TGIF, Agents of Impact! May your summer solstice be light and warm – not dangerously hot! To kick off this “Summer of Impact,” we’re reprising our best introductory offer of the year. Share the abundance with friends and colleagues by sending them to ImpactAlpha.com/subscribe.
In today’s brief:
- Participatory economics as a pathway to growth
- Rise of the “electrostates”
- Pushback against the backlash to ESG
- Tackling Tesla’s workplace woes
The Week in Impact Investing: New Majority
🗣 Participatory economics. More than 175,000 Maryland residents, primarily people of color, now have clearer paths to jobs, mortgages and student loans after Gov. Wes Moore pardoned them for misdemeanor marijuana convictions that date from the failed war on drugs. “We’re losing competitiveness because we have not had an economy that is actually a participatory economy,” Moore told CNN. Racially-based exclusion has cost the US economy an estimated $16 trillion in lost GDP over the past two decades. Conversely, inclusion represents an opportunity for economic growth. New Majority Capital, for example, is raising a $50 million fund to create pathways to small business ownership for diverse entrepreneurs, as Roody Senatus reports. A similar generational opportunity exists as the increasing wealth of women flows to women-led funds that are investing in businesses improving the well-being of women and girls, as Visa Foundation’s Najada Kumbuli and Bootstrap Europe’s Stephanie Heller explain in a guest post.
Grabbing such growth opportunities requires doing business in new ways. About two-thirds of the portfolio companies of Marcy Venture Partners, founded by hip-hop icon Jay-Z, Jay Brown and Larry Marcus, are led by women and entrepreneurs of color. A similar percentage of Kellogg Foundation’s mission-driven portfolio is managed by female managers and/or managers of color, including Marcy. “People have been leaving this money on the table,” Kellogg Foundation’s La June Montgomery Tabron told me in our joint video interview with Brown. To provide financing needed by climate tech startups seeking to cross the chasm to commercial deployment, Elemental Excelerator has put a new spin on the “simple agreement for equity” terms widely used in Silicon Valley with a “D-SAFE” designed specifically for climate projects, as Amy Cortese details. Roots of Impact offers up lessons for scaling impact-linked finance, as Jessica Pothering reports.
The Economist this week declared, “The exponential growth of solar power will change the world,” with increasing abundance and falling costs (see Chart, below). Some seem committed to squandering such participatory growth opportunities, as ImpactAlpha’s original roundtable crew discuss on this week’s podcast (see below). In his latest Fiduciary Future column, As You Sow’s Andy Behar dissects the case presented by the Republican majority of the US House Judiciary Committee against the “climate cartel” of investors and advocates urging corporations to get serious about decarbonization. “Apparently, the entire free market is colluding to protect itself from the risks of climate change,” Behar writes. If only. – David Bank and Dennis Price
The Week’s Podcasts
🎧 This Week in Impact. Who is colluding with whom? Contributing editor Imogen Rose-Smith joins host Brian Walsh and ImpactAlpha editor David Bank for a roundtable discussion on the growing pushback against the ESG backlash.
- Listen to the new episode of This Week in Impact. Get the podcast in your feed by subscribing on Apple or Spotify. And, if you like the podcast, please leave us a review.
The Week’s Chart
Rise of the ‘electrostate.’ Move over, petrostates. Electricity is the new “king of energy,” declares RMI, and China is the world’s first “electrostate.” As cities and countries electrify their buildings, factories and, increasingly, transportation, nonprofit RMI is calling the peak for fossil fuel demand to generate that power. Bloomberg adds that seven Chinese solar companies are out-producing the energy represented by Big Oil’s Seven Sisters. China has been electrifying at a rate of 10% per decade, nine times faster than the rest of the world.
- Race to the top. The US is slapping tariffs on Chinese solar panels, electric vehicles and batteries, but China’s massive investment in cleantech is largely responsible for the plunging cost of green energy. China remains the world’s largest coal consumer, by far. But for the world’s largest energy consumer, “cleantech is a path to leadership, clean air, and zero emissions, so China will continue to deploy cleantech rapidly,” RMI states in the latest “Cleantech Revolution“ report. “Chinese leadership, and a race to the top, will continue to overwhelm a fragile fossil fuel system, which wastes two-thirds of its primary energy and fails to pay for its externality costs.”
