reduce their impact. NZBA membership for many organizations has not translated to lessened impact. According to the Banking on Climate Chaos 2022 report compiled by a coalition of organizations, the world’s 60 largest banks have provided $4.6 trillion in financing to fossil fuel ventures since the 2016 Paris Climate Agreement. Forty-four of these banks have taken pledges to achieve net zero emissions by 2050. Many have since increased their financed emissions. As the report authors write, "While the acknowledgement of banks’ accountability for their climate impact is welcome, as is the setting of their long-term direction of travel, long-term commitments cannot serve as cover for short-term continuation of business as usual; if they do, they are simply greenwashing." ‘There are a lot of challenges’
Among the world’s largest banks, some have taken meaningful steps forward. Paris-based Banque Postale has distinguished itself by putting a moratorium on all financing that would expand oil and gas production. It has promised to end financing for oil and gas completely by 2030. Others highlight how difficult their pledged transitions will be. Speaking at the World Economic Forum Annual Meeting in Davos, Switzerland, in May, HSBC Group Chief Sustainability Officer Celine Herweijer discussed her company’s commitment to issue $1 trillion in green financing by 2030. "We've got seven and a half years left," Herweijer said. "And there are challenges with that. There are a lot of challenges because, actually, the green stuff at the moment is quite hard to finance … our bankers and our credit risk teams aren't used to evaluating [these] newer companies." Amalgamated Bank CSO Ivan Frishberg doesn’t buy that argument. "I think it's completely antiquated," he said. "Look at the housing market in 2008. Lots of data. Great track record. How did that go?" Amalgamated Bank began building climate lending and investment capacity in the 2010s. In addition to its pledge not to lend to fossil fuel companies, 32 percent of its loans go to climate-focused or clean energy development. It also offers a range of ESG investment products. "On our end, our credit quality has increased," Frishberg continued. "Because of our move toward this type of lending, we are sounder as a bank, we do better with regulators. We’re better lenders overall." Still, Climate First Bank's LaRoe believes that world’s largest banks have an important role to play. "I don’t want to vilify big banks," LaRoe said. "There has to be a transition and, if they are serious about transitioning, they will be helpful in the long run. You have to look at the person at the top. I’m not sure, but I don’t think [JPMorgan Chase CEO] Jamie Dimon is a bad guy. I think his heart is in the right place. They’ll probably turn out to be leaders among big banks. " 
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As big banks struggle to decarbonize, midmarket leaders prove ‘there can be margin in the mission’

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Banks must be officially certified as fossil free from campaign group Bank.Green to join initiative
A new alliance of US retail banks that do not finance the fossil fuel industry has been formed, in a bid to help citizens more easily shift their money away from institutions that profit from oil, gas, and coal projects. The Fossil Free Banking Alliance, launched yesterday by sustainable banking campaign group Bank.Green, brings together eight banks, including Ando, Beneficial State Bank, Clean Energy Credit Union, and Climate First Bank. Ando CEO, J.P. McNeill, urged other banks that operate fossil fuel free investment portfolios to join the group. "For too long, traditional banks funneled trillions of dollars into the fossil fuel industry without sharing that information with their customers," he said. "We encourage others in the industry to do the right thing and join us in being proudly Fossil Free Certified." Banks who want to join the alliance must go through an independent verification process that will enable them to claim to be 'Fossil Free Certified', Bank.Green explained, noting banks could use the certification to promote their commitment to sustainability to climate-conscious customers, future employees, and data-driven consumer investment and banking platforms. "There are a lot of fossil-free banks out there that don't have a way of shouting about it yet", said Zak Gottlieb, director and co-founder of Bank.Green. "Fossil Free Certification is the simplest way to signal to customers, professionals in the banking sector, and the general public that a sustainability-conscious financial institution is putting its money where its mouth is." Green Dot, Helios, Self-Help Credit Union, and Virginia Community Capital have also been named as members of the new alliance. Share

Fossil Free Banking Alliance: New divestment initiative launched by US banks and credit unions

Signals: Ahead of the Curve
How place-based strategies in Virginia and other states are leveraging private capital for public good. Virginia Community Capital has turned a $15 million seed investment from the state in 2006 into more than $600 million in loan originations to finance thousands of affordable housing units, healthcare facilities, small farms, businesses and jobs. The community development financier is among the leaders of Virginia’s emerging impact investing ecosystem. A map of 185 “impact capital holders” in the commonwealth has identified more than $230 million in impact capital deployed through 900 deals last year. Impact Finance Center’s Colorado Impact Initiative, New Mexico Impact Investing Collaborative, Michigan Collaborative, Minnesota Impact Investing Collaborative, the Georgia Social Impact Collaborative and other state-level initiatives are also demonstrating the role local investors can play in creating thriving economies in their own backyards (see, “ Invest in where you know: Impact investors rediscover the power of ‘place’ ”). The map and accompanying report from the Virginia Impact Investing Forum, which is housed within Social Entrepreneurship at University of Virginia, projects another $222 million will be deployed by community and private foundations and community development financiers in the coming year. That represents a tiny fraction of the $19 billion the university team believes could be unlocked with more networking and training, success stories and talent. The list doesnot include university endowments, pension funds or family offices, which would add tens of billions of assets that could be activated for impact. “More and more impact investments are being made every year,” says UVA’s Christine Mahoney, who led the project. “But there’s still a lot of capital on the sidelines.” In Virginia and the broader Appalachian region, communities, local advocacy groups and place-based investors are building a financial ecosystem for a more economically diverse and sustainable post-coal future (see, “ Seeding Appalachia’s sustainable future with public and private capital ”). Impact pioneers. Virginia is for Entrepreneurs, founded by former Virginia Gov. Terry McAuliffe and Sen. Mark Warner, teamed up with venture fund Village Capital to connect local startups with venture funds like Steve Case’s Rise of the Rest fund. Other impact investors in the commonwealth include Virginia Foodshed Capital, a revolving loan fund for small farmers, as well as Richmond Memorial Health Foundation and Community Foundation for a Greater Richmond. Allagash Opportunity Zone Fund is mobilizing capital to renovate existing housing stock for middle-class and lower-middle class residents. Top investment sectors include education, health, housing, food and agriculture. Dealflow: Follow the Money
Mastercard deposits $20 million through CNote’s network of community development financial institutions. The financial services giant’s deposit will be placed with CDFIs in $250,000 slugs and managed by Oakland-based CNote. CNote has helped retail investors put their savings to work in support of under-served businesses and communities since 2017. It launched its “Promise” account earlier this year to make the same opportunity available to accredited investors (see, “ Cash is hot: Investors find new options to put deposits to work for community development “). Mastercard’s $20 million is the latest example of a corporate giant investing its cash reserves with organizations on the frontlines of the COVID economic response and recovery. CNote’s Cat Berman calls cash the “low-hanging fruit” of impact investing. Corporate cash. Netflix’s $10 million cash deposit in Jackson, Miss.-based HOPE Credit Union inspired 125 other companies to follow suit, increasing HOPE’s lending power by $25 million. HOPE’s Bill Bynum calls such investments “life-changing capital” (see, “ How corporations can make good on their racial equity pledges ”). A shift of just 1% of the cash held by companies in the S&P 500 could add $20 billion in deposits to Black-owned financial institutions like HOPE. Even more helpful: equity deposits to strengthen CDFI balance sheets (see, “ Corporate deposits in CDFIs are good. Equity investments would be even better ”). High-need areas. A third of U.S. counties are experiencing high economic vulnerability because of the pandemic; 20% of those are predominantly Black. CNote’s county-by-county map helps investors identify counties facing the greatest need by overlaying economic vulnerability data with Black demographic data. Natural Order Acquisition Corp. readies a SPAC to invest in alternative proteins. Beyond Meat made a splash last year as the first of the “plant-based meat” companies to go public. Another one may soon hit the public markets via a special purpose acquisition company, or SPAC. Natural Order Acquisition Corp. is looking to raise $250 million to invest in “technologies and products related to sustainable plant-based food and nutrition,” according to its SEC filing. The company is listing on the Nasdaq exchange. Oikocredit backs BizCapital to help Brazil’s small businesses recover. Rio de Janeiro-based BizCapital launched in 2016 to help small businesses shut out of traditional bank lending. The company has ramped up its lending in response to COVID, which has hit Brazil particularly hard. Dutch impact investor Oikiocredit committed $3 million to BizCapital’s $15 million Series B equity round. Germany’s DEG, MercadoLivre’s corporate venture fund MELI Fund, Quona Capital, Monashees, Chromo Invest and 42K Investments committed the other $12 million in June. Agents of Impact: Follow the Talent
The Local Initiatives Support Corp. elects Alisahah Cole of CommonSpirit Health to its national board of directors… Lord, Abbett & Co. is recruiting a head of ESG investing in Jersey City, N.J… Quilter Investors seeks an ESG data analyst in London… Open Society Foundations is looking for an associate investment principal for its Economic Justice program in London… Instiglio has an opening for a senior associate in Rabat, Morocco… Impact Entrepreneur will host Amy Francetic of Buoyant Ventures and Michael Whelchel of Big Path Capital, Thursday, Oct. 29… The Triple Bottom Line Group is holding its Asia conference, Nov. 18 – 20… ImpactCity The Hague’s virtual ImpactFest starts tomorrow, Oct. 27. Thank you for reading.

The Brief: Virginia’s impact ecosystem, Mastercard’s deposits with CNote, alt-protein SPAC, lending for Brazil’s small businesses

Illustration: Mio Buono
 
ImpactAlpha, Oct. 26 – Virginia Community Capital has turned a $15 million seed investment from the state in 2006 into more than $600 million in loan originations to finance thousands of affordable housing units, healthcare facilities, small farms, business and jobs. The community development financier is among the leaders of Virginia’s emerging impact investing ecosystem. A map of 185 “impact capital holders” in the commonwealth has identified more than $230 million in impact capital deployed through more than 900 deals last year. Impact Finance Center’s Colorado Impact Initiative, New Mexico Impact Investing Collaborative, Michigan Collaborative, Minnesota Impact Investing Collaborative and the Georgia Social Impact Collaborative and other state-level collaboratives also are demonstrating the role local investors can play in creating thriving economies in their own backyards (see, “ Invest in where you know: Impact investors rediscover the power of ‘place’ ”). The new report, from the Virginia Impact Investing Forum, housed within Social Entrepreneurship at University of Virginia, projects another $222 million will be deployed by community and private foundations and community development financiers in the coming year. That represents a tiny fraction of the $19 billion the university team believes could be unlocked with more networking and training, success stories and talent. The list does include university endowments, pension funds or family offices, which would add tens of billions of assets that could be activated for impact. “More and more impact investments are being made every year,” says UVA’s Christine Mahoney, who led the project. “But there’s still a lot of capital on the sidelines.”
In Virginia and the broader Appalachian region, communities, local advocacy groups and place-based investors are building a financial ecosystem for a more economically diverse and sustainable post-coal future (see, “ Seeding Appalachia’s sustainable future with public and private capital ”). Virginia is for Entrepreneurs, founded by former Virginia Gov. Terry McAuliffe and Sen. Mark Warner, teamed with venture fund Village Capital to connect local startups with venture funds like Steve Case’s Rise of the Rest fund. Other impact investors in the commonwealth include Virginia Foodshed Capital, a revolving loan fund for small farmers, as well as Richmond Memorial Health Foundation, Community Foundation for a Greater Richmond. Top destination sectors include education, health, housing, food and agriculture. Allagash Opportunity Zone Fund is mobilizing capital to renovate existing housing stock for middle-class and lower-middle class residents. The new tax incentive is driving a resurgence in interest in community and economic development all across the US (see, “ Opportunity Zone capital flows to real estate but not to small businesses – or impact ”). The exercise from UVA demonstrates the value of a flagship university in a state’s impact investing ecosystem. “We can make this connection point and do it in a cost efficient way,” says Mahoney. Everyone wants the work of intermediaries but no one wants to pay for it. At universities, she says, “you’ve got hungry, smart students that want to do some of the research or the due diligence and you’ve got staffing to oversee them.”

How place-based strategies in Virginia and other states are leveraging private capital for public good

Photo by Charl Folscher on Unsplash
Greetings, Agents of Impact! The Call No. 9: Beyond Trade-offs. Be intentional about where you play. 9 to continue the conversation with guests in our special-edition podcast series produced in collaboration with Omidyar Network. Prudential Financial’s Ommeed Sathe (see below), Elevar Equity’s Sandeep Farias, Blue Haven Initiative’s Liesel Pritzker Simmons and Omidyar Network’s Robynn Steffen join ImpactAlpha’s David Bank, Thursday, May 30th, at 10:00 am PT / 1:00 pm ET / 6:00 pm London. RSVP today . Podcast Series: Beyond Tradeoffs
Prudential Financial: An 80/20 rule helps an institutional investor manage its risks, returns and impact. Per the Pareto Principle, 20% of the inputs often cause 80% of the outputs. In its $860 million impact investment portfolio, Prudential Financial has carved out 20% for investments with the potential to have outsized impact. The Newark-based insurance giant, one of the world’s largest institutional investors with nearly $1.4 trillion in assets, is demonstrating impact strategies that fit within the norms and constraints faced by institutional investors. Prudential’s impact portfolio is invested to show measurable benefits in financial inclusion, affordable housing preservation, educational excellence, workforce development and sustainable agriculture and other areas. Prudential’s 80/20 rule is a real-world implementation of a Beyond Trade-offs truism (introduced in Episode One ): See the full continuum of capital and be intentional about where you play. The bulk of the impact portfolio, part of Prudential’s broader corporate balance sheet, is expected to generate the same kind of risk-adjusted market-rates of returns as the rest of Prudential’s huge portfolio. But Ommeed Sathe, head of impact and responsible investments at Prudential, has carved out 20% of the impact portfolio for investments that wouldn’t pass typical tests. Because the “catalytic portfolio” is kept outside the assets matched to Prudential’s insurance liabilities, Sathe is able to take on a bit more risk. “More creative, more thoughtful capital can be really crucial in unlocking solutions at scale,” Sathe says in Episode Three of ImpactAlpha’s “Beyond Tradeoffs” podcast series, produced in collaboration with Omidyar Network. “Having this resource that we can do things that are catalytic, that can change the shape of an industry or change entrenched patterns, is really, really important.”
Interactive infographic. Explore investors’ portfolios along the continuum of returns . Catch up. Take a spin through the full “ Beyond Trade-offs ” podcast series. Don’t miss an episode. Subscribe to ImpactAlpha’s podcasts on iTunes , Spotify , SoundCloud or Stitcher . Dealflow: Follow the Money
Peel-Works raises $5 million to give India shops a tech upgrade. E-commerce is booming in India and on-demand food delivery is increasingly popular. Mumbai-based Peel-Works is trying to help India’s millions of small corner shop owners “stay relevant for the new-age retail consumer.” Peel-Works makes software that helps small corner shops manage inventory, analyze purchasing data, and order popular products through its delivery service. The company connects shop owners to potential lenders. Peel-Works is similar to Frogtek, which provides analytics software for mom and pop shops in Latin America. Peel-Works’ system, called Taikee, is being used by about 20,000 shop owners in 16 cities, Inc42 reports. The company’s Series B round was backed by Equanimity Investments, HDFC Bank, Unilever Ventures, Chiratae Ventures and Inventus Capital India. Here’s more . Virginia Community Capital backs Richmond arts and skills center. The East End of Richmond contains 60% of the city’s public housing. The area is gentrifying in a city that already has high rates of displacement of existing, primarily Black residents. Virginia Community Capital invested $340,000 to help a community arts center acquire and renovate an abandoned church at the edge of East End. Oakwood Arts was founded by Virginia Commonwealth University adjunct professor Shannon Castleman to foster creative skills and host events. “I saw how quickly the neighborhood was changing and thought about creating an inclusive and safe place for old and new neighbors to interact and address changes through art,” Castleman said. Read on . Agents of Impact: Follow the Talent
Aleem Remtula, Bogdan Tatarchevskiy, Courtland Walker and Odette Tolliver become partners at Developing World Markets. Edward Marshall is the investment firm’s new managing partner… The Sustainability Accounting Standards Board’s Jean Rogers joins Terra Alpha Investments’ advisory board… A team from University of Vermont’s Grossman School of Business wins the Total Impact Portfolio Challenge… Opportunity Finance Network seeks a vice president of programs in Washington DC… World Benchmarking Alliance is hiring a research analyst… Spero Ventures is looking for a venture capital associate in Redwood City… New Island Capital Management is recruiting a real assets/real estate associate in San Francisco… Carbon Brief is offering a two-week summer journalism internship in London. — May 13, 2019.

Prudential’s 80/20 rule for institutional investors, tech’ing up India shops, Virginia’s creative economy, career moves and openings

Commons Energy is a comprehensive total-energy solution for owners of small to mid-size multifamily affordable housing, education, health care, and community and municipal facilities who may have difficulty accessing capital, technical skills, and implementation services. Commons Energy is a wholly owned subsidiary of the Vermont Energy Investment Corporation.

Commons Energy

Under terms of the partnership , Virginia Community Capital and Commons Energy will form a `` one-stop shop '' for municipal and community buildings , healthcare facilities , schools and educational centers , and affordable housing projects considering implementing energy-improvement projects .

Bringing energy savings to public-purpose buildings

Capital One operates as a financial services company focused on providing banking and credit solutions. The company offers products such as credit cards, checking and savings accounts, auto loans, and business banking services. Capital One also has tools for credit monitoring and financial management. Capital One was formerly known as OakStone Financial Corporation. It was founded in 1994 and is based in McLean, Virginia.

Capital One

Virginia Community Capital

Elliott Davis

Loan

Virginia Community Capital is a Community Development Financial Institution that provides community development financing, strategic consulting, and financial tools to support small business growth, housing, climate resiliency, and food access. Virginia Community Capital serves low-to-moderate income and underserved communities through its financial services and advisory. It was founded in 2006 and is based in Christiansburg, Virginia.

Date	Round	Amount	Investors	Valuation Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.	Revenue	Sources
6/8/2020	Loan	$1.5M	Paycheck Protection Program	$XXM	0 FY undefined
10/9/2015	Debt - II	$XXM	Subscribe to see more	$XXM	$5M - $25M FY 2015	10
5/16/2014	Debt	$XXM	Subscribe to see more	$XXM	$X.XXB ((X.XXx)) FY XXXX	10

Date	6/8/2020	10/9/2015	5/16/2014
Round	Loan	Debt - II	Debt
Amount	$1.5M	$XXM	$XXM
Investors	Paycheck Protection Program	Subscribe to see more	Subscribe to see more
Valuation	$XXM	$XXM	$XXM
Revenue	0 FY undefined	$5M - $25M FY 2015	$X.XXB ((X.XXx)) FY XXXX
Sources		10	10

First funding	6/8/2020
Last Funding	6/8/2020
Investor	Paycheck Protection Program
Rounds	1 Loan
Board Seats
Type	Government
Location	DC

How VCs Use CB Insights

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Platform Overview

Virginia Community Capital

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Investors Count

Funding, Valuation & Revenue

Virginia Community Capital Investors