Investment Strategy Whitepaper

Jump to a synopsis of In3’s Impact Investment Strategy

This whitepaper provides In3’s background rationale, purpose and perspective on why we invest in companies with shared values, prioritizing positive social and environmental benefits as part of their DNA.

Today’s world and 2030 deadlines for the UN Sustainable Development Goals requires radically innovative solutions that go well beyond ESG compliance.

But let’s not panic, either.  Yes, time is running out, but we can and must also deploy a variety of innovative risk mitigation strategies that are part of the “ecology” (fit with the current conditions) of implementing better designed solutions — to realize “upside” social/environmental/economic benefits at an accelerated pace but without creating a bigger mess (failure to respond, or additional unintended consequence of misguided responses to the true priorities) along the way.

Purpose of Our Flagship Funding:  From “greenfield” project finance to early-stage venture/growth capital, we partner with companies to create a continuum of funding that accelerates the development and deployment of clean/healthy/circular/just solutions worldwide.  (Glossary of Impact Investing terminology “demystified”)

We’re on a mission to break down barriers to make affordable capital accessible to anyone with a qualified project based almost anywhere in the world.

We Invest in the Impact Economy with a preference for well-designed “Nature-based” Solutions that are generally more sustainable and reliable than more experimental (such as geoengineered) interventions.

The SDGs come with a deadline — 2030 leaves no room for error

We believe nature has already designed the better methods of, for example, reversing climate change, as “carbon sinks” are part of nature (e.g., the oceans), so amplifying and expanding these processes, rather than methods designed to defeat or impose our will on nature, is the better choice.  We will listen and give due consideration to all solutions, keeping an open mind about how we offset, capture and store more carbon than we produce at scale.  Let’s not rush, or make poor decisions with a sense of panic to “act now.”  Are need measured, rapid, and sustainable responses to achieving the UN Sustainable Development Goals (SDGs) by 2030.  Reducing new carbon emissions through renewables and efficiency is the logical complement to creating less of an uphill battle of rapid drawdown.

Priorities include

• protecting and rebuilding degraded soils
• protecting clean water and recovering valuable/displaced resources like water and raw materials such as nutrients for living things
• converting Persistent Organic (human-made) Pollutants like tires and plastics into recovered carbon black (rCB)
• drawing down atmospheric carbon via trees and bamboo forests, while protecting the older trees and forests that science shows contain the most carbon. Use alternative design assumptions (regenerative principles) and building materials like bamboo, hemp and other fast-growing fibers to decrease demand for wood
• sustainable food systems, agroforestry / silvopasture, no-till agriculture, rotational grazing and other nature-based carbon sequestration.

For more on the SDGs, see “Unmasking the Truth,” below.

Examples of project we wholeheartedly support:

1. Nature-based carbon removal projects and related climate stabilization solutions — Regenerative Food Systems, Afforestation, Reforestation and Revegetation (ARR), Eco-restoration.  Projects such as these often have an even greater need for significant greenfield/early-stage investment because they typically require a long time to produce verifiable and sustainable carbon draws.  Key to this in food systems is regenerating topsoil and groundwater resources.
2. Clean Power Generation to radically reduce emissions, decarbonize and rebuild a sustainable economy:  Roughly 85% of greenhouse gas emissions in the United States come from current energy systems.  Achieving climate stability will require radical improvements in methods of energy production (generation), storage, distribution and patterns of consumption, including “net zero” buildings, energy-intensive industries, “smarter” cities, and the electric power grids.  This includes efficiency measures, waste recovery (often an overlooked source of energy) and controls.
3. Innovative solutions to social issues such as sanitation, affordable housing, health and safety through business activities that improve lives and livelihoods — such as improving smallholder farming with more valuable crops, less exposure to toxic inputs like pesticides, improper waste handling, excess tillage, or other non-value-added steps.
4. Responsible, Transparent and Renewable Supply Chains, heading toward zero waste, via better feedback loops and risk management.  Materials accumulating in our biosphere can and must become feedstocks to close the take-make-waste loop across industries such as packaging, transportation, waste management/resource recovery, healthcare, … the list goes on and on.  Specific areas of our focus and expertise:
   1. Shifting from petroleum-based plastics to biopolymers (biodegradable plastics) as well as durable polymers and composites — get the fossil carbon out of circulation that’s presently poisoning the planet.  Reuse and pollution reduction measures can only go so far.  Better to use the “zero waste” designs of natural systems, a “bio-inspired” approach.
   2. Shifting from synthetic fertilizers applied to dead soil with overwatering (causing runoff harmful to the downstream environment) to more sustainable practices, use of biologics and living microorganisms applied to healthy soil and building more organic material (regenerating topsoil) through no till, cover crops, crop rotation, and using biologically active soil to draw down carbon, also known as “carbon farming.” Healthier soil also makes for healthier plants that are naturally more resistant to pests and thus require fewer pesticides.
   3. These same principles of soil and resource management apply to human health and wellness, spanning disease prevention and optimal health and wellness (healthy lifestyles, fitness, even mental health and happiness), meaningful work, social justice, realizing our potential as contributors to our families, communities, and the greater society.
   4. Water and energy efficiency, conservation and clean water generation.

