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Earth Day 2021: Investing at the Nexus of Climate and Innovation

By Alix Peterson Zwane, CEO  |   Posted 22nd April 2021

On Earth Day 2021, and as world leaders gather for the two-day virtual Leaders’ Summit on Climate, our CEO, Alix Peterson Zwane, writes about GIF’s commitment to net-zero emissions and the Sustainable Markets Initiative’s Terra Carta, as well as the role that GIF can play as an investor in impact at the nexus of innovation and climate change.

Climate change is one of the greatest challenges of our time, and its often devastating effects are felt by people throughout the world, rich or poor. But like so many crises, it is often the poorest whose lives are disproportionately affected, and particularly those living in developing countries which are less well-equipped to respond to its most life-altering consequences. Just as we have seen since the onset of the COVID-19 pandemic last year, climate change has the potential to wipe out decades of progress in improving the lives and livelihoods of people living in the developing the world, and now is the time for collective action.

At GIF we are eager to play our part through reducing our own footprint, and I am pleased to announce our commitment as an organisation to reaching net-zero carbon emissions. As part of this we look forward to engaging with campaigns such as the UN’s Race to Zero, and understanding how we can contribute towards the shift to a decarbonised economy as we approach COP26. We were also delighted to sign His Royal Highness the Prince of Wales’s Terra Carta through the Sustainable Markets Initiative, and we look forward to engaging with other like-minded organisations through this platform to think about how we can most effectively contribute to accelerating global progress towards a sustainable future.

As we mark Earth Day 2021, world leaders are meeting virtually for the Leaders’ Summit on Climate, organised by President Biden. As an innovation fund focused on achieving outsized social impact for people living on less than $5 a day, we welcome the emphasis that nations are placing not only on the enormous potential of climate action to spur job creation, prevent global temperatures from rising, and create new technologies to reduce emissions and adapt to climate change, but also how a greater collective commitment to improving the state of our climate can directly help vulnerable countries to adapt to its worst effects.

We at GIF are thinking carefully about the role that we can play as investors in impact at the nexus of innovation and climate change, and how we can use our funding to support initiatives focused on climate adaptation and mitigation to bring about transformative change in the lives of the most vulnerable people and communities. See below for examples of how current investments in our portfolio are tackling the climate change challenge.

As we go through this process, we are keen to hear from those who are already making great strides in this space: if there are interesting examples of approaches to funding climate that we should be aware of, or experts we should talk to, please reach out to us either through Twitter or via climate@globalinnovation.fund.

If you are an entrepreneur working at the intersection of climate and gender and you think your work aligns with GIF’s focus on improving the lives of the world’s poorest people, we’d love to hear from you! More information about our mission and model and our funding criteria can be found through our open window for funding applications, which is available here.

Investments through a Climate Lens

Babban Gona

Babban GonaAgriculture is susceptible to climate change as its negative impacts affect crop yields and livestock. Farmers in Nigeria with no viable means to increase their yields often engage in unsustainable agricultural practices which increase the effect of climate change and threaten farmers’ livelihoods and food supply. Babban Gona, an agriculture franchise model that seeks to sustainably improve the lives of smallholder farmers through the provision of comprehensive farming services, tries to tackle these issues upfront. Its efforts focus on climate change mitigation initiatives and building farmers' resilience to climate related shocks. Climate change mitigation initiatives include farmers' training which promote (i) reduced deforestation (ii) reduced crop burning (iii) crop rotation and (iv) optimized input use. To build Babban Gona  farmers’ resilience to climate related shocks, Babban Gona (i) implements innovative solutions to increase their productivity and profitability (i.e. post-harvest solutions to reduce losses) and (ii) takes out yield insurance in the case of extreme weather conditions to provide disaster relief (Copied and adapted from Babban Gona investors memorandum, Q420).

CityTaps

A recent study on the climate resilience of water companies in developing countries demonstrated that climate change over the next ten years will negatively impact water supply for approximately 5.1 billion people, with water quality and affordability most at risk. All water suppliers will face disruption to their supply chain. Climate change manifests both as shock (e.g. increased droughts) and stress events (e.g. depleting groundwater levels), and necessitates that water systems build resilience to guard themselves against potentially devastating effects. Facing this threat, CityTaps built a three part inter-related solution to address multiple issues faced by developing countries’ urban water utilities in ensuring sustainable water provision: a) A prepaid connected smart water meter, which measures and sends water usage data in real time; b) A cloud software, which the utility can use to view live data, as well as to manage customers (e.g. controlling water supply to a given area at a meter level); c) Mobile payments which enable households to load water credits using mobile money (and can also have other individuals e.g. relatives or friends pay on their behalf). This not only allows utilities to better manage water supplies when facing stress events, but also to be more resilient to shocks by being more sustainably funded to spring back.

Give Directly and ideas42

The world’s poorest are particularly vulnerable to the effects of climate change, as they are both more dependent on natural resources for their livelihoods and less well equipped to adapt and respond to climate change given access to limited financial resources. Cash transfers can help those households to build climate resilience by increasing household consumption, and providing opportunities to invest in assets or build up savings to better cope with adverse climate shocks in the future[1]. GIF has provided grants to two innovations working on cash transfers: GiveDirectly is working on delivering large, lump sum cash transfers to improve the lives of refugees and host communities, and ideas42 is designing and implementing behavioural nudges that increase the effectiveness and efficiency of cash transfer programs targeting the poorest households. These innovators work across some of the countries most vulnerable to climate change including Sudan, South Sudan, Democratic Republic of Congo, Uganda, Tanzania and Kenya [2]. 


