The Brief | August 5, 2017

ICYM The Brief, climate-smart insurance, sustainability bump, AI’s economic impact, Brief Quiz №26

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Greetings, ImpactAlpha readers!

#Featured: The Brief Quiz №26

Cheap puns, terrible quotes and no regard for the truth edition. The GIIN has a question for you. What is it? Chan & Zuck are investing their social-change billions. How? The “Great Green Wall” is where?

If you couldn’t answer three simple questions, you’d better take this week’s Brief Quiz by Jérôme Tagger:

Cheap puns, terrible quotes, little regard for the truth: Brief Quiz №26 is all in

#ICYMI: Worth a Read

How Priscilla Chan and Mark Zuckerberg are investing their social-change billions. Big bets in science and medicine, an emphasis on tech-driven education for all — and a growing social justice lens? Read more.

Putting impact investing on the map. The Case Foundation is promoting a “culture of transparency” in impact investing to tap into capital and interest that are not yet part of the movement. A practical step: #ShareYour Data on the foundation’s forthcoming Impact Investing Network Map. Read more.

J.P. Morgan will facilitate $200 billion in clean-energy financing by 2025. The bank has committed to power its own operations with 100% renewable energy by 2020. Read more.

#Dealflow: Follow the Money

Meloy Fund raises $10 million for sustainable fisheries in Indonesia and Philippines. The 10-year fund managed by the conservation organization Rare will make debt and equity investments to support coastal fisheries and communities. Indonesia is the second largest seafood producer globally; Rare has worked extensively in the Philippines, with a strategy that boosts livelihoods of local fishermen and women and regenerates fish stocks. Rare’s Dale Galvin says the fund targets the “latent opportunity for value-creation in the undervalued coastal fisheries sector.” The fund expects to positively impact 100,000 fishers and their households and improve management of 1.2 million hectares of coastal habitats with Rare’s help on both fisheries management support and community engagement. The $10 million first closegets Meloy halfway towards its $20 million goal. Lukas Walton of the Walton Family Foundation led a group of family offices and foundations. The Global Environmental Facility is expected to make a $6 million commitment as an anchor investor toward the final close later this year.

Kin raises $4 million to simplify insurance in U.S. natural disaster zones. The Chicago-based company uses a home address and public data to underwrite its policies. This simplifies the policy process for customers and brings down costs, the team says. Kin’s first markets are Florida, North Carolina and Oklahoma, “where hurricanes, tornadoes and other potential natural disasters allow it to apply data and risk models to differentiate itself,” TechCrunch reports. There’s likely to be an uptick in data-driven products and services like Kin’s and MyStrongHome’s insurance policies for U.S. communities most vulnerable to shifts in climate change-related weather. Kin’s funding round was backed by Commerce Ventures, Omidyar Network, 500 Startups, Chicago Ventures, and angel investors from companies like Square, Facebook and Capital One.

A dozen tech-for-good startups to get accelerated at Norway’s Katapult. The Oslo-based tech accelerator supports startups addressing social and environmental issues through artificial intelligence, virtual reality, blockchain and the internet of things. Twelve ventures were selected from as many countries from 1,000 applicants. The ventures include BEAD from Turkey, which helps commercial building operators manage energy consumption; Agrieye from Ukraine, which uses drones, the cloud and a “neural network” to help farmers manage agricultural inputs; and SheKab from Pakistan, which offers monthly carpooling subscriptions to women with dangerous work commutes. Each startup will participate in a three-month program in Oslo and receive $100,000 in seed funding.

See all of ImpactAlpha’s recent #dealflow.

#Signals: Ahead of the Curve

The sustainability stance. What Barack Obama did for gun stocks, Donald Trump appears to be doing for funds that track environmental, social and governance, or ESG, performance. The president is undoing environmental regulations, pulling out of the Paris climate agreement and rolling back transgender and immigrant rights. Investors appear to be going in the opposite direction. Morningstar reports a four-fold increase in the use of environmental, social and governance, or ESG, data on its platform since Trump’s inauguration. To meet demand, fund managers have launched a dozen new ESG funds this year, bringing the total to around 200. Already new flows of investor capital into these funds in just the first half of 2017 has topped net flows for 2014 or 2015 and are on pace to top 2016 inflows, the fund tracker reports. “If anything, Trump in the White House is having a galvanising effect, as sustainable investors become more committed to the idea and draw even more into their ranks, as more people seek ways to counter Trumpism outside of the political sphere,” writes Morningstar’s Jon Hale.

  • The sustainability stance is paying off. Nearly half of U.S. large-cap sustainable funds have outperformed the S&P 500 in the first half of 2017, vs. barely a quarter of large-cap blend funds.
  • Data point: The $10 billion fund managed by the Church of England returned 17% last year vs. annual average of 9.6% over the last 30 years. One difference: a climate policy that reduced risk by ­divesting from coal and oil sands and shifting 4% of its portfolio to low-carbon investments.

#2030: Long-termism

Artificial intelligence won’t steal your slice, it’ll grow the pie. In pop culture, AI is often associated with a terrifying rise of the machines and a dystopia in which only the fittest, handsomest humans survive. To wit: Facebook AI bots, “Bob” and “Alice,” were quickly shut down after they started using their own language to communicate with each other.

Sizing the Prize,” from PwC flips that image on its head and forecasts enormous economic impact from AI by 2030. With Global Trade Analysis Project (GTAP) data on the size of different economic sectors, the report forecasts global GDP will increase by 14% in 2030 as a result of the accelerating development and take-up of AI. That would mean an additional $15.7 trillion, with the greatest gains in China (up to a 26% boost of its GDP) and North America (up to a 14% GDP boost) — more than the current output of China and India combined.

The biggest gainers will be in retail, financial services and healthcare as AI increases productivity, product quality and consumption.“Carebots” are already being tested to care for the elderly and provide doctors with all of the information they need to make the best decisions. The PwC report highlights the potential for AI-powered diagnostics that use the patient’s unique history to spot deviations and flag health conditions in need of further investigation and treatment. In the long term, robots could likely both diagnose and treat.

Machines will learn to identify potential pandemics by tracking incidence of diseases and helping prevent and contain their spread. One of the problems with treating patients infected with HIV, for example, is the virus’s high genetic variability. AI excels at such multivariate analyses; by plugging in vast amountsof data and tracking every variable at once, deep learning and neural nets can suss out patterns that humans can’t see. That might not make for a box-office smash, but could one day make epidemics history.

That’s wrap. Have a great weekend! Please send any news and comments to [email protected].