Why these priorities?  Because principles of biology and the “appropriate scale” of both problems and solutions provide a reliable way to “clean up the mess” (drawing down enough carbon in soils and products that capture and keep carbon out of the atmosphere) without creating a bigger mess in the process.  Why is this important? Why not just take the big risks associated with “dramatic” change versus steady as she goes?  Isn’t that more gradual approach what got us into the climate crisis we now face?

Actually, no. Sustainability avoids unintended consequences while maximizing value.  We’ve all seen examples of well-intended “solutions” to one problem or need that create bigger messes than known, truly sustainable, nature-based ones:  large-scale reactor nuclear waste, water pollution and geotechnical disruption from fracked shale gas, deforestation to make room for something that seems more productive (problematic because vast, old growth forests hold massive carbon while giving off oxygen) or further depletion of soils, decreasing the carrying capacity of our biosphere, … where habitat destruction from these activities that causes further species extinction, poorly designed products and substances generate persistent organic pollutants we can’t safely eliminate, just as would putting our “head in the [tar] sands” about the real risks of any of these accumulating downsides.

We are perhaps the first generation to have both the awareness and the solutions at hand to turn this big ship in the winds of sustainable changes — harnessing the awesome power of better designs rather than beating our collective heads against the incremental changes, doing the same thing over and over (but slightly “less bad”) expecting a different result.  Radical innovations (but not throwing due caution into that wind) that are designed to scale up as nature would, using precautionary principles of biology, green chemistry and green engineering.  Such systems approaches do not sacrifice performance for ethics, nor the economy (jobs, mainly) for environmental integrity and sustainability.  Indeed, they avoid the risks an inevitable cliffs and tipping points we now face in several aforementioned areas.

Our Criteria:  Measuring Results to avoid “Impact-washing”

Thus, we give preference to projects with social and/or environmental benefits — and we will not consider any venture or project that would cause social or environmental harm — in order to focus on those solutions with the greatest potential for making enough of a difference as soon as possible. Arguably, we still have time to turn around climate change, for example, so let’s not stumble — we need to implement, scale and measure the impacts of truly sustainable solutions as rapidly as the teams and capital will allow.

We utilize the latest tools for measuring/tracking, transparent reporting, and include community members as part of the solution to improve lives and livelihoods, to bolster local self-reliance.  Toward that end, see examples of “Impact Measurement and Management Systems” such as IRIS or the Investor Impact Quotient tools, translating “from impact intentions into impact results”. This is an area of In3 specialization, along with ESG-related measures and strategic advise, carbon credits, tax equities, and more.

Our capital and capabilities are designed to meet clients where they are and utilize our best strategic thinking on how we can together drive positive social and/or environmental change.  We customize or tailor solutions to meet the needs of our clients (“bespoke” solutions), now and into the future.

We mainly focus on the more pressing problems of our times — from climate change to food security, from health to wealth, housing to reforestation, we keep an open mind and really listen, implementing solutions to diverse and innovative approaches with measurable impacts alongside profits.

Our clients are usually mid-market project developers, increasingly involved in reducing carbon emissions (“de-carbonizing” all commercial activity), reducing and eliminating other pollutants and risk of harm (now or in the future), or socially responsible facets (worker health and safety, better-paying jobs, livable wages and healthier workplaces and communities) alongside decent if not enhanced fiscal returns.

Our “next gen” approach to project finance delivers funding to developers seeking up to 100% of their project’s budget from a single Family Office under our Capital Assurance (Guarantee) Program (article on CAP funding’s purpose, goals and advantages).  Discover how CAP funding expedites and streamlines project funding for $25 million or more.

Innovate, Accelerate and Scale.  How?

