The Brief

The Week in impact investing: Political risk

ImpactAlpha · November 1, 2024

TGIF, Agents of Impact! 

  • The next POTUS
  • SOCAP’s Best Dressed 
  • Guaranteeing green lenders
  • Impact real estate funds

🗣 ImpactAlpha endorses Kamala Harris. There, we said it. We don’t expect many readers to be surprised about where we stand. We have no illusions about swaying still-undecided voters or tipping swing states. And we appreciate that the impact investing community – our audience and our beat – has long sustained a rare level of bi- or even post-partisanship. Indeed, at last week’s GIIN Impact Forum in Amsterdam and this week’s SOCAP gathering in San Francisco (see below), impact leaders largely sidestepped the impending US presidential election, at least in their public comments. In private, many shared shudders of dread before moving back to evergreen topics like climate solutions, sustainable development, diverse representation and systems change. But as the election nears, maintaining that sealed bubble feels at least naive, if not borderline complicit. Certain other publications have zigged away from making endorsements. We’ve chosen to zag: We believe the vice president represents the best choice for keeping open the path toward an impact economy, inclusive prosperity, a just transition and, ultimately, systemic change.

Reams have been written about the candidates’ policy planks and party stakes in this election. Lists are being prepared for personnel to be promoted or purged in the various agencies, from the EPA to the DOE to the SEC. The outcome of the election will have specific implications across the whole range of impact investment priorities and strategies. But the systemic risks of the former guy’s return to power go beyond parties and policies (for a rundown, see Leadership Now’s “US political risk analysis“). And even the persecution and prosecution promised by Donald Trump and his proxies is less alarming than the anticipatory obedience of so many supposed leaders. Just Capital’s latest survey suggests Americans overwhelmingly agree executives have a role to play in addressing income inequality, gender and racial equity, and even the ethical use of AI. They are more iffy on CEOs’ responsibility, or perhaps ability, to protect our democracy. In the hopes that we don’t find out too late that the rule of law and the freedom to invest were essential preconditions for positive impact after all, we endorse Kamala Harris and Tim Walz in Tuesday’s election. – David Bank

This week in ImpactAlpha: 

The Week’s Podcast

🎧 This Week in Impact. Host Brian Walsh takes up ImpactAlpha’s top stories with editor David Bank. Up this week: The ImpactAlpha team was at the SOCAP conference in SF, where the focus was on systemic change; how private investors are pouring more money into blended climate finance transactions; and, why global family offices are slowly warming up to climate investments.

The Week’s Agents of Impact

SOCAP’s ‘best dressed’ choose substance and style. At this year’s SOCAP gathering in San Francisco, attendees were asked to bring their authentic selves to the annual impact investing conference. That extended to their sartorial style. ImpactAlpha again fanned out across the hallways and gardens of the Yerba Buena Center for the Arts to spot some of the coolest fits, on the theory that appearances can reflect leadership and optimism (thank you, Nicole Lasasso and Lindsay Smalling for helping us scout!). We asked SOCAP’s Best Dressed what they are most excited about now and for the future. Meriko Kawashima (at left), co-founder of Game the System, is driven by making, acquiring and developing games that encourage transformation in systems that need reimagining.

  • Making the scene. SidePorch’s Andy Riemer finds excitement engaging with people to solve some of our times’ more critical issues, such as mental health and the climate crisis. On stage, Jennifer Harper, founder and CEO of Cheekbone Beauty Cosmetics, shared her passion for expanding Indigenous representation and wisdom and giving young people the ability to dream big. “I want the world to fully understand and recognize that when you hear the term Indigenous beauty, that it means something special,” Harper said. “Indigenous people are the OGs of sustainability.”
  • Take a look at SOCAP’s Best Dressed, by ImpactAlpha’s Zuleyma Bebell.

The Week’s Deal Spotlight

Bank of America offers guarantees to help community lenders leverage green funding.  How do you turn $27 billion into nearly $190 billion? In the case of the Greenhouse Gas Reduction Fund, by leveraging the $27 billion in federal grants for green lending with seven times that amount of private capital. The community development financial institutions, or CDFIs, and green banks that are charged with implementing the GGRF program are scrambling to line up projects and co-investors. Now is the perfect time for private investment dollars to work alongside community green lenders, Bank of America’s Dan Letendre told attendees at Opportunity Finance Network’s 40th annual gathering in Los Angeles last week. CDFIs’ net asset ratios “are at all time highs in our history,” he said. “There’s an opportunity to leverage that with a significant infusion of low-cost private sector capital.” 

