ImpactAlpha Open: AI in impact finance + changing systems

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ImpactAlpha Editor

Dennis Price

Greetings, Agents of Impact! 

Welcome to OpenImpactAlpha’s free weekly newsletter with the top news and opportunities in impact investing and sustainable finance. Ready to go deeper and connect with other Agents? Join subscriber-only Calls, practitioner message boards and in-person events. Subscribe today with 25% off.

🔌 Join tomorrow’s Plugged In: Training AI in Black and Brown history. Latimer.ai’s John Pasmore will join Plugged In host Sherrell Dorsey to explore how thoughtful design and intentional strategies for training large language models can combat what OpenAI’s Sam Altman calls “shortcomings around bias.” 

  • Join the conversation on LinkedIn Live, Wednesday, Jan. 31 at 8am PT / 11am ET / 4pm London. RSVP today.

In this week’s Open:

  • AI in impact finance
  • Changing systems from inside and out
  • Reengineering the tampon (and the ethos of biotech)
  • The growing impact fund universe

Ok, let’s jump in. – Dennis Price


Must-reads on ImpactAlpha

  • AI in impact finance. Query ChatGPT for ‘How will AI influence impact investing?’ and you’ll get a sunny list of uncomplicated benefits including enhanced data analysis, automated impact assessment and portfolio optimization. Humans Allie Burns of Village Capital and Jasper van Brakel of RSF Social Finance flesh out the promise and the perils of the new tools already permeating every aspect of finance. Get smart quickly.
  • Changing systems from inside and out. My profile of Draper Richards Kaplan Foundation’s reflection on social-change strategies sparked a vibrant debate on LinkedIn. Among the issues: Do systems-improvement strategies represent retreat, or reality? How best can systemic failures like racial, gender and economic injustice be redressed? How might incremental-change approaches and systems-change strategies become complementary, not contradictory? How can we harness the power of capital markets? And what is systems-change, anyway? Read the follow-up piece.
  • Q&A with LISC’s Michael Pugh. Climate resilience, affordable housing and boosting small businesses have topped Michael Pugh’s agenda since he became CEO of the Local Initiatives Support Corp. last year, reports Roodgally SenatusAlso on tap: leveraging AI to expand access to credit. Check it out.
  • Financial inclusion and climate resilience. In a guest post on ImpactAlphaPaul Buysens and Kapil Kanungo of Incofin Investment Management say financial institutions can bridge the gap between mitigation and adaptation by prioritizing financial inclusion in their climate investments. Get their take.
  • GE’s Scope 3 disclosure dance. In 2021, GE moved to spin off its energy business, combining its coal and gas turbine units with its wind, solar and grid businesses into GE Vernova. As GE seeks to rally investors ahead of Vernova’s NYSE debut later this year, Australian shareholder activist group Market Forces alleges the conglomerate has understated “Scope 3” emissions data from its power division, reports Climate and Capital’s Peter McKillopGo deeper.

Sponsored by Tideline

The alpha in impact. What distinguishes impact-led value creation activities from those of traditional or ESG-oriented investors? Tideline and Impact Capital Manager’s forthcoming research report, “New frontiers in value creation,” identifies key characteristics of effective impact value creation. Join Tideline and International Capital Managers on Thursday, Feb. 8 for a discussion with leaders from CitiEQT GroupHCAP PartnersNuveen and W.K. Kellogg Foundation on effective and financially-material impact value creation.

  • RSVP today for “New frontiers in value creation.”

Agents of Impact

♀️ Ines Schiller, Vyld: Reengineering the tampon – and the ethos of biotech

Ines Schiller got the idea for seaweed tampons while training to be a marine guide in South Africa. The Berlin-based entrepreneur learned about seaweed’s role in ocean ecosystems, “and also about how versatile and healthy and sustainable it is.” Feminine products, and tampons specifically, presented an opportunity. “As a menstruator, I just wasn’t happy with the products out there,” she tells ImpactAlpha. “I’m shocked that we don’t label the ingredients in tampons.”  

  • New ethos. Schiller, whose background is neuroscience, philosophy and film, isn’t just redesigning essential hygiene products. With Vyld, she’s redesigning the business ethos behind them. Vyld operates under a steward-ownership structure, where 1% of its shares are held by Purpose Foundation, whose job is to ensure the company’s mission preservation.
  • Keep reading, “Ines Schiller, Vyld: Reengineering the tampon – and the ethos of biotech,” by Jessica Pothering on ImpactAlpha and share the story on Instagram.

🏃🏾‍♀️ People on the move

  • Lucas Turner-Owens, a former senior advisor at Possibility Labs, joined Building Ventures as principal (Turner-Owens also co-hosts the Impact(ed) podcast).
  • Milton Speid, formerly with The ImPact, joined VC Include as executive director.
  • DAI Capital adds Casey Verbeck, a former partner and managing director at Veris Wealth Partners, as impact investment managing director.

Short Signals: What We’re Reading

💲 The growing impact fund universe. Impact investors launched 153 new “financial first” funds in 2023, representing growth of 16.7% (compared to 11.4% growth in 2022), according to Phenix Capital. Total committed capital grew €50 billion to €589 billion, a growth rate of 9.3% (compared to 13% in 2022). (Phenix Capital)

👩🏽‍🦱🧑🏼‍🦱👨🏾‍🦲👩🏻‍ Inclusive asset management. Less diverse capital markets are less efficient at allocating capital. To capture value and mitigate risk, asset managers can expand their talent pipeline to historically Black colleges and universities and other diverse educational institutions. Other steps include standardizing a governance diversity pledge and expanding access to diverse managers. (Milken Institute)

🚀 Offensive vs. defensive sustainability strategies. Companies that put sustainability at the core of value creation (offensive strategies) have been shown to outperform companies that pursue sustainability selectively to mitigate specific risks (defensive). (Nawar Alsaadi / Kanata Advisors)

🔭 In 2024, authentic impact beats political agendas. Within the apathy and disillusionment with ESG lies “a story of resilience, pragmatic action and quiet optