The Brief | April 2, 2019

Cause capital for challenger brands, empowering education, super solar cells, European pension shifts, sustainable asset growth

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Greetings, Agents of Impact!

Featured: ImpactAlpha Original

How the Craftory is deploying ‘cause capital’ to back impact-driven challengers to consumer brands. Elio Leoni Sceti has parlayed a 30-year career in corporate brand-building into an investment firm that is trying to break the mold of consumer-goods companies. The Craftory aims to amplify “challenger brands” that embody one or more of five “righteous causes” – delivering good health, democratizing access, progressing society, prospering sustainability and championing self-esteem. The $300 million investment firm based in London is betting the next tectonic shifts in consumer behavior will be driven by the quest for positive impact. “People care about the planet and health and respect,” Leoni Sceti said. “They can’t relate to big brands anymore. That relationship broke.”

“Those big brands are going to be disrupted in a massive way,” Leoni Sceti continued in a Q&A with ImpactAlpha. New brands increasingly have to offer purpose. “That’s a new message, and that resonates with the 20% to 25% of consumers that realized they were being cheated by consumer goods companies.” The Craftory’s first investment is in NotCo, a vegan foodtech startup based in Chile that is bridging molecular science with artificial intelligence to make “real-tasting” vegan milk and mayonnaise. “You can create plant-based solutions for every food in the world.” Leoni Sceti said. “The artificial intelligence could make this company the next Nestlé or Danone.”

Keep reading Jessica Pothering’s interview with Elio Leoni Sceti, “How the Craftory is deploying ‘cause capital’ to back impact-driven challengers to consumer brands,” on ImpactAlpha.

Dealflow: Follow the Money

Empowered Education raises $8 million from Rethink Education. Empowered Education is a training platform for wellness and healthcare coaches. The firm raised $8 million from White Plains, N.Y.-based Rethink Education. Through its online schools Health Coach Institute and Functional Nutrition Alliance, Empowered has trained more than 20,000 healthcare coaches and practitioners with project-based learning and intervention coaching. The firm aims to “positively impact the lives of millions of people who are struggling with chronic disease management and those working to improve their overall health and wellness,” says Empowered Education’s Eric Neuner. Other recent Rethink Education investments include student analytics platform Civitas Learning and Peruvian skills startup Crehana. Dig in.

Oxford PV raises €36 million to commercialize super-efficient solar cells. Oxford PV’s solar cells set a world record for solar power efficiency in December. The firm raised €36 million ($40 million) from Chinese renewable energy giant Goldwind, as well es existing investors Equinor and Legal & General Capital. Late last year, Oxford PV’s perovskite solar cell achieved a certified record 28% conversion efficiency, a measure of a solar panel’s ability to convert sunlight into electricity. (The solar panel manufacturers with the highest efficiency panels on the market are SunPower, at 22.2%, LG at 21.1% and Panasonic at 20.3%.) Oxford PV’s Chris Case thinks the firm can achieve “beyond 30% efficiency.” More.

Signals: Ahead of the Curve

European pension funds move to operationalize their impact strategies. Institutional investors in Europe are expanding their impact investing mandates and relaxing restrictions that had blocked the deployment of capital. “People are moving from the talk to the walk,” Phenix Capital’s Sophie Robé told ImpactAlpha ahead of the firm’s fifth Impact Summit Europe convening today in The Hague. One signal: the $23 billion Pensioenfonds Detailhandel, which manages pensions for Dutch retail workers, dumped 500 of the 1,600 stocks in its public-equities portfolio after committing $6.5 billion to an index fund aligned with the Sustainable Development Goals. Among the findings of Phenix’s survey of 64 asset owners managing more than €9 trillion:

  • Increasing allocations. Nearly four out of five of the asset owners said they expect to increase their allocation targeted at impact investing over the next three years. More than 90% said delivering positive environmental and societal impact is part of their ‘fiduciary duty.’ European regulators last month approved requirements for asset owners, insurance companies and money managers to disclose their ESG performance.
  • Relaxing rules. Several large investors are relaxing internal rules to allow investments in smaller funds. Minimum investments of $50-$100 million (along with 20% concentration caps) had meant only very large funds could get institutional checks. New rules that allow investments of as little as $5-$20 million are “going to create a whole new set of opportunities,” Robé said.

Phenix is launching a new platform with more than 1,000 strategies from 400 fund managers to help investors move from “alignment” to integration with the global goals. Investors’ new investments “do have more intentionality,” Robé said. Share this post.

Retail and Japanese investors help push global ‘sustainable’ investment assets above $30 trillion. Casting the widest possible net, the Global Sustainable Investment Alliance charted a 34% increase in sustainably managed assets under management since its last tally in 2016. The totals, from sustainable investment forums in Europe, the U.S., Japan, Canada, Australia and New Zealand, include $19.8 trillion in assets screen for negative exclusions and $17.5 trillion that integrate environmental, social and governance, or ESG, considerations. Nearly $10 trillion in assets use corporate engagement or shareholder action around sustainability issues. The survey found $444 billion in impact and community investing assets, roughly in line with the new estimate of $502 billion in impact investing assets under management from the Global Impact Investing Network.

  • Jump in Japan. Driven by corporate engagement and shareholder action, sustainable investing assets in Japan quadrupled from 2016 to 2018, growing from just 3% of managed assets to 18%. Japan is the third-largest center for sustainable investing, after Europe (nearly half) and the U.S. (26%). In Canada, Australia and New Zealand, sustainable investing accounts for more than half of all professionally managed assets.
  • Retail power. The portion of sustainable investments assets held by retail investors climbed to 25% in 2018, up from 20% in 2016.
  • Public tilt. More than half of sustainably invested assets are in public equities. Just 3% are held in private equity or venture capital.
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Agents of Impact: Follow the Talent

Peter Njonjo is the new CEO of Kenya’s Twiga Foods. Grant Brooke remains executive director… Ruth van de Belt steps into the role of manager of the Triodos Sustainable Mixed Fund. Interim head Erik Breen remains director of socially responsible investment at Triodos Investment Management… Ohio-based Coalition for Green Capital is recruiting a lead for its Green Bank incubation project… One for the World is looking for an executive director.

April 2, 2019.