In Case You Missed It: Must-Hear Conversations Shaping Impact in 2026

Up next on the SRI 360 podcast. We've identified this unique opportunity of becoming a sector-specific venture fund, focusing on the area that Brazil is by far the most globally competitive, the most science-driven, and the most entrepreneurial-minded, which is agriculture. Brazil is going to become one of the most sophisticated agriculture financing models. This has merged with what I believe is the most sophisticated fintech ecosystem in the world.

What we're looking to do is accelerate and increase the allocation of capital and economic resources in support of positive impact. You can't just have a conversation between investors. You have to bring together the whole ecosystem. Policymakers, regulators, investors, those supplying capital, those looking for capital.

Try and build better understanding between these different silos because they are silos and they don't understand each other. We are currently financing our own extinction. We need to work from a very different paradigm. We can see the flooding.

My name is Scott Arnell, and each week I sit down with a world-class investor to uncover their secrets of profitable ESP, impact, and socially responsible investing. Find out more at SRI360.com. Hey everyone, I'm Scott Arnell and welcome to Sustainable and Responsible Investing 360.

Over the past few weeks, I've had the opportunity to speak with four remarkable investors and practitioners, each working at the frontier of how capital can respond to a world that's becoming more complex, more constrained, and frankly, more urgent. Across these conversations, we've moved from the agricultural innovation hubs of Brazil to policy reform required inside of governments, from climate adaptation challenges in Southeast Asia to rethinking the very structures of investment in the emerging markets.

What ties all of these together is a simple but powerful idea. It's no longer enough to just allocate capital efficiently, we have to be intentional about the outcomes it creates. In this special episode, I've pulled together some of the most thought-provoking moments from those discussions. Think of it as a curated walkthrough of different perspectives on where impact investing is headed and what still needs to change here in 2026.

You'll hear first from Francisco Chico Jardim, general partner at SP Ventures who explores how Brazil has become a global leader in regenerative agriculture and biologics and why local innovation is key to scaling sustainable food systems. Then I speak with Nick Hurd, Chair and Senior Advisor at the Global Steering Group for Impact Investment, as he reflects on the evolution of outcomes-based finance and the push for global impact transparency and why we need to move beyond ESG towards regeneration.

After that, we have Laura Ortiz Montemayor, founder and chief purpose officer at SBX Mexico and the managing partner at the Regenera Venture Fund, who shares with us why climate adaptation is still underfunded, how to identify non-obvious climate companies, and discusses what it takes to measure real impact at the earliest stages. And finally, Alina Turino, who is the founding and managing partner at Utopia Capital Management, challenges us to rethink not just what we invest in, but how we invest through structures like redeemable equity and with a deeper focus on shifting power dynamics.

And if something resonates with you today, I encourage you to dive deeper into the full conversations you can find with the links provided in the show description below. Now, let's get started. Thank you first and foremost for being a part of this community. But it's driving me crazy that over 83% of you that listen to or watch this show regularly haven't yet subscribed to this show.

So can I ask you for a favor before we start today? If you like the show and if you like what we do here and you want to support us, the free and simple way that you can do just that is by hitting the subscribe button or following us on your podcast app. It helps this channel more than you know. Thank you and enjoy this episode.

I'm joined by Francisco Jardim, who is called Chico by people who know him. And Chico is the founder of SP Ventures. It's an agtech venture capital firm investing across Latin America with around $150 million USAUM with investment in more than 30 portfolio companies and a deep focus on agricultural innovation. I hope you'll enjoy this conversation as much as I did.

Listen in. Agriculture that is practiced in Brazil is very different than agriculture that is practiced in the US, in Canada, in Europe, in Eastern Europe, in Ukraine, Russia, etc. Brazil is a tropical agriculture ecosystem. And when we started to understand the particularities of this, you start to understand some opportunities.

In Brazil, we don't have winter, we don't have between four to six months of the year where biological activity is frozen or crawls to a halt. In Brazil, you don't have the diapausa, as it's called. In Brazil, the plant, the pest, the disease, the weed grows all year long. Soil erosion happens all year long.

This means that on one side you have an opportunity that you can plant and seed multiple croppings a year, but the operational is much more complex. Everything you need to have completely different mechanisms, systems, technologies, products, etc., to be able to make this work. So tropical agriculture is radically different.

And Brazil had built out internally this system and scaled it. And at the time, another thing that most people uh still don't know in Brazil, because you hear a lot of people saying that ah, agriculture in Brazil is a form of neocolonialism. We produce low-value added commodities and we import industrial goods. If you look at Brazil, the three major sectors of the economy: industry, service, and agriculture.

Industry has flatlined, and at the time they had already flatlined for many decades productivity growth. Service grows around 1% productivity growth. Agriculture was already and has continued to grow at approximately 3% annual productivity growth. So productivity growth is the best indicator for you to see if you're implementing innovation, science, technology within a category.

Sure, you can import technology for a few years and be able to have a few years, but you can't do 50 years of consistent productivity growth at those numbers as Pursuit is doing if you're not really building homegrown innovations. And of course, this goes from deep science that are going on in universities all the way to farmers being entrepreneurs at the end, experimenting with new systems, new processes, really having a very fluid dynamic. So we saw this already. You quickly identified that Brazil has a tropical agricultural climate.

And you're saying that there's substantial advantages to that compared to most of the world, which has what you call temperate agricultural climate. What are the differences specifically and where does that lead you in terms of your investing? With one caveat on the tropical climate ecosystem, it's much harsher for agriculture the way it is. So for you to transform it into a high productivity, high profitability agriculture system, you need to build out a lot of innovation, a lot of sciences, and you have to build it out from almost scratch.

You need to really develop a lot of new innovations and technologies. But why is it harsher? The fact that you have activity all year long, it means that the pests they grow and they have super infestations much more intense. And given an exact example of GMO and chemical results.

When you implement a new pesticide in temperate agriculture, you control the pest very well, and usually you do it once, twice a year. And eventually that pest is going to develop through natural selection resistance, but it'll take a long time. And you can use many models and technologies or processes, you can rotate crops, you can cycle in different chemical solutions to increase the shelf life, and it doesn't really become an issue. But in tropical agriculture, and Brazil specifically has been nicknamed by many of the large chemical companies as the graveyard of chemical technologies for agriculture.

Because since the pest population, the pest pressure is so high because there's no period that actually kills the capability of the pest reproduction, you need to be putting chemicals all the time. So when you're putting chemicals all the time, what happens is you start to select the resistant species very quickly. So in three, four, five years, you've been increasing the dose and the pests are still coming out. You need to bring in different models and different innovations.

So going directly to an investment thesis of ours and how it fits and why this has become the global innovation epicenter for this category in Brazil. You need to have a broader arsenal against pest management because the chemicals they lose efficacy very quickly. And of course, this is correlated with another major trend, which is it's becoming much harder, much more expensive, and it's taking much longer for you to identify a new chemical molecule and get it approved through regulatory channels.

So you're losing arsenal in chemistry, and here it's it loses efficacy shelf. The product lifecycle is very quick. So, what did Brazilien basically engineer and its scale? And today we have the largest and most robust industry.

