Ahead of the climate storm, JPMorgan’s $500 million bet on inclusion, emerging market volatility, opportunity zone advisory



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Featured: The Impact Alpha

Running to stay ahead of the storm…and the climate catastrophe. In the Carolinas, residents scramble to get out of the way of Hurricane Florence. In San Francisco, advocates scramble to get to dozens of events around the Global Climate Action Summit. The juxtaposition reinforces the summit’s sense of urgency, ImpactAlpha’s David Bank writes in his latest column, but also the sinking feeling that the initiatives on offer may be too little, too late to avert climate calamity. America’s Pledge, for example, launched by Michael Bloomberg and California Gov. Jerry Brown, makes a good case the U.S. can still get close to its 2025 goal of reducing greenhouse gas emissions 26% to 28% below 2005 levels (we’re about halfway there), despite President Trump’s decision to withdraw from the Paris climate agreement. But even achieving the Paris goal won’t be enough to keep the world under the agreement’s limit of a 2-degree Celsius global temperature increase.

The same tension between impressive ambitions and modest progress dogs “The Investor Agenda,” some part of which has been embraced by nearly 400 investors representing $32 trillion in global assets. Of those trillions, only a small number of billions have been committed to low-carbon investments, scarcely enough to fill the gap in renewable-energy financing. Bank writes that he has bounced this week between inspiration and despair. “In the end I’ve got to go with the palpable energy of the bottom-up and broad movement that is powering the inevitable low-carbon transition,” he writes. “What’s the alternative?” Meanwhile, all eyes are on the weather. An analysis from Stony Brook University suggests human-induced climate change has made Hurricane Florence wetter, fiercer and longer-lived than it would otherwise have been.

Keep reading David Bank’s latest column, “Running to stay ahead of the storm…and the climate catastrophe” on ImpactAlpha. Catch up on all of David’s columns here.

Dealflow: Follow the Money

JPMorgan antes up another $500 million for economic mobility in cities. The new $500 million fund will build on the bank’s Detroit model, which includes a mix of grants and low-interest loans to cities “committed to improving economic mobility [and] implementing measurable strategies for generating inclusive growth.” JPMorgan hopes to crowd in an additional $1 billion from other investors for programs in as many as 30 new cities. Read on.

Logistics company Maersk backs food traceability startup Ripe.io. The blockchain-based tech venture, founded last year, is the latest “food transparency” startup to raise funding. The food chain is “inefficient and could do with improvement to reduce the negative side effects and impacts,” according to Ripe.io’s founder. Its $2.4 million seed round was led by global logistics corporation Maersk, with backing from Relish Works. Follow the story.

FoodShot Global seeks sustainable soil solutions with $30 million investment platform. It’s a moonshot, for food. New York-based non-profit FoodShot Global has secured commitments from investors, philanthropic organizations, universities and industry to search for entrepreneurs and researchers tackling global food and agriculture challenges. Year One focuses on soil health and restoration. Each year, debt, equity and grant capital will go to researchers and businesses with “big ideas” for improving food systems. Dive in.

Signals: Ahead of the Curve

What does emerging market volatility mean for impact investors? Currency routs in Argentina and Turkey. Political and economic isolation in Russia. Recession in South Africa. Economic and financial risks in emerging markets once again have investors on edge. What does this mean for impact investors exposed to emerging economies? More than half (56%) of the $226 billion in impact investing assets under management identified in this year’s investor survey from Global Impact Investing Network are in emerging markets. Since 2013, annual growth rates in allocations to East and Southeast Asia (28%) Middle East and North Africa (26%), Latin America and the Carribean (15%) sub-Saharan African (14%) have all outpaced the overall average (12%), according to the GIIN.

  • Patience is a virtue. “Emerging market volatility means all investment – including impact investment – is likely going to suffer. As long as you have a financial return expectation, currency devaluation is going to scare you,” says Randall Kempner of the Aspen Network of Development Entrepreneurs. “Impact-first’ impact investors, he says, are more likely to wait out the storm. “They tend to be more patient than other impact investors, and more likely to have invested in businesses that are less exposed to forex fluctuations.” Dan Zook of ISF Advisors, an advisor to investors in smallholder agriculture, says long-term capital may be more durable. “When short-term capital flees a country due to volatility, then the long-term sticky nature of impact or SDG capital can become even more valuable,” says Zook.
  • Local resilience. Local impact investors that invest locally may be the sweet spot. “Most impact industries are focusing in areas like affordable housing, health, education, access to energy and financial inclusion,” says Rodrigo Villar of New Ventures Mexico. “All these industries are tackling local issues where international volatility is not as direct or related as other industries could be.”
  • We want to hear from you: What does emerging market volatility mean for impact investing? Email editor@impactalpha.com or hop on ImpactAlpha’s subscriber-only Slack channel to share your thoughts.

Agents of Impact: Follow the Talent

Christine Harada, former White House chief sustainability officer, is the new president of i(x) investments. She’s joined by Paul Aaronson, ex- of Guggenheim Partners Investment Management, who is i(x)’s chief operating officer and Sarah Bloom Raskin, formerly the deputy Treasury secretary and new board chair… Steve Glickman, who helped design the opportunity zone legislation at Economic Innovation Group, has launched Develop, an advisory for fund managers considering investments in the zones… There’s still time to register for tonight’s SOCAP 365’s “Tech + Impact” event in Austin, TX. Featured: Techstar Impact’s Zoe Schlag, Austin Impact Hub’s Chelsea Collier, Civitas Learning’s April Downing, SparkCognition’s John King, Austin Center for Design’s Ruby Ko (see, “South by Social: Austin is the capital of impact entrepreneurship, too”).

September 13, 2018.

 

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