  • Repayment guarantee. With their community engagement and low-income focus, CDFIs have become an attractive place for corporations, foundations and even high net-worth individuals, providing low-cost capital that can be loaned out to small businesses, local organizations and project developers. Not all private investors understand how to underwrite such a transaction, or the risks involved. “Bank of America can provide a full payment guarantee to the investor to get them comfortable and make it easy,” Letendre said. “They don’t even have to underwrite.” With $2 billion in loans, deposits, grants and equity deployed to more than 250 CDFIs, BofA is one of the biggest private investors in the CDFI sector. 
  • Green infrastructure. This week, Calvert Impact-led Climate United, which is managing half of the fund’s $14 billion National Clean Investment Fund, inked its second deal. The $250 million partnership with California’s Forum Mobility will invest in 500 electric drayage trucks, the vehicles used at ports to move shipping containers, to lease to small fleet owners and operators (see, “Climate United’s $7 billion strategy to mainstream green lending”). Climate United’s Beth Bafford said the deal’s combination of tax credits, incentives and attractive financing can lower costs for small operators.
  • Keep reading, and catch up on all of this week’s dealflow reporting on ImpactAlpha.

The Week’s Short Signals

🏠 Impact real estate funds. Affordable housing. Green infrastructure. Culture preservation. Impact and sustainable real estate funds have more than tripled to 187 today, from 58 funds in 2015, raising a collective €37 billion ($40.2 billion). Among them: Schroders’ Real Estate Impact Fund, Octopus’s Affordable Housing Fund, and Gresham House’s Sustainable Infrastructure Fund. (Phenix Capital)

🏦 Financial inclusion in the US. The US Department of the Treasury released a first-ever “National strategy for financial inclusion in the United States” with guidance for policymakers, industry and community organizations for promoting access to credit and investments that are key to building wealth. The release “reflects the vice president’s leadership on expanding access to capital, credit and economic opportunity,” said National Economic Advisor Lael Brainard. (US Treasury)

🌏 Impact at Asia-Pacific family offices. Over a quarter of Asia-Pacific family offices invest at least half of their portfolios in impact or ESG strategies. An additional 23% invest at least a tenth, according to a survey of more than 100 family offices. Top themes: Food and agriculture, circularity and innovative materials, and healthcare. (Sustainable Finance Initiative)

🌱 Responsible insurance directory. Many large insurance companies insure fossil fuel projects and invest in oil, gas and coal, while refusing to cover the cost of climate damage. Green America’s “Climate smart insurance directory” lists local and regional home and auto insurance companies in each state that do not insure fossil fuel projects, invest little to nothing in the fossil fuel industry, and are financially stable. (Green America)

💲 Drivers of income. A 60 Decibels survey of customers and suppliers of Acumen-backed companies Koolboks (Nigeria), Promethean (India), and Lizard Earth (Sierra Leone) found that all three energy and agriculture companies improved specific drivers of income – reducing costs, improving prices, and growing yields, respectively. (Acumen)

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.

Norsad Capital welcomed Vusi Raseroka, formerly with the Public Investment Corp.’s Rest of Africa Fund, as CEO… Amplify Capital added Sohaib Siddiqui, previously with Medly Therapeutics, and Will Falk, previously with West Neighbourhood House, as venture partners… PaceZero Capital Partners appointed Toronto Foundation’s Andrew Torres to its advisory board… Opportunity Finance Network hires former impact investing intern Binderiya Usukhbayar as a credit analyst.

Transform Finance recruited Susan Ozawa Perez, formerly with Impact Investors, as a lead researcher… Antony Bugg-Levine stepped down as president of Lafayette Square Institute to create an impact investing advisory practice at Bugg-Levine Inc., the consulting firm his wife, Ahadi Bugg-Levine, launched in 2010… Impact Cubed brought on Geoff Moore of Impact And Inc. as a consultant… Carissa Sanchez, a former consultant with Boston Consulting Group, joined Raven Indigenous Capital Partners as an investment associate.

That’s a wrap. Have a wonderful weekend. 

– Nov. 1, 2024