We understood that when you're talking about tropical agriculture, you need to build out some kind of equilibrium that nature had before as a mechanism to control pest populations. So remember something, Scott. Before you took down the forest and implemented a monocrop system, there was an equilibrium in nature between pests and its natural predator in nature, right? When you take out the forest, you introduce a monocrop, which is the food for the pest, you kill the natural predator, and you created a huge surplus of the food for that pest.

It's kind of obvious that you're gonna have a major infestation. What did Brazilians start to do first in sugarcane in the 80s, 70s, and 80s, and this has become a major industry? We were pioneers in the biologic sector. So we started to find natural predators, for example, wasps, fungi, viruses, etc.

, that attack those pests. It can be a caterpillar, it can be a grasshopper, it can be a stink bug, etc. We developed a technology to industrially produce a natural predator, then we developed the technology to mass inundate the harvest, soybean, corn, cotton, etc., and bring down the pest population with a natural predator.

I'll give you a comparison. It's as if you created a major surplus of ganoos in Africa. You mass produce lions, you liberate those lions, they go, they hunt the gnu population, the new population goes down. Once the gnu population goes down, the lion population controls itself.

But since you have created in a permanent environment of lack of equilibrium, you've created an environment where there will always be an imbalance as the gnues come out. So you need to come out and you have to release additional lines every single year. This is the same thing, logic of the biologics industry in Brazil. Brazil had already built out the largest biologics program in the world in sugarcane in the 70s and 80s.

When we started looking for investments in the space, we found a startup in the University of São Paulo em Piracicaba. This is an agronomical school called ESAUC, a Escola Superior de Agricultura, Luis Queiroz. This one is consistently ranked as one of the top five agronomical science universities in the world. It's always number one rank tropical agriculture.

And these guys had identified this company called Bug, and they had raised additional multiple series of grant funding, this program that I mentioned earlier, to be able to find this parasite wasp that parasites the sugarcane boar, which is a caterpillar that attacks sugarcane. The scientific name is Diatrea sacchalis, it's a major problem for sugarcane. And they found this parasite wasp that parasites the eggs of this caterpillar. So it works on preventing their reproduction.

And it's a very efficient parasite. The eggs don't multi-close, and out of those eggs come out more parasite wasps because and with that you can control the population, of course, gradually, but it super works. And these guys have developed technology to not only large-scale production, but also large-scale application. We invested in this company in 2009.

This is a company that was exited, was sold to a leading Dutch biologics company in 2015 called Copert. They were already probably the largest biologics company in the world. Today they're one of the largest biologics players in Brazil. And this acquisition was one of the major levers for these guys to become relevant players in Brazil.

And this is a company that probably was the most successful case in building out large-scale caterpillar control with a biologics product using macrobiologics, so large macroorganisms anywhere in the world in this kind of environment. They eventually pioneered also JVs and partnerships to use drones. This was in 2014, 2015, when this was still very early. So also very pioneering.

And they had set up an RD, a joint venture with a company out of the aeronautical engineers. So we started to have networks between the universities of economical sciences with aerospace. Something that Brazilian agribusiness has been very effective in building these RD networks to solve multiple different problems, using different expertises. This was our first encounter of biologics.

This has become a major area of investment of ours. Today the Brazilian biologics market is well over $1.2 billion, by far the largest biologics domestic market in the world and one of the most innovative. Because remember, I spoke about the tropical nature, which puts pests in a population.

But there's another element that is also very important. It's about how much biodiversity do you have, Scott, to be able to find these natural predators and these organisms and these solutions. And at the same time, that the pest pressure is much higher in Brazil, the biodiversity is much higher. I believe 70 to 80 percent of global biodiversity is in tropical climate, tropical ecosystems.

So you have a much bigger database to be able to find products and technologies to be able to combat. And this is not random. The reason there is such a higher pest pressure is because there is such a higher biodiversity element. So this has become one of the most important pillars of global regenerative agriculture, is being able to find natural predators that, even if just for a short window of time, restablish an equilibrium, a nature-based equilibrium.

So this is a nature-based solution using local biotechnology. Chico's you identified maybe almost by accident. That this is a unique competitive advantage because first of all, this tropical agricultural environment is something that's unique to Brazil. At the same token, the solutions to accommodate that must be developed locally because temperate environments and climates they don't have the ability to develop those solutions.

Is that really the thesis of what you're doing? 100%. And let me build on that because probably the biggest challenge of emerging market venture capital today is exits. It's liquidity.

So picking up on what you said, when you look at all the big input technology companies in agriculture, whether we're talking about seeds, whether we're talking about chemical across the board, so the BASFs, the Cingentas, the Cortivas, the Bayers, the Mitsubishi, the Sumitomos, across the board. These guys have an RD program and structure where they do RD in Japan, they do RD in Basel, they do RD in North Carolina, they do RD in Germany, and then they bring that innovation to the market that they want to serve, right?

And all of a sudden, when we look at that in tropical agriculture in this new growing class, we say, well, this model doesn't work. They can't find microorganisms, viruses, fungi, etc., in value and bring it over here. So they're gonna have to do local RD, they're gonna have to do local bioperspection, they're gonna have to do formulation, they're gonna have regulatory challenges because it's tough for you to take a virus from Brazil to Basel, handle it over there, produce it over there, and then bring it back.

It's challenging. At the same time, Brazil is a top two profit center for pretty much every relevant agribusiness company in the world. This is a market that really matters. And if you're looking at the future, and the future is not chemical, the future is biologics, and biologics means doing local RD.

This means that you're gonna have to buy local assets. I mean, these guys are gonna have to buy local teams that do these RDs, they're gonna have to buy local pipelines of products, local regulatory assets, local distribution assets, all these things, which is exactly where we said, okay, we're gonna invest in this, we're gonna build out these capabilities, and then we're gonna have liquidity channels selling to these guys. And this has become a basic pillar of our investment strategy.

So, of course, we just spent a lot of time just talking about crop protection, which in Brazil, if we look at chemical crop protection, Scott, it's between 12 to 15 billion dollar market broken up between insecticide, fungicide, and herbicide. But something magical has happened in the last five years. I think the world, Brazil and the world has understood that biologics, it's not just about crop protection, it's also about plant nutrition. So Brazil is around the $20, $25 billion fertilizer market.

We are the biggest fertilizer importers in the world. This is nitrogen, phosphorus, potash, etc. Most of it comes from the Black Sea corridor. So we had a major shock with the Ukraine-Russia crisis where there was a significant imminent risk of supply.

And we started to think about, oh, we need to have a national program for fertilizers to be able to gain independence because this there is no major agriculture without fertilizers. And then they started to realize something that was known for many years and now has become a very fast-growing biologics product, which is there are many microorganisms that enable through biological process nitrogen fixation from the atmosphere into the plant. The plant can do it. So instead of having to sell urea and other products, you can use some microorganisms to be able to substitute a very significant.

Some of our companies, portfolio companies, are doing RD partnerships, some of the biggest agribusiness companies in the world to substitute in a three-year time horizon 40% of their nitrogen fertilizer applications for biologics. And the same thing goes for phosphorus solubilization. So the market is becoming much bigger than just that $1.2 billion is eating in the $10 to $12, $15 billion crop protection market.