The Week’s Short Signals
🚗 Taming Tesla. Nia Impact Capital’s Kristin Hull showed up at Tesla’s gigafactory in Austin, Texas last week to present Nia’s anti-harassment shareholder resolution at the EV maker’s (largely male) shareholder meeting (for context, see “Elon Musk’s pay grab is a skirmish in the broader battle of the billionaires”). “When looking under the ‘frunk,’ we find failures in workplace management,” she told the assembled shareholders. With the proposal drawing 30% of the vote, Hull said, “I would expect the board to take action.” (Nia Impact Capital)
⚡ Next-gen nukes. A bipartisan bill awaiting White House approval would speed permitting and dangle incentives for advanced nuclear power. In Wyoming, a nuclear project from Bill Gates-backed TerraPower could generate up to 500 megawatts at its peak, enough for 400,000 homes. The project, which just broke ground, is expected to cost up to $4 billion, half of it provided by the US Department of Energy. (AP)
👩🏼🌾 Outcomes-based agriculture. Farmers in Vermont are being paid to keep phosphorus-based fertilizer from leaching. Midwest farmers earn income from the government and carbon credits by controlling nitrogen runoff. Texan ranchers are compensated for saving water savings and restoring native grasses. The $32 million in performance-based payments paid by the Department of Agriculture’s Regional Conservation Partnership Program since 2018 “could herald a transformative shift in USDA’s approach to conservation funding.” (Environmental Policy Innovation Center)
SCOTUS and wealth taxes. The Supreme Court upheld a Trump-era tax on US shareholders with certain foreign profits kept overseas. But the justices signaled they may not stomach the wealth tax on rich Americans that is supported by some groups to finance the green transition, drive social change and reduce inequality. The 7-2 ruling was narrow and left the question of taxing wealth “for another day.” (US Supreme Court)
🥵 Climate insurance for women. India is wilting under its longest heatwave on record. In May, insurance company ICICI Lombard paid basic living wages totaling $340,000 to 46,000 low-income women in a pilot of parametric insurance with the Self-Employed Women’s Association. The free policies are meant to gauge appetite for such livelihood insurance as climate impacts intensify. (Bloomberg)
🧑🦱 Impact’s demographic sweet spot. At least some wealthy American millennials and adult Gen Zers are hot for alternative investments, including impact companies. More than one in five individuals aged 21-43 with at least $3 million in investable assets rank companies focused on positive social and environmental changes as a top growth area for their portfolios – the most interest of any age group. (Bank of America)
The Week’s Dealflow
Accion invested $17.5 million to boost microlending in Indonesia… Solugen secured a $214 million federal loan guarantee to scale sustainable chemicals production… Tender Food scored $11 million to make plant-based “meat”… Houston issued a $104 million muni bond to bolster health services… Check out the week’s dealflow here.
The Week’s Talent and Jobs
💼 See and share more than a dozen new impact jobs posted this week on ImpactAlpha’s Career Hub and view hundreds of more jobs in impact investing and sustainable finance. Have a job listing to post? Submit it here.
James Gifford stepped down as head of sustainable and impact advisory at UBS… Tameo Impact Fund Solutions appointed Safeya Zeitoun as CEO and promoted Ramkumar Narayanan and Vincent Dufresne to executive managers… Noorjit Sidhu, previously with Plug and Play Ventures, joined Social Finance as impact investing associate director in San Francisco.
Nick Chaset, formerly of Ava Community Energy, joined Octopus Energy Group as executive vice president for North America… Co-founder Phyllis Kurlander Costanzahas left OutcomesX. “It’s extremely bittersweet,” Costanza wrote on LinkedIn. She declined further comment… Croatan Institute welcomed Duy Nguyen, Zaina Maqbool and Stephanie Silva as its new BIPOC Leaders Advancing an Inclusive and Sustainable Economy interns.
That’s a wrap. Have a wonderful weekend.
– June 21, 2024