[1] World Food Programme, (2019). Social protection and climate change. Access online: here.
[2] Notre Dame Global Adaptation Initiative. 2017."ND-GAIN Country Index." Accessed online: here

Mr Green Africa

The plastics industry is an intensive greenhouse gas emitting industry, not only through the extraction, transport and refining of fossil fuels to produce plastic, but also through its disposal. Plastics are built to last and when they are discarded in landfills or water systems, they further add to CO2 emissions through their degradation or incineration. A proposed solution to the plastic problem is through the circular economy; a closed system that uses innovation to eliminate waste. Mr Green Africa, a tech-enabled plastics recycling company in Nairobi is building a circular economy through its in-house end-to-end recycling process. Mr Green Africa purchases plastic waste directly from waste pickers, some of society's most marginalised and poorest people, and processes the plastic waste into PCR (post-consumer recycled) plastics for onward sale to plastics manufacturers. The PCR plastic finds its way back into household consumer brand packaging, such as Sunlight’s scouring powder, a well-known Unilever brand in East Africa. Mr Green Africa is paving the way for a circular economy, stopping plastic waste from leaking into our environment and converting it into a sustainable and valuable resource.

One Acre Fund & Stanford

Two and a half billion people -- among them half the world’s poor -- live on smallholder farms.  Small-holder farmers in developing countries are disproportionately exposed to the effects of climate change that undermine their livelihoods and exacerbate food insecurity. At the same time, unsustainable agricultural practices, such as deforestation, used to increase yields accelerate these climate trends further. 

GIF is supporting One Acre Fund with a $15m grant to drive small-holder farmer income improvements through accelerating testing and scale up of new farming innovations. They address the above mentioned vicious cycle by prioritising work on resilience with the over 1 million farmers in their network by focusing on promoting strategies that enhance small-holder adaptation, and implementing practices that mitigate climate change. Adaptation initiatives include crop diversification, micro-insurance, and improvements to soil health, and mitigation activities that cover agroforestry, conservation agriculture, and increasing soil carbon stocks. 

Designing policies and improving markets to support smallholder resilience requires timely, reliable, fine-geographic-scale information on farm conditions and performance at the national level. This information has historically not been systematically and reliably available.   GIF-supported researchers at Stanford have shown that they can use satellite imagery and machine learning to measure crop yield as accurately as far more expensive and time-consuming ground based methods.  This opens up possibilities for more responsive  implementation of public policies and more efficient agricultural markets.  The researchers have gone on to found a public benefit corporation to get this to work at scale.

SparkMeter

Multiple studies have demonstrated the pervasive use of fossil fuel backup generators in developing countries across Africa and Asia, contributing to a substantial amount of greenhouse gas emissions. Generators are used not just to bring electricity to remote areas, but overwhelmingly to circumvent unreliable and broken electricity distribution grids. Unreliability is a symptom of the financial insolvency and dysfunction that is common amongst utilities in charge of these grids. A better solution exists, both for the immediate needs of poor communities, and for the climate. SparkMeter designed a smart meter technology to enable more reliable grid operations by reducing utility inefficiency and making it easier for utilities to transact on and collect large numbers of small electricity payments from customers (often those in remote areas who are most expensive for utilities to serve). It also enables broader renewable adoption supply into their systems to mitigate climate change. Moreover, SparkMeter provides utilities with grid analytics, which can increase grid resiliency against the effects of climate change (stronger storms, droughts and temperature extremes lead to a surge in peak energy use), by providing operational insights that plot trends, show impacts, explain root causes of grid anomalies, and suggest actions to improve.

WhereIsMyTransport

Emerging market cities contend with significant urban mobility challenges driven by system inefficiencies, and as a result suffer from considerable levels of pollution and congestion. This is exacerbated by a lack of data, for governments, local transport agencies and networks, as well as for commuters, who collectively are unable to make informed mobility and transport infrastructure decisions. Low income consumers are disproportionately reliant and affected by the inefficiencies and challenges associated with informal transport. WhereIsMyTransport is helping to solve these challenges by generating mobility data and solutions through mapping informal and formal transport routes, through their proprietary algorithms and on the ground mapping expertise. 

WhereIsMyTransport’s solutions aim “to get the right information to the right people at the right time” by mapping complex public transport networks. As emerging market cities develop and grow, this data can help equip cities to make smart infrastructure decisions and its residents to make smart commuting decisions. Over the long term this could alleviate the burden of congestion, emissions and pollution that developing market cities contend with on a daily basis. Google’s recent integration of WhereIsMyTransport’s data into Google Maps in Mexico City is an exciting step towards empowering people in emerging markets to harness the power of data and improve their daily commuting experience and overall livelihoods.


 

The Global Innovation Fund (GIF) is a multilateral, social impact-first investment vehicle launched in 2013 by the governments of the UK and the US with a mandate to find and fund innovations with the potential to improve the lives of millions of poor people through both debt and equity investments and grants. Since then, GIF has grown to become a multilateral fund with additional support from the governments of Australia, Sweden, South Africa, and Canada, as well as a number of philanthropic foundations and corporate partners.

To date, GIF has invested in more than 50 innovations throughout the developing world, and expects them collectively to improve the lives of more than 130 million people annually by 2030. GIF can fund innovations focused on any developing country, and can invest in any sector relevant to international development, provided that there is a clear pathway to scale, the innovation focuses on people living on $5 per day or less, and that there is a commitment to generating rigorous evidence of impact.