But now they're looking at the $20, $25 billion market for chemical fertilizers. And that starts to become the playing ground for the fertilizer, for the biologics industry to be able to attack, eat out a very relevant market share, and build out. And what has happened in the exit opportunities? When we invested in BUD back in 2009, and BUD went through a great journey, they became a tech pioneer at the World Economic Forum, same vintage as the Airbnb guys who were in the same selection cohort, and was acquired by a niche crop protection biologics company from Europe.

Since then, biologics has gone mainstream. Now the Sigjecas of the world, the Curtivas of the world are investing in buying biologics assets. And now it's becoming a mainstream fertilizer player. We're seeing the Yaras, the mosaics, the nutrients of the world also start to get into biologics, OCP for Morocco.

So you start to look at the opportunity as a venture capitalist. Now I have assets that I don't have just eight, nine, ten, twelve chemical crop protection companies. Now I have 30, 40 players, including fertilizers. And this is not just the large players that we know today, because there is a major transformation going on in the chemical industry as well.

We look at the top seven or eight formerly generic Chinese companies, the number one is Rainbow. These guys are no longer generic chemical providers. These guys are doing a lot of frontier science and chemistry, and they understand that biologics is also the future. So they're starting to look into buying assets and understanding how to scale in this segment in Brazil and in the relevant markets.

So all of a sudden, this has become an incredibly hot MA market. Nick Hurd has spent decades moving between government and markets and civil society, trying to solve the same systemic problem from different angles. As a UK cabinet minister and as a market practitioner, and as a central figure in building institutions like Big Society Capital, working closely with pioneers such as Sir Ronald Cohen and Nick Widanohoe. He's worked on climate finance and development finance and energy access in Africa.

And today he chairs GSG Impact, a global network operating across nearly 50 countries and mobilizing capital towards real world impact. You're part of pioneering outcomes based finance during. During this period and developing new concepts like social impact bonds and outcome funds. And this was a fundamental shift from paying for an activity to paying for results.

And you're doing this as a minister for civil society, working, of course, with civil servants. So how difficult was it to shift the civil service mindset from spending a budget to buying outcomes? I could imagine there might have been some resistance you may have encountered. The context helped, Scott, because now we're talking 2011-2012.

So we've got a country in a fiscal crisis, a government with a mandate to try and address that. There's not a lot of money around. The key word is austerity. That's a context in which you can make the case for doing things in different ways.

And that's what we did. My boss, Francis Maud, was leading an efficiency in reform programme that ended up reducing the cost of central government by about fifty-five billion pounds over five years cumulatively. And this is where they feel like the agendas met because we were saying, look, whatever money we've got, we need to spend it in as smart a way as possible. We all know governments waste money.

Let's try and introduce some new rigor and discipline to how government commissions services. Let's listen to these clever, innovative people who are arguing, look, actually, there's a better way of commissioning, which is for government to pay for results, to pay for outcomes, and that's your primary role. But to structure new partnerships with impact investment and with civil society delivery partners, what are now called social outcome partnerships. At the time, social impact bonds was the kind of the tag and the tool.

Let's innovate. Particularly in areas, Scott, of social policy where clearly the state had failed, where the status quo should be unacceptable because of the cost of the status quo, if you like, both human and financial. So we targeted areas where you couldn't really argue for carrying on the way we were carrying on before. Surely we in this context we must be able to innovate.

And let's start to structure some pilots around children in care, around keeping people out of jail, and let's test this. So it was quite hard to argue, make a case against innovation. This is a system that hates doing things for the first time. But ultimately, sometimes we have to crack that.

It helped enormously. That we had people like Ronnie Cohen and Bridges Investment Management saying, look, we are prepared to invest, we're prepared to provide the working capital in these type of arrangements if you can stand up the outcome fund. So working closely with Kieran Boyle, who I know you also interviewed, with a full support of David Cameron and Francis Maud, we stood up the first outcomes fund. I think it was £75 million, the Life Chances Fund.

And that was a catalyst for a number of these social outcome partnerships to start providing some demonstration, to start encouraging some leadership at local government level, some permission, if you like, to try and do things in different ways. And now, 10-15 years later, we've got some data set and some evidence to suggest that in some contexts this works really well. But for government, the shift from paying for activity to paying for outcomes, for me as a taxpayer and as an embattled minister, that made perfect sense to me.

And to your point about civil servants, Scott, when you interviewed Kieran, I was really lucky because I've listened to so many ministers over the years complaining about the system and the service and how the civil servants have got in the way of innovation and radical change. That wasn't my experience at all. I felt like I was helping lead a startup in the middle of government with some brilliantly talented people who were really up for trying to do things in a different way.

And we had a mandate and we worked together for a number of years. But the context helped a lot. As they say, you should never let a good crisis go to waste. And that was an opportunity for us to try and do things in different ways.

Aaron Ross Powell, could you take me through one of the early social impact bonds to make it real for someone listening? How did it work and what did it prove was possible? Trevor Burrus, What we're talking about is a new contractual relationship between effectively three pillars, three parties. The first is the payer of outcomes, the organization that says, okay, if you deliver these outcomes, this is what I'm prepared to pay for them.

That's the role that we position government for. Sometimes philanthropy can come in as a co-funder of outcomes, but that's fundamentally the role of government, is to pay for the outcomes. And pay when they're achieved. The second pillar, the second key party of this new relationship is the delivery partner, mostly NGOs or combination of NGOs that think that they have enough insight experience to do a better job of delivering the outcomes than the status quo arrangements.

So you have a pair of outcomes, you have a delivery partner or a delivery consortium, and then you need someone to provide the working capital for the project. And that's where the impact investment community came in, organizations like Bridges, organizations like Big Society Capital, as it was called at the time, coming in and saying, we will provide the working capital, we'll take a view on the probability of success, we'll provide the working capital, and we'll get repaid out of the outcome payment.

That's broadly the structure. So for the government, it's a good outcome because you pay for success and you pay when success is achieved. And so that sometimes defers the liability. And for the impact investor, there's the opportunity to combine high impact with acceptable financial return.

But you can imagine this is a quite a significant transfer of risk from the states to partners and required a certain amount of courage from the broader community to do something different. As we're talking now, this kind of approach has been expiloted in 35 countries around the world, over 200 of these kinds of partnerships. They tend to work best in areas of high existing cost of the status quo and areas of complexity where often a more holistic approach is required. Think of things like keeping people out of jail, where our track record in the UK has been horrendous.

So the first social impact bond was literally attached to a jail, Peterborough jail. But over time, some of the work we were doing, the children in care seemed to be a particularly promising area. I think the cost of a child in care is around £40,000 a year. That's just the financial cost, but the human cost, you can't put a value on it because the state is a lousy parent.

The consequences of that are enormous. That was an area crying out for innovation. Local governments like Essex, for example, back in the day, were pioneers in saying, no, we want to experiment with this because what we're doing is not good enough. But we like your support, central government, to provide us with what were sort of top-up outcome payments.