Clean Energy | Efficiency | Healthy/Sustainable Food | Materials | Storage | Waste-to-Value | Water

We also fund: Healthcare | Regenerative Design Hospitality / Real Estate | Impact Infrastructure | all sectors

New venture investments are in some ways the opposite of project finance in the sense that a late-arriving, “me, too” technology will usually deliver marketplace advantages (necessary to attain market share), but we prefer “cookie cutter” solutions, organized into pipelines or portfolios of projects, because they provide the keys to reaching scale more rapidly.  Scale of what?  The measurable social and/or environmental impacts necessary for timely UN Sustainable Development Goal (SDG) achievement.  See below for more specifics.

The time for action is upon us.  This is our moment.  We are clear that project-based replicability of nature-based solutions (versus new tech venture originality) more rapidly moves the needle in the right direction.  This is a point of hot debate in some circles, with data and science helping settle the age-old question of “what will make the most difference, sustainably, profitably, in the least amount of time?” 

Unmasking the Truth (and ourselves)

Making a “molehill into a mountain of change” requires replicability to reach scale and tracking progress to calibrate whether or not the target results are within range. One-off “bespoke” deals represent progress, but do we really have time to experiment at the margins?  Is that wise?  That’s a risk we simply cannot afford to take.

We have to be quite certain that we focus on change for good, change for keeps, changes that conform with systems science and ecological principles, not primarily being just “less bad.”  Incremental, stepwise thinking has a place in all of this, but “tinkering” with nature such as with certain types of GMOs (open pollenating, that tend to take over other crops), geoengineering, or designs for defeating or “fixing” the harm already done, without regard for the precautionary principle, … how is that worth the risk and worthy of our support?  Such technology tends to multiply and spread like a pathogenic virus, on its own, so we must make certain that there are not going to be unintended consequences before unleashing.  Is that research routinely and consistently required by promoters, or are we the unwitting subjects of a vast experiment, like blind mice unaware of the longer-term effects, just looking for the next piece of cheese?

Take geoengineering, for example, with plans to store wastes underground, by injecting CO2 emissions in between rock formations, hoping that it stays there.  One decent earthquake could erase all that good intention.  Haven’t we already learned that there is no “away” for things like nuclear waste?

Further, even if data science could prove greater benefit at a reasonable risk, we have get our turnaround goals right sooner, not later.  Estimates are that we have about a decade to make serious progress toward the big, hairy, audacious goals (BHAGs) in the post-pandemic era, starting, well, yesterday. Decade of Action

This “impact investing” strategy embraces and aims to help achieve the UN Sustainable Development Goals (UN SDG’s), with particular attention to SDG’s 6-13, where private capital, if wisely and properly deployed, has the potential to

1. Eradicate Poverty — promote self-reliance
2. Eliminate Hunger and Malnutrition — achieve Food Security and promote Sustainable Food Systems & Regenerative Agriculture (ties to 13, below)
3. Ensure Good Health & Well-Being 
6. Ensure access to Clean Water & Sanitation for all
7. Ensure access to affordable, reliable, sustainable & modern Clean Energy
8. Promote sustainable development, economic growth and Meaningful, Decent Work
9. Invest in Infrastructure and Innovation — to promote inclusive, resilient and restorative or at least sustainable Industrialization
10. Reduce [Income] Inequalities — especially within and between countries, which ties to SDG 1 and 8 as well as all impact projects that create better-paying jobs
11. Make Cities & Communities Sustainable (all human settlements) inclusive, safe, resilient communities and affordable housing
12. Ensure patterns of sustainable and responsible Consumption & Production — radically reduce our global ecological footprint
13. Take urgent action on Climate Change
14 & 15. Sustainably manage Life below Water and Life on Land — encompasses forest preservation and fisheries management, regeneration of degraded drylands (ties to agriculture), and protecting biodiversity
17. Partnerships for the Goals, which includes access to impact capital.

Result:  Accelerated solutions to today’s pressing sustainability problems such as decreasing the worst effects of climate change (SDG #13), greater food (2) and housing security (11), with breathable air, drinkable water, healthy and nutritious food (2, 3, 6, 7 for cooking, 8 and 10 to afford healthy food), local self-reliance such as enabling farmers to earn a decent wage (1) while regenerating topsoil or preserving the living soil and clean water (2, 6, 15) that we still have. Together, we build a sustainable future.  more

Related Article:  Impact Capital — Opportunities to solve problems we all face

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