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#Featured: Debate Night
‘No compromise’ vs. ‘deep impact’ as impact investing titans face off. Do impact investors need to compromise between financial and social returns? The longest-running debate in impact investing goes live tonight at 6:30 ET, as Acumen streams a formal debate on its Facebook page. On the ‘have your cake and eat it, too’ side: Bain Capital’s Greg Shell, who is heading the private equity giant’s “Double Impact” fund, and Hilary Irby, managing director of sustainable investing at Morgan Stanley, which just raised $125 million for an impact fund of funds.
Arguing that compromises, concessions, tradeoffs and even subsidies are not only necessary, but valuable, will be Acumen’s Sasha Dichter and Debra Schwartz, managing director of impact investing at the MacArthur Foundation. Tipping his hand, Dichter argues in his blog that financial returns, however high, are simply a means to an end: “If someone is going to be a truly great impact investor, they have to be passionate about impact.” EY’s Jon Shepard will moderate the (semi-) formal debate.
Advance take: Both-and. The private-equity firms and big banks need the nonprofit funds and foundations to scout the impact opportunities and build the markets. And the impact folks need the banks and PE firms because, in the immortal words of Willie Sutton, “that’s where the money is.”
Watch the debate via livestream from Acumen’s Facebook page tonight at 6:30 ET.
#Dealflow: Follow the Money
Nestlé commits $6 million to Closed Loop’s recycling fund. The investment from Nestlé Waters North America to back recycling programs and infrastructure in the U.S. is part of Nestlé’s plan to become waste neutral by 2030. “The United States has one of the lowest recycling rates of any industrialized country, says Nestlé Waters Nelson Switzer. Only 30 percent of recyclable waste in the U.S. is actually recycled. The $100 million Closed Loop Fund provides financing for companies building recycling programs. It was launched in 2014 exclusively for corporate partners, and also includes Coca-Cola, Johnson & Johnson, Procter & Gamble, Unilever, and Walmart.
Savia launches trade finance fund for small African agribusiness. Savia Trade Asset Management is targeting Africa’s $100 to $150 billion trade-finance gap. The joint venture between U.S.-based CVG Capital and Mauritius-based Ubuntu Capital wants to raise $200 million to support small farmers, cooperatives and small agribusinesses. CVG Capital’s founder German Vegarra launched the fund after leaving the International Finance Corporation because “there was nothing transformational in the region reaching smallholder [farmers] and SMEs.” The fund will rely on a blended finance model, with 80 percent allocated for short-term loans, 10 percent for equity, and 10 percent for grants. Savia is planning 12 to 16 months of piloting to test the fund’s model.
NewSchools Venture Fund backs 15 special-edtech ventures. The nonprofit venture philanthropy put out a call in March for edtech ventures targeting the needs of special education students. The winners includeTimocco, which focuses on improving students’ motor skills; BeeLine Reader, a web plug-in designed to make online research more accessible to dyslexic students; and PhET Interactive Simulations, which develops math and science content for students with audio or visual impairments. Individual investments range from $50,000 to $150,000. The non-profit venture fund’s Ignite Special Education Challenge was developed to fill a gap in the edtech market. “While it may sound obvious that students with disabilities need additional support, few edtech tools exist to support this diverse group of students,” says NewSchool’s Tonika Cheek Clayton. Half of U.S. states’ public education systems are under-resourced in special education. Two in five special-ed students don’t finish high school.
See all of ImpactAlpha’s recent #dealflow.
#Signals: Ahead of the Curve
Microloans offer a glimpse of how Syria can rebuild. “Hidden almost literally under the rubble of the civil war in Syria is an economic success story that is rarely told,” writes Pierre Krähenbühl, the head of the United Nations Relief and Works Agency, which supports more than 5 million Palestinian refugees. Even as large businesses have collapsed in Syria and elsewhere, he says, “small-scale enterprises can survive and even thrive in the markets opening up at the grassroots.” Krähenbühl’s group, which works with TOMS, Mercy Corps, the Bank of Palestine and other partners, disbursed $2 million in nearly 10,000 micro-loans in 2016 to Palestinian refugees inside of Syria. The loans are designed to help refugees rebuild their homes, open businesses and maintain stable incomes and move away from dependency on aid. The six-year Syrian civil war has cost the country’s economy more than $250 billion and three million jobs and has pushed the unemployment rate in the country above 50 percent. Business and political leaders met in Jordan earlier this month at the World Economic Forum on the Middle East and North Africa to discuss the role of entrepreneurship in building an inclusive economy in the war-torn region.
Global jobs in renewable energy could reach 24 million in 2030. That’s well over double the 9.8 million jobs in renewable energy today, according to a new report by the International Renewable Energy Agency. The bullish projection comes even as job growth in renewables has slowed in the last couple years, to a mere 1.1 percent last year (or slightly higher when hydroelectric-power jobs are excluded). The 2030 projection assumes “an accelerated ramp up in deployment in line with global climate imperatives,” the report says.
The solar sector is responsible for more than one-third of current renewables employment, reports the annual Renewable Energy and Jobs review. So is China, which accounted for 3.6 million in 2017. Europe follows with 1.2 million, then Brazil with 876,000 jobs. The U.S. accounts for 777,000 renewable-energy sector jobs. Per capita, Brazil’s renewable employment wins, with about one of every 2,000 people employed in the renewables sector. In China and the U.S., it’s about one of every 4,000 people, and in Europe, one of every 10,000. In all, more than 60 percent of renewable jobs are in Asia. Thailand and Malaysia are emerging as secondary manufacturing and installation hubs to China.
And that’s just direct jobs. In emerging economies in particular, improved energy access fuels additional job creation through increased economic activity. Africa still represents the smallest share of renewable energy employment, but “off-grid and mini-grid solutions are giving communities the chance to leapfrog traditional electricity infrastructure development and create new jobs in the process,” says IRENA’s Rabia Ferroukhi.
Onward! Please send any news and comments to TheBrief@impactalpha.com.