Because if we deliver better outcomes here of keeping more children in Essex out of care, there's going to be a benefit to the central government and the taxpayer. This should be reflected in a contribution to the outcome payment. So we set up a fund in the central government to effectively be like a top-up fund for outcome payments for these kinds of outcome partnerships that were blossoming around the country. Homelessness in Greater Manchester, great results there, better outcomes at a much lower cost.

Employability, helping young people into employment, another area where this has delivered good results around the world. The Education Outcomes Fund, at least three funds now in Africa, helping governments there to provide better outcomes there using this model. It's evident around the world. And what we're waiting for now is scaling it.

I'm delighted to see that the UK government, the new UK government, the Labour government, has just committed to a £500 million outcomes fund, which is seven or eight times bigger than the fund that I helped to initiate. Trevor Burrus, Jr. In one example you mentioned recidivism in jails or homelessness. How did it work, if you remember?

Just so people can visualize this. Aaron Powell For the Peterborough, the original one got decent results in terms of the outcomes and return money to the investors. I mentioned the homelessness in Greater Manchester. Trevor Burrus That delivered better outcomes than the program that it replaced at a cost that was around 60% of the original cost.

Trevor Burrus, Jr. Obviously what matters most is the human outcome, if you like, less people homeless in Greater Manchester. But for a government that had an efficiency agenda, to deliver more with less is a great outcome. And we did innovative things like we put out rate cards that kind of were very transparent around the cost to government of the states.

The cost of failure that created space for people to innovate and say, look, we see your costs and we think we can help you deliver better outcomes at a lower price. That was quite a big cultural shift. And then we set up a commissioning academy to cost nothing, but we basically a learning network for commissioners around the country to learn from each other, to encourage each other, to build confidence, swap data, swap information. Again, just part of this groundswell of building confidence in a new way of doing things and a system shift, really, in terms of how public money should be spent.

Trevor Burrus, Jr. You eventually served at the Department for International Development, where you led on Africa's strategy and launched the Energy Africa campaign to accelerate universal energy access in sub-Saharan Africa, and then later became Minister for Climate Change and Industries. These roles put you right at the intersection of climate development and industrial policy. How did those experiences shape your thinking about the need to integrate social outcomes into climate finance?

At the time, I was a minister in a department called the DIFIT, or Department for International Development. It's disappeared now. It's been sucked up into our foreign office. But it was a world-class department with a huge budget.

We're at the sort of peak of the period of generosity in terms of overseas development aid. I felt was really making a difference. But I became also increasingly uncomfortable about the aid model, if I'm really honest, and was increasingly interested around development finance and investment and helping to build agency and capability and employment in Africa through an investment model. I was also very keen to support the development of development, impact bonds, learning, building on our experience in terms of the social investment market.

And then I moved over to the Department for Business and was Minister for Climate Change. And I had responsibility for all the UK climate finance budgets. Over time, to answer your question, it became clearer and clearer to me that the social and environmental were inextricably linked. The drive to reduce emissions and that a drive in the energy transition could not leave people or places behind.

And that there was high political risk and social risk to making that mistake. Investment in people had to go alongside investment in new technology. And that change is really difficult to manage, and that you have to bring people along with you, and that there was real danger in leaving people or places behind. And now I think that's become much clearer to everyone.

In 2021, you were asked to chair the impact task force during the UK's G7 presidency for people who don't know what the Impact Task Force is, and you know what you know, could you explain what it is and what the problem was that it was created to solve? Aaron Powell So the hat I was wearing is as chair of GSG Impact. The context then was real concern about funding gaps for the SDGs and the climate goals, particularly in emerging economies, the desire to try and accelerate the mobilization of private capital looking for impact in the emerging economies.

Aaron Powell And the British Government decided that they wanted to have another look at that question, asked us, and that was GSG Impact, to set up a task force which Ronnie Cohen and I assembled to look at that exam question. How do we accelerate the mobilization of private capital that's looking to make a positive impact, especially in emerging economies, with an eye on the STGs and an eye on the climate goals? You published a number of reports, but what was the fundamental barrier you identified that's preventing institutional capital from flowing to where it's needed for impact?

Trevor Burrus I recommend the reports. We're very proud of them. I think part of the value that we added in terms of our theory of change was to make an argument for the importance of impact transparency and increased accountability for impact. Trevor Burrus, Jr.

One of the biggest barriers to the flow of capital that people want to see is that for the big institutional asset owners and asset managers, they don't actually need to do it. Investing in emerging economies that are below investment, great, because they get satisfactory returns elsewhere without taking that risk. So unless you transform the landscape of information and incentives, inertia will prevail. Those of us who kind of aspire to system change and want to be part of driving change know that one of our biggest enemies is inertia.

The system we're trying to change is the system that takes decisions on allocating our global wealth. And that's a system that plenty of people do very well out of at this moment in time. The argument for change is not universally held. So you have a lot of conversations with big Australian pension funds and things.

And push comes to shove, they don't need to allocate capital to Kenya and Nigeria, let alone Burkina Faso or Togo. My private and very candid view that has evolved over time is that the debates around mobilizing international capital scale into merchant economies, the barriers now are really well documented. There are very serious substantial risks, political risks, forex risks. They're well documented.

Shelves are groaning with reports reaching similar conclusions. And yet the needle has not moved in four or five years, despite all the talk of crises in funding gaps. One of the conclusions I've reached, and certainly one of the conclusions we've reached at GSG impact, is that actually we've got to spend more time thinking about how we encourage the mobilization of domestic capital into the emerging economies that kind of need the capital most. Because our experience in many African countries is that there are domestic pension fund schemes that are young, immature, growing very fast.

Demographics tell you where they will continue to grow fast, that at the moment are not investing in their own economies. They're tending to take sovereign risk. Part of the exciting opportunity now, and one we're actively engaged with, is to focus on creating the right environment for how domestic capital that isn't bothered about forex risk or isn't so bothered about political risk can engage with investing for impact in their own real economies. I don't think we should give up on the opportunity to mobilize private capital at scale into emerging economies.

If the question is how you drive capital to the economies that need it most that are below investment grade, the inevitable conclusion is you have to dump a whole lot of resource into catalytic capital or whatever tag you want to put into in terms of risk adjustment mechanisms, and that resource is finite and precious and needs to be used very smartly. But I think in parallel, we as a system and a community that cares about this need to focus more and more on mobilization of domestic capital and domestic resource, which is growing and is there to be influenced and should have the incentives to invest in their own economies and help build agency and capability and employment that way.

Trevor Burrus, Jr. The Impact Task Force has been working closely with the ISSB, which is the International Sustainability Standards Board, and the IFVI. We love our acronyms, the International Foundation for Valuing Impacts. And these institutions are trying to move us from what you've called impact as PR to impact as math.

Tell me what you mean by that. And are we closer today to globally consistent impact reporting that institutional investors can actually trust and use? Or are we still stuck in a too many frameworks world? I think we're moving in the right direction.

