LeapFrog Investments, a private equity firm, has used our Just Transition Criteria to develop a climate investment strategy focused on scaling companies and technologies that enable both mitigation of and adaptation to climate change whilst creating greater prosperity and productivity for citizens and enterprises across Africa and Asia.
Fund information
| Manager | LeapFrog Investments |
| Strategy name | LeapFrog Climate Investment Strategy |
| Asset class | Private equity |
| Target sector | Mobility, Energy, Built Environment, and Food and agriculture |
| Target geography / region(s) | Africa and Asia |
| Investment strategy objective | LeapFrog Investments’ climate investment strategy focuses on scaling companies and technologies that enable both mitigation of and adaptation to climate change whilst creating greater prosperity and productivity for citizens and enterprises across Africa and Asia – what LeapFrog call the Green Leap. In line with LeapFrog’s stated profit-with-purpose mission, the strategy, launched in 2022, focuses on companies providing green products and services that are cost competitive in many emerging markets and enable green savings for end-users. Examples in this large and expanding investable universe include pay-as-you-go (PAYG) rooftop solar, distributed renewable energy systems, two- and three-wheeler electric vehicles and climate-smart farming practices. |
Alignment with Just Transition Criteria
Criterion 1: there is a product-level commitment to the three Just Transition Elements
The just transition thesis of the strategy is anchored in the reality that global growth markets are poised to emit five out of every six tonnes of CO2e by 2050 without a green transition. These markets can swiftly and effectively transition beyond expensive and highly polluting energy, transport, and agricultural business models to low-carbon and climate-resilient technologies. This thesis is inspired by LeapFrog’s track record in emerging markets and helping to enable hundreds of millions of low-income customers leapfrog over traditional telecommunications, banking, and distribution models by accessing lower-cost, higher-quality digital solutions.
The strategy prioritises investments in solutions that not only drive mitigation of emissions, but also adaptation and resilience for those who need it most. Example investments include providers of clean products in sectors such as mobility and built environment to reduce pollution in high-risk countries, such as India.
In particular, it seeks to scale solutions to further a just transition for those who have contributed the least to the climate crisis. LeapFrog believe there is a need to ensure that green technologies and practices are both affordable and readily available for low-income consumers to promote long-term use, thus locking-out emissions for years.
In keeping with LeapFrog’s investment track record, the strategy aims to empower underserved consumers and producers to rise into the middle class via green pathways by making high-quality, affordable, and relevant green solutions accessible to all. The strategy has a strong inclusion lens, aiming to enhance the livelihoods of millions with greater earnings or savings, in addition to creating thousands of jobs. Empowering the productivity of MSMEs, which account for ca. 90% of employment in emerging markets, alone has the potential to create or improve more than 30% of new jobs with a transition to green power.
The impact approach also places particular attention on the strategy’s ability to reach and serve the needs of women, who are disproportionately affected by climate change and have been historically barred from economic opportunities. LeapFrog’s unique in-house Customer Experience (CX) Launchpad is a key tool to build or enhance customer-centric capabilities within companies, including to reach this gender goal. The program gathers relevant customer insights which can inform and improve product development and delivery, marketing, and community engagement.
Criterion 2: Each investment within the product is assessed to avoid harm to any of the three Element
As part to its environmental and social (E&S) commitments, LeapFrog conducts rigorous ESG due diligence prior to each investment, in line with the IFC Performance Standards, EIB’s E&S Standards, plus other guidelines from the UN and OECD. As an active investor, LeapFrog is dedicated to support its portfolio companies to identify E&S risks, mitigate any adverse impacts, and support sustainable economic growth within its portfolio.
Criterion 3: Through its investments, the product makes a positive aggregate contribution to all three Elements and, over time, each underlying investment contributes to all three Elements
The strategy assesses each of its investments in line with the selected KPIs below, which are applied across the portfolio:
Element 1: Climate & environmental action
- Tonnes of avoided CO2e emissions to measure climate mitigation.
- A suite of relevant depth metrics to measure climate adaptation.
Element 2: Socio-economic distribution & equity
- Creation or enhancement of jobs.
- Increased earnings or savings for end-users.
Element 3: Community voice
- Number of consumers or producers reached through investments.
Investment example – Battery Smart
| LeapFrog’s recent investment into Battery Smart, India’s largest and fastest-growing battery swapping network for electric two- and three-wheelers, exemplifies the climate action and socioeconomic benefits of the firm’s strategy. Since 2020, Battery Smart has rapidly scaled to 1,000 swapping stations across 30 cities, completing over 35 million swaps for <45,000 active customers. The company provides convenient, low-carbon driving range to support the transition to electric vehicles for two- and three-wheel riders. Its asset-light approach includes partnering with Indian small and medium-sized businesses to leverage their existing facilities and set up swap stations at a rapid pace. This model also improves the livelihoods of local business owners, thus enabling the decarbonisation of India’s highly-polluting road transport sector |
This case study is provided for information only and should not be interpreted as constituting investment advice or any regulated activity. The information and figures provided are accurate as per the latest information publicly available and/or made available to the Impact Investing Institute for the purpose of this research at the time of publication.