Muni investors see through mispriced risks to find alpha and impact. Lower risk: Bonds issued by high-performing school districts that serve low-income populations. Higher risk: Issuances that fund entertainment complexes that disrupt and displace residents of majority minority neighborhoods. Rampant misperceptions, and mispricing, of demographic risk in the $4 trillion municipal bond markets has left opportunities for impact, and alpha, hiding in plain sight. Investors with more intentional strategies for racial equity are finding them, with help from advisors with unique analytics and ratings that can cut through legacy gaps in information and transparency. “Investors that are smart, that really want to beat the market, that want to see opportunities and not be beholden to past thoughts on race, are beginning to see the opportunity,” says Homero Radway of Activest, an investment research firm that will launch its “fiscal justice” fund strategy next month (see, “Activest’s FIRE strategy seeks to bend the arc of municipal finance toward fiscal justice”).
Sponsored: AlphaMundi Foundation
Gender-inclusive strategies to unlock value in Africa's small businesses. Nairobi-based AlphaMundi Foundation is helping turn challenges for women into opportunities for impact. With support from DEG Impulse's develoPPP program, the foundation worked with Value for Women to help five East African portfolio companies build resilience and competitive advantage through workforce empowerment and value chain inclusivity initiatives.
Dealflow: Digitizing Small Businesses
Mercy Corp Ventures backs Tappi to boost economic and climate resilience in Africa's small businesses. Flooding and droughts, which disrupt logistics, damage stock, depress consumer spending and raise the cost of goods, affect nearly all informal and small businesses in Africa's biggest markets, according to Mercy Corp Ventures. It can take up to a year for a small business owner to recover. The impact venture fund is backing Nairobi-based digital services company Tappi to foster small business economic and climate resilience. "Digitization of small businesses [is] key to building a more resilient network of small businesses across emerging markets,” Mercy Corp Ventures' Dan Block told ImpactAlpha. The firm invested in Tappi's $1.5 million pre-seed round alongside Chui Ventures, SOSV and other investors.
Signals: COP Watch
Down and out in Dubai. COP28 negotiators will spend the next two days wrangling over details of a final agreement as the sprawling climate conference draws to a close. Goals such as tripling renewable energy and doubling energy efficiency by 2030 are relatively easy lifts. The stickiest debate, and the one that will determine how the United Arab Emirates’ COP presidency is remembered, is whether to phase out or phase down fossil fuels – or punt on the issue altogether. More than 80 countries want the “phase out” language, but large oil producers like Saudi Arabia remain opposed to even phasing down their chief money-maker. OPEC has urged its members to reject any mention of fossil fuels. China’s top climate envoy called COP28 “the hardest meeting” in his 16 years of COP negotiations. (It won’t be much easier next year, when COP29 takes place in Azerbaijan, another autocratic, oil-rich country). Focusing on cutting emissions without addressing their main source is “like trying to cut with one half of the scissors,” says Tzeporah Berman of the Fossil Fuel Non-Proliferation Treaty (see, “Winding down production to fulfill the Paris Agreement”).
Agents of Impact: Follow the Talent
Erick Berkerts will step down as CEO of Evergreen Climate Innovations at the end of this year. Michelle Carr, ex- of The Nature Conservancy, will replace Berkerts as CEO… RMI is looking for a remote strategic planning and growth manager… International Finance Corporation is hiring an investment analyst for climate and sustainable finance in Washington, DC… Amalgamated Foundation has openings for a community stewardship director and a growth and impact director.