Actually, what excites me about this, Scott, and this is my sort of political lens on this, I think transparency is a very powerful tool because information is power. The transparency agenda is to some degree a transfer of power. And my experience is that once you give people power in the form of information, it's very hard to get it back. Transparency tends to be a one-way street.

My basic premise is that we live in a much more complicated world where the landscape of risk and opportunity has been transformed, not least by climate systemic risk, and that those looking after our money, those charged with a fiduciary duty to look after our money, have a responsibility to be as good as they can be in terms of optimizing their processes around risk assessment and risk management. And we all want investment decisions to be taken with the best possible information.

Now the landscape of what is now possible in terms of useful information to optimize the investment process is changing very fast. Now there are headwinds and we obvious headwinds are blowing across the Atlantic. And we argued for this strongly in the Impact Task Force about the need for real accountability for impact to change the conversation in the boardroom, to change the conversation in the investment committee. And Emmanuel Faber, who leads the ISSB, was on the steering committee of the Impact Task Force.

And what what I see is a continued risk around fragmentation, as you're suggesting too. But observed over a period of time, common sense prevailing in terms of trying to maximize the kind of harmonization and the interoperability that we argued for in the task force. I can see now, I think at the last count, 32 jurisdictions that effectively adopted the ISSB standards. We see consistent attempts by the standard setting bodies to work together more effectively.

Further down the road, we can see a whole bunch of talent working through impact accounting as the logical end destination of this. We live in a world where, if to really persuade and move, you have to put a monetary value on things. I think we're getting closer and closer to having a credible methodology for putting a value on different impacts. And as you know, Ronnie is arguing that the evolution of our processes of investment management will lead us inexorably to looking to integrate that into financial statements and making that data available on the Bloomberg terminals.

I've learned never to bet against Ronnie. I think this will happen. The reality is that we can't continue to invest and generate economic activity in a world without regard for the social and environment impacts because we've got more and more evidence about the cost and the systemic risks associated with ignoring them, which is what we've done for decades. There are frustrations, of course.

There's lots that is suboptimal, but the direction of travel is pretty clear for me. We must always take care not to distinguish between the cycle and the structural trend. Now there are headwinds, there's dilution, softening of ambition, but I think the direction of travel will be led by investors who want useful information to optimize their own processes. I'm excited about that because the future has got to be one in which there is more accountability for impact.

I think the only thing I would say, as we argued in the report, this process of setting standards for disclosure cannot be a process dominated by the richest economies and the biggest companies. We argued in the report and had the support of ISSB and the British government actually to land the argument that this needs to include emerging economies and critically small businesses in the supply chains. And we've been doing some work around capacity building in nine or ten countries where new disclosure regimes are being adopted and where, frankly, a huge amount of work needs to go into building understanding of the why, what, and the how.

The Impact Task Force introduced the concept of a just transition, which you referred to earlier, Nick. And this is the idea that moving to net zero must integrate three elements: it's climate action, socioeconomic distribution, and community voice. Help me understand this as the social dimension so often left out of climate finance. This came home to me in the context of the South Africa Just Transition and a package that was put together by donor countries to support South Africa in that important transition of coal.

And it became quite clear, looking at that process, that insufficient thought had been put into something that seemed very obvious, which is what's the story for the communities where coal is the lifeblood, where livelihoods of so many families depend on this industry? Where's the investment story about alternative livelihoods or community development support for the losers in that process? And there had been arguably insufficient political attention paid to that by the donor community, which is surprising.

I'm not so surprised by how the champions of green investments in the private sector didn't attach importance to that, because all they're really interested in is the technology and the return on the technology and the investment proposition. But we've seen time and time again how the social element has been overlooked. And it's not smart because if you overlook the social element, overlook the need to bring people with you, the chances are handbrakes are going to be introduced into the process that carry cost and friction and add risk.

So we saw this in the UK, for example, where there was a big push-through behind onshore wind, controversial technology, lots of communities against it, political resistance very strong. There's no real systematic effort to ask up front. Okay, what are the incentives for the community to embrace this? And let's get this right, because if we get this right, we're going to travel down this road faster.

I saw the from the South Africa context that not enough been thought to be put into it. And I see it now again around the world where the cost of living comes forward. I get linked to that is some political insights that put the brakes on the net zero agenda linked to cost of living. And that's in part because the narrative at the start of this journey wasn't sufficiently honest or inspired to bring people along.

And so now it's vulnerable for all sorts of different architectures. Reasons the political incentives and the business incentives are to make sure as part of your policy and your investment. To make sure that you're bringing people along. You're not leaving people in places behind.

Because if you do, you're probably storing up risk and cost. What I loved about the task force is we didn't want to just write reports. We wanted to build coalitions of action around ideas. And the idea emerged.

Look, you know, people are talking about this just transition idea, but it's like so many other expressions that we prodded and say, Well, what does it mean? And particularly for an investment community, what does it mean? What does it mean to invest in the just transitions? The mood of the task force was oh, well, let's help define it and let's bring some investors around to create a framework that actually people can understand and trust and apply to their own processes to try and maintain the integrity of their propositions.

That's where it came from. I'm joined by Laura or Fiz Morte Mayor, an investor and system thinker who has worked on both sides of that transition. After spending years in traditional thinking and asset management, Lauda made a deliberate pivot into impact investing in regenerative finance, not just as a concept, but as something capital has to do. She's the founder of SDX Mexico and is currently launching Regenerative Ventures, a fund focused on biodiversity regeneration and inclusive economic development across Latin America.

So when you look at the landscape today, where do most ESG funds or sustainable funds actually sit on that spectrum? Are they as impactful as their marketing suggests? I'm not gonna name names, but basically in the spectrum, we have the destructive investments, the extractive, the responsible ESG, and then the bridge to sustainable. From the bridge to the right, everything I call impact because even the sustainable bridge is impactful enough, but it's not the destination.

Because the sustainability bridge, or what we're promising with all of these ESGs, we're only promising survival and we're only promising neutrality. We're not acknowledging the historical debt that we have on nature and on society. So if I'm from a paradigm of neutrality, of doing no harm, I'm not acknowledging that there's a bleeding wound, you know? And so I'm no longer doing harm.

Yeah, but there's a bleeding wound. Like you need to restore, you need to heal, you need to do so much more than neutrality. Neutrality falls very short. And so basically, what what I think is that the ESG is working from the wrong paradigm.

I really respect what they're doing, and I think many, many, many internal people from the ESG movement are working their their themselves off in like they're they're doing so much to try to push an unsustainable industry. And so I think I I really, really admire the people within the work because I think most of them are being very genuinely trying to move, change the needle, right? Like they are really trying. But I do believe the system is way bigger than them, and and it's overpowering all their efforts.

And so while I admire and I really respect the work that ESG people are doing, I believe, you know, we we're still really, really so far. Like even the the amazing report that Patagonia published a week ago. I don't I don't know if you've read it. No?

Okay, so it's this amazing report. It's a very shocking report and a very beautifully written report in terms of storytelling. And as usually Patagonia has, you know, it's very honest in some ways in saying that you know they've fallen short in this and that. And so, and at the end, the ending slide says nature is a tough boss because they have you know given all their shares to the earth and blah blah blah.

