CoPower Inc: Investing for a Good Cause

By: Yvonne Ho

The following is an interview with Lauryn Drainie, Manager of Marketing and Engagements at CoPower.

 CoPower is a Canadian start-up that partners with energy efficiency and clean energy development firms to finance projects that reduce carbon emissions while generating strong financial returns. Projects they finance centre around solar energy, energy efficiency improvements, LED lighting, and geothermal heating and cooling.

Y: How did CoPower come about and what does the organization do?

L: It all started in 2013, when David Berliner and Raphael Bouskila—now cofounders of the organization—first met while working at a cleantech venture firm in Montreal. Their “a-ha” moment came when they noticed that clean energy companies were struggling not to develop technology, but rather to find financing to deploy those technologies – such as actually getting that solar rooftop or geo-exchange installation built.

This became the initial idea behind CoPower: the main challenge of addressing climate change is not a lack of brilliant low-carbon technologies, it’s a lack of innovation in finance. The CoPower solution is to provide financing to help more small to mid size clean energy projects get off the ground. We then give individuals the opportunity to invest in these projects through green bonds and green funds. In other words, we’re crowdsourcing finance for clean energy.

Y: What is CoPower working on right now?

L: Our most recently financed project was a portfolio of LED retrofits in 108 condo buildings across BC, Alberta and Ontario. This portfolio alone reduces CO2 emissions by 748 tonnes per year! We’ve developed a solid project pipeline and we’re excited to announce more projects in the coming months.

We’ll also be issuing our next green bond shortly. Our first bond— a $300,000 issuance—ended earlier this year and sold out fast proving that investors are looking for investments that support clean energy and offer positive impact. Currently, there is a waiting list for our second bond and we’re looking forward to sharing more information about it very soon.

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Photo Credit: CoPower website

Y: What are some goals and milestones that CoPower hopes to achieve within the upcoming months?

Our “big hairy audacious goal” in start-up speak is to have $100 million invested in clean energy projects by the end of 2018. As of April 2015, we had raised $300,000 for clean energy projects. Today that number has increased to $8.6 million. We’re on the right trajectory!

Ultimately, we want to move the needle on climate change and we know that means mobilizing hundreds of millions of dollars for clean energy. It also means bringing distributed clean energy finance into the mainstream – we’re not going to solve this on our own. That’s why we’re particularly excited to have institutional investors like RBC and Fondaction as our shareholders.

Y: What are some major challenges that the organization has faced in this sector?

L: Lots! This is what being a social enterprise is all about — finding creative ways to solve long standing challenges. One of the top challenges so far has been matching capital supply (ie. funds from investors) with capital demand (ie. borrowers wanting loans). It can be hard to bring them together at the same time. We’ve addressed this by developing an innovative financial vehicle in partnership with leading Canadian foundations. This allows us to place loans and accelerate development of our green bonds more efficiently. In addition, its revolving structure allows the investors to leverage their capital repeatedly and multiply their impact by a factor of five.

For me personally, the challenge has been to help investors overcome some of the myths associated with impact investing, for example that it’s only for major investors, or that you have to trade returns in order to have a positive impact. As we build a track record and as responsible and green investing builds a track record more generally, this will become easier.

Y: What makes CoPower different from other organizations that do this?

L: In addition to looking for investments that better fit their values, investors, particularly millennials, are looking for easier, friendlier, lower cost and more transparent ways to invest. We aim to deliver a great, simple experience with our online platform. In an industry that is slow to catch up to digital developments, we feel the platform gives us an edge on top of being the key to reaching investors and mobilizing capital at scale.

Y: What is CoPower’s proudest achievement so far?

L: This year has been pretty incredible. A big part of our mission is to democratize access to clean energy investments, but up until February 2016 we had only worked with major investors. Launching our first green bond was our first step toward fulfilling that mission and making clean energy investing accessible to all Canadian investors. (DYK: 50% of the investors in their first green bond came from ONE Toronto Star article!)

 

The Impact Investing Sector

Impact investment is investment made into companies, organizations, and funds with the intention of generating social and environmental impact alongside a financial return. The growing impact investment market provides capital to address the world’s most pressing challenges in sectors such as renewable energy, conservation, microfinance, and sustainable agriculture.

Y: What does the impact investing scene look like in Toronto and across Canada? Is it still a very niche market or growing in popularity?

L: It’s definitely growing in popularity. The attitude that I hear from investors is that if financial returns aren’t affected, of course they’d prefer to make investments that do good. Interest in responsible and impact investments is particularly notable among millennials and women. As well, a recent study found that over the next four decades millennials will inherit $60 trillion. Imagine how much of a difference they’ll be able to make if they choose to make investments that align with their values.

There are a few other impact products available to individual Canadian investors, but demand far outstrips supply. SolarShare for instance is a cooperative that offer green bonds that support Ontario solar projects, and there are similar community-based co-ops across Canada. Impact investments can support other social causes as well. For instance, Oiko Credit offers GICs that support microfinance in the developing world.

Y: Are there any myths surrounding the sector that you’d like to shed light on?

L: I often hear potential investors make the assumption that they need to trade financial returns in order to make a difference. They’re absolutely shocked when they hear that Green Bond I offered 5% interest annually.

The good news is that in general, green, responsible and impact investments have started to build impressive track records. (*Responsible investment (RI) is the integration of environmental, social and governance factors (ESG) into the selection and management of investments.) In many cases, responsible or impact funds are matching or outperforming comparable traditional funds in the short, medium and long term.

Another myth to bust is that impact investing is only for wealthy people and angel investors. Others believe it’s only for “do-gooders”. To bust this myth we only have to look to some of the world’s largest financial institutions. Black Rock, Goldman Sachs and RBC are entering the market both because they want to do good but also because it’s a smart business decision.

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Photo Credit: CoPower website

Y: What are a few key things that can be done (by the government or other private sectors etc) to accelerate growth in the impact investing sector?

L: We wrote a blog post a few months ago to introduce the idea that the single most powerful action government could take would be to set up a “green bank” that leverages small amounts of public money to unlock larger amounts of private capital. To solve the climate crisis we need to mainstream the financing of green technologies. A government-mandated green bank, if set up well, could make it easier for large investors to invest in these projects or technologies by lowering associated risks and by providing them with incentives to invest.

Y: What role does GEDO play in promoting cleantech organizations such as CoPower?

GEDO is a great platform for CoPower to educate people about what’s possible—during GEDO we had the chance to showcase the Harbourfront Center Retrofit project that backed our first green bond. We’re excited to give people tangible examples of how clean energy and energy efficiency can make a difference; and more importantly, that they can support initiatives like these through their investment portfolios, not just by changing lightbulbs in their homes!

Read Copower’s newest blog to learn how they track, measure and report the impact of their clean energy investments to help investors make more informed decisions.

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Photo Credit: CoPower website


Yvonne is an environmental professional with an educational background in environmental science and sustainability. She has several years of work experience in the environmental non-profit sector— carrying out research on key environmental issues, writing reports and educational articles, executing membership development and outreach initiatives, as well as implementing marketing and communications plans for campaigns. She has a keen interest in renewable energy, impact investing, sustainable development, and environmental laws and policies. Prominent environmental organizations she has volunteered at and worked for include Sierra Club, Environmental Defence, Ontario Sustainable Energy Association, Toronto Environmental Alliance, and Pollution Probe. Yvonne is motivated to work together with like-minded people and organizations towards greater environmental justice and climate action.