And so even Patagonia, with all that disruptive, I would say, essence, even them, they're so so short of everything. Like living wages, the graph of living wages, imagine that the top is not a hundred percent, the top is 50% of living wages. And so all the graph that you're seeing, the you know, the reference point is that this is 50% of our living wage, and all the graphics here. And so and that is like a very disruptive company, one that is trying really hard.

Imagine the rest. Imagine the rest. So for me, it's like I I just don't have the time to be in ESG. I don't have the time.

Like we need to work from a very different paradigm. And so I do work a lot, and I I was yesterday in a conference with a big, big corporation here in Mexico and international corporations. Like I really admire and I'm learning a lot from the ones that are the insiders that are trying to push the needle really hard. And I think that some of them are doing very worthwhile efforts.

I'm not saying all of them, but of course the greenwashing is too strong, and of course, the billions of dollars against you are too strong. And because we all wear several hats. We have the hat of we need to pay rent and we need to, you know, pay our children's education and our health and blah, blah, blah. And so, and within the European sphere, you have usually healthcare is at least mostly free.

But that's not the case in the US and Mexico, right? So we really need to save a lot. Like cancer costs millions. And so that kind of paradigm is always forcing us to work for corporate culture and banking culture that is the one that pays the most.

But it's of course doing a lot of greenwashing and and it's it's a disservice, you know, it's and so yeah, so I I have different opinions on different people and and funds in particular, which are not needed in the podcast. But I would say there's there's people who are certainly doing way more than others. And I have some admiration for some corporations, and even though they are not necessarily the best, they are really very much further ahead than many others that are not trying at all.

And in terms of the difference in in paradigm, I would say the the there's also people doing the impact investing work in such a light way that I think the laziest thing that I've ever heard is when people say agriculture is already impact. I'm like, no, because they are not acknowledging that there are so many ways of doing agriculture. There is an extractive way of doing agriculture, there is a destructive way of doing agriculture, there is a non-ethical way of doing agriculture, there's slavery in agriculture, there's child labor in agriculture, there's so much in agriculture that it's very lazy to think, oh, agriculture is impactful inherently.

You know, like there's so much in the how. And so I think there's a very lazy classification of impact where one single sector, just because it's education, it's impactful. And so for me, that is very low standard, and we need to raise our standards and always look at the how. Because there's always a how, because everything can be better if we really care.

You know, agriculture can be better, production can be better, there's so much that can be better. But if we pat ourselves on the back and just say, Oh, I work in agriculture, so I'm already impactful. So you're basically saying that impact is not only what you invest in, but also in the how you invest in it. So unpack that for me.

What does the how look like in practice? If I want to just change the what, oh, this is dirty energy, this is clean energy, I saved the world. I'm not necessarily acknowledging that I'm investing in clean energy with a broken system. And so we really need to look at the how and we really need to look at what my investment is perpetuating within the status quo.

Like I still need to work within the system to make transactions. But I really need to see if my work and what I'm doing is really pushing the boundary within the breach of the transition. And so to put the boundary, I really need to be disrupting a little bit of the how, a little bit of the why, a little bit of the who, a little bit of the where. Because our impact investments must honor where commodities are coming from.

And we know most commodities in the world are coming from the global south. That is not new knowledge, that is not news to anyone. But even though we have in the global south the diamonds and the coffee and the chocolate, somehow we're the poorest. And so it is always like how are we perpetuating that and being accumulative by design, just following what finance told us in school, versus how are we changing that power dynamic?

How are we making finance really be at the service and not at the controlling dynamic? And so that is, I think, how we can change termships and how we can change that each investment is really working at the at the change of power dynamic. And I think there are people who are actually doing that and being very intentional in how they do that. And so that is where you get deeper.

And so I think there's the impact investors that are doing impact on the surface, and there's the ones that are doing transformative, and then there's the ones who are doing regenerative. And so those are very few. One of the most interesting design choices you've made is the use of redeemable equity as the primary financial instrument. Most early stage funds default to traditional equity stakes or venture capital structures.

Why did you reject those models? And how does this redeemable equity actually work in practice? Well, we don't reject those traditional models. We accept that they are absolutely needed.

But what we want is also to have that additionality, right? If debt is already done, how do we actually provide a longer-term time horizon where there's really skin in the game together with the regenerator? Because usually the regenerator is risking everything. Like we've seen many entrepreneurs that have their houses on mortgages to be able to afford the viability of their company.

There's so much that they're putting it at risk. As proof of that skin in the game, we think equity is more aligned in terms of being partners. And so what we are doing is being very flexible in terms of structure and allowing for the alternative structures to be explored by both the entrepreneurs and the investors, precisely because you know, debt is already the most well-known. So, how do we bring out additional value in terms of redeemable equity or self-liquidating equity?

The reason behind redeemable equity is also social justice. What we see today in Mexico and Latin America, the usual impact investments that have been going on for decades, is if you have this really impactful company, your exit strategy is selling to this corporation, right? So, and that has happened many times. There's always an ethical dilemma to that, there's a big corporation dilemma, there's so much going on.

And so it is precisely because the exit strategy is towards a third party. So, what if the exit strategy was structured within the structure itself? And the exit strategy is you get your shares back as a founder, or you're buying back your own shares. And so that redeemable equity or self-liquidating equity was inspired by the agricultural fund that I was mentioning from way back in 2015.

But we're doing it a bit different. So, what we've seen is that, for example, Eco Enterprises Fund, one of the funds that we admire the most in natural capital in Latin America, they've been around for now four funds. They have a ton of assets under management and they're super mature. And they actually use a very flexible strategy.

They put a little bit of equity, tiny piece of equity at least 10%, I mean at most 10%, and the rest they do it in long-term debt. And so we've learned a lot from what they've been doing and others have been doing in Latin America. And what we think is that we don't want to put the founders in that dilemma of selling out to corporations at the end if they are successful. We want them, if they are successful, we want them to have the opportunity to buy it back and remain.

Because these are lifetime companies that are usually not the unicorn chasing mentality from Silicon Valley that wanna exit and do something else. These are usually very much within the family structure. There are a lot of our entrepreneurs that are a husband and wife. There are a lot of our entrepreneurs that are third generation family stewardship of this land, you know, and so what we want is not to, you know, for private equity to buy up land and die up Mexico.

What we want is for them to have the opportunity to grow, to regenerate and keep it. Because we see that as the only way that regeneration will remain. For regeneration to be permanent, or not permanent, but more longer serving, I would say it has to be intergenerational. And really, there's there's a phrase from Wendell Berry.

He's an American philosopher and farmer that was very much at the heart of the regenerative movement. And one of his phrases says that one needs to be bound to the land, and not bound to the land only in property of the of the land, but also in work and in family and in love and tradition. And if we cut those ties and like I own the land and you work in it, you're gonna leave because these conditions are no longer attractive for you. And so for people to remain, for communities to remain, and and for agriculture to no longer lose labor because it has lost labor, we need that attachment.

And so there are many, many investment thesis in regeneration that are really land acquisition strategies. And that has a huge risk, a huge social risk, because if you end up over concentrating the ownership of rural land in very few hands, you will no longer have a labor force and an enduring produce and an enduring climate resilience or nature. And so like I think private equity firms are building up their own risk in that accumulation of land ownership. And so what we're trying to do is being very disruptive in that we want to invest in the use of product of the land, not in buying up the land.

And so that is why the redeemable structure is so important and profoundly impactful, because it gives the ownership back. And so, you know, we've made our returns and and now it's yours so that you can keep it and steward it for more generations. Walk me through an example of this redeemable equity. A company gets an investment from you of, I don't know, a million, a million US equivalent.

What happens next? How does the cash flow sharing work and how does the buyback process work over time? It needs to be a co-creation process with the entrepreneurs because what mostly happens when it's regular debt is that the very first moment that you're getting the money, there's already a tranche taken away for you to pay back the first interest, you know, and so like the money has not even worked for you yet, and you're already paying costs. So in the very beginning, we need to set up, you know, like in how many tranches there's gonna be the investment, the payback terms, all of that, of course, will be set.

But what we want is to have a grace period, and the grace period really depends a lot within the maturity phase of the company and the type of company that we're working with. Because we have this very holistic investment strategy where we're targeting farm to fork. So it's very different the payback cycles of a farmer than the payback cycles of a commercializing company, right? And so we're usually investing in commercializing companies, not necessarily at the farm level, but we really need to understand that cash flow works very differently in those two different cases.

And so the grace period will be adjusted depending on what type of cash flow and and company we're talking about. But usually it will be a grace period of, let's say, a year, a couple of years, where they're only paying back a minimum amount of interest for them to remember that we're there and that they need to pay back, but really letting them, most of the principal will be at work, right? And producing and making the transition to regenerative management successful and all of that.

And so within the payback terms, there's a little bit of interest and principle that is paid back. But usually there's a hybrid situation between equity, preferred equity, redeemable equity, and just usual debt that we need to be, let's say, navigating within the negotiation. So we have the flexibility of all of those instruments, but we need to cater that towards the specific company and their cash flows and their understanding, because many of them are already against equity from the get-go, but many of them are really excited about redeemable equity.

So we really need to work on a transaction in each case by case so that we agree on the payback cycles. There's also a flexibility that you need to work in because you know, when you set the terms six or seven years in advance of the payback moment, there's gonna be so much change within those time frames that we really need to give a little bit of, I would say, leeway to adjust conditions in terms of how much we pay back, how we evaluate the company from the start to how we evaluate the company later.

And so I think those terms and conditions will be very special and I would say tailored to each situation. I'm joined by Alina Torina, founder and managing partner of the Radical Fund and Utopia Capital Management. Alina has spent her career building and backing early stage companies across Southeast Asia and Africa and working at the intersection of climate risk and economic development and venture capital. And now, please meet my guest, Alina Torino.

You've talked about the missing middle of Southeast Asia. You've said that 90% of global climate capital currently flows to mitigation that reduce emissions, things like solar farms and carbon capture, but almost nothing goes to climate adaptation, which is more about helping the communities survive climate impacts that are already here and happening. So, why is adaptation the more urgent investment thesis for Southeast Asia and what makes it fundamentally different from mitigation as an investment category?

It's quite obvious now that Southeast Asia as a region is one of the most vulnerable regions in the world due to climate change. And at the same time, it's also one of the largest emitters of the world, right? The thing that really blows my mind is when I talk to people or talk to climate skeptics, let's put it that way, it is visible in that we can see the rising sea levels, right? We can see the flooding, we can feel the stress that comes from heat waves, we can see the impact on food and water scarcity.

We as people are very much in it. And I have this kind of story that when I first landed in Bangkok, I remember people wearing masks outside. And this was just after the COVID era. Why people wearing masks outside, don't they know actually COVID is going down?

And by the way, if you're outside, you don't need to wear a mask. Only to then realize, as my lungs filled up with polluted air, that they were wearing it because of pollution. And I myself actually suffered, I literally couldn't breathe. I had to buy an oxygen mask.

The pollution is so bad in some of these places. And it's not the only place, right? It is here. It's not going to happen in 10 years' time or 20 years' time.

We are already being impacted. So, how do we bring solutions that help us adapt to this reality? Now, why is it hard? Again, many, many reasons.

I always say actually mitigation is much, much easier to quantify. So whether you're an investor or your development finance institution or your government, measuring carbon. Is a quantifiable measure. And you can price it, you can model it, you can put it into a spreadsheet and you can look at it.

Adaptation is harder to measure. And identifying kind of what KPIs are around resilience or around risk reduction or around avoiding losses, there's a lot of probability, there's a lot of hypothetical, there's a lot of assumptions, and there's a lot of nonlinear, non-quantifiable sort of KPIs and metrics. So it's harder to measure and to manage. Another reason is traditionally most of the adaptation dollars came from large infrastructure real estate and therefore large government-supported funds or DFI supported funds.

So there is funding going towards adaptation, but it's just not going to startups that are driving solutions and innovations, especially at the earliest stage. So there's this kind of missing middle whereby you've got startups that are creating new solutions for people, for society, for us in the adaptation space, right? And they're too commercial for your philanthropic concessionary, real kind of pure impact-related sort of investors. And so therefore they might miss out on some of these large grants that are going towards infrastructure projects or renewable projects.

And they don't get that capital, but they're too complex or too asset heavy for VC, right? There's the challenge that some and a lot of the early stage climate tech founders face when they're building in adaptation and adaptation/slash mitigation. Are you decisively trying to push more capital towards adaptation and trying to avoid mitigation? Or what's the percent breakdown in your portfolio?

We are intentionally expanding our sourcing and of course doubling down on some of these ecosystem development activities that drive more adaptation deal flow, that drive different types of dynamic capital that can go into adaptation. But are we decisively avoiding investment mitigation? No. And look, right now I would say we've got several mitigation-only startups, and we've got several that are both kind of mitigation and adaptation, that cover both sectors such as food, a sector such as agriculture, even nature-based solutions as well, sometimes can cross over.

So that's how we construct the portfolio. If you had to estimate what percent is mitigation versus adaptation of capital deployed? From our fund, I would say roughly kind of 60-40. So you're not following the 90-10 lopsidedness, you're pushing the other direction.

Yeah. So let me ask you since we established that you're commercial first, but definitely trying to have impact at scale, how do you actually measure impact and intentionality and additionality during due diligence? And a lot of climate funds get accused of greenwashing because they're just backing companies that are good businesses with incidental environmental benefits. But we all know in these conversations, measuring impact is pretty hard.

It's messy, it often gets into subjective areas. How do you verify that a founder is truly building for climate outcomes and not just accidentally efficient? And are there KPIs or signals that tell you that this is real versus lip service and performance? We really spend a lot of time thinking about exactly that.

How do we put the right checks and balances and the right systems and processes across the board, right? So it's not just at sourcing or not just a DD, but uh across the entire sort of investment process to ensure that we're actually investing in the right companies that really believe and have that intention to have direct or indirect climate impact. And actually, one of the things that really fascinated me, and this is where perhaps we're slightly unconventional in nature, is that because we play in such an early stage of pre-seed and seed, we see a lot of founders that are building incredible companies where they haven't thought about their climate impact.

A lot of what we do is to identify that and help them build a robust enough system by which they can measure, monitor, and leverage their climate impact. Looking at, for example, their life cycle analysis and looking at the entire sort of value chain of a company and actually really thinking through where climate can or is impacted from the different lenses is part of our mandate. I even remember saying to a lot of founders, like, you might not think that you're a climate startup.

You might not look like a climate startup, right? Because we're so used to having climate startup is in clean tech or renewable energy, right? But actually, you could be a logistics fleet management company and have an incredible climate impact, right? That's an important point to mention.

How do we measure it? The other thing is like we didn't want to create a new proprietary system just to sort of show that we're creating something new. There's a lot of great climate management and impact management systems and processes and templates. There's now communities that are built around supporting each other and sharing that information.

But what we did do is say, well, where does it matter for us? And as I mentioned previously, for us it's different three levels: venture level, portfolio level, fund level. It is very much across embedding, and we call it the performance management framework that encompasses both commercial growth metrics, climate mitigation metrics, and climate adaptation metrics. So we're measuring your IRR and your MOIC as a fund, as well as your unit economics, whilst also measuring GHG emissions avoided or households improved and hectares of land under sort of climate resilient practices.

And it wasn't as easy as it sounds, but we've integrated the two and we very much see the two kind of interplaying. In terms of specifics, we've leveraged, again, not our work, but we bought this because we think it's a really great framework, which is called the six-dimensional analysis. It really goes through kind of six elements of who is being impacted, how they're being impacted, how is it being delivered, looks at risks, it looks at contribution to broader systems change.

Is it being done equitably? Is it done sustainably? So we use that as part of our due diligence, and then we use that as part of diagnostics to then work hand in hand with each founder to build their specific climate management plan, you let's say, so that they can then manage it and measure it themselves. So a lot of it is about also, again, co-building something that's individualized and tailored, and also equipping the founders so that they can do it themselves going forward, because we won't be there for the journey of their business.

Is it all climate oriented or do you have also social impact? So we look at ESG as well. That's very much focused on identifying potential risks and then how do we mitigate or potentially mitigate some of those risks? And we look at inclusivity and diversity, very much leaning on the framework of the 2x community, is bringing in the DEI lens and looking at that, both from agenda, but also it's not just about gender, it's about other types of diversity as well.

Can you walk me through your investment strategy and your systemic drivers that you're focused on? I think the radical fund is focusing on five sectors. It's agricultural and land use and energy and the built environment, industrial processes, transportation, and water and waste. Is that right?

And how did you land on these? The investment thesis itself has not evolved, but how we approach it and how we source companies and where we invest has actually evolved. We first mapped out, and we've actually written a report around it. We've done an enormous amount of research around what the different, let's call it, subsectors are within mitigation and adaptation and where they overlap.

And when we first started, I remember in the first year as a team, we're coming together and we're saying, actually, there's a lot of sectors that this involves. And so we went through an exercise of really focusing on where the priority areas are that are specifically applicable, appropriate, and obviously important to, again, Southeast Asia, where we have an outsized potential to deliver exits and returns, as well as have an outsized or scale of impact. So that interplay between the two has always been there and top of mind.

Where we are now, those kind of sectors are correct, but the way we're actually structured is we now work very closely with the studio. And together collectively, we identify what we call pods, problem-oriented deep dives. And in each sort of given moment over, let's call it a six-monthly cycle, although that cycle kind of continues and can compound, we unpack these opportunity spaces within each sector. So rather than looking at energy and saying we invest in energy, we actually dive deeper and identify those complexities, real sort of sticky opportunities across our markets, right?

Where we can build and invest in. So in this instance, for example, of course, within energy, we're looking at decarbonization, we're looking at energy efficiency and energy optimization, we're looking at data centers and optimizing for energy use within data centers. In agriculture, that would be around, again, food systems and value chain across agriculture. So we've turned around how we look at these sectors and work really closely with the studio to deliver on that.

We're going to get to the studio shortly, but you touched on it a few minutes ago about these companies that don't really know that they're climate companies. And I think actually you articulate something that you call investing in non-obvious climate companies. So it's kind of an investment thesis for you. Can you just take me through the logic?

We're doubling down, and this is with the onset of the technology, and certainly AI has a big role to play in it as well. We're looking for people who have spent time in the industry in a specific sector where they really understand the pain points and the gaps of that specific industry. And they are in close proximity to those problems. They may have started a venture in that space because of the obsession with that problem and wanting to actually fix that problem for themselves.

And so those are the type of entrepreneurs that may start, again, companies where they see an opportunity. They might not even think about it as, oh, I'm starting a climate company. They're starting a company that addresses a problem that it has a potential customer. So that's who we look for, both for companies that we're building, but also companies that we're investing in.

And I think that, again, it's a different way of sourcing founders that we think will have what it takes to build incredible companies that are impacting not just the region, but also global scale and global growth, and therefore global impact as well. Can you make this concrete with one or two examples of real portfolio examples? Two or three companies from the radical fund that demonstrate your thesis in action. We've invested in a company called Dash.

Dash, two co-founders, Dity and Robert. They are based in Indonesia. And they both come from very sort of product-focused backgrounds that previously worked in Grab and Gojek. So they understood the space of logistics very well.

And they started a white label EV, so electric vehicle-based fleet management business. And they're serving small medium enterprises, basically enabling them to create their own fleets, but utilizing and providing both drivers and electrical vehicles. So they have obviously an incredible impact on reducing emissions as opposed to utilizing your normal motorcycles. We really loved the founders for many reasons.

They have really exuded and showed how much knowledge they have in their space and they have showed how much they have learned from their previous employers, if you like, and understood the dynamics of Indonesia. That's also important is knowing your market and therefore knowing your consumer base. And they've been growing incredibly well. It's been just over a year since our investment.

Indonesia is a big market. So that's one example. Another example is a company called Alicia Bots. It's a Singaporean second-time founder.

His name is Inder, who has developed a robot-based crawler, so it's it looks like a robot that basically cleans the hulls of ships. And you might ask yourself, what is the connection? Well, actually, the process is incredibly manual. If you think about the maritime industry, in that you have actual human divers going every time the ship is stationed and cleaning all of the barnacles, all of the slime that's built up over the passage of the ship that actually contributes because it slows down the vehicle, it actually contributes and can contribute up to 20 to 25% of GHG emissions because of the extra energy use.

So he's developed this robot that not only cleans it also provides prevention and inspection basis for capturing data around any potential risks of the ship. So it's all around preventing that buildup and therefore preventing the expenditure of energy. A really interesting business, as I mentioned, they started in Singapore. They've actually since have expanded to Greece and received global funding from both a global and a European VC.

And he's looking to expand across Europe and hopefully the US as well. Two various companies that, again, on the surface, you might think it's a maritime robotics company or it's a fleet management company, but actually there's a lot of climate impact embedded in their business models. You've been listening to SRI 360. If you enjoyed it, please hit the like button and subscribe to get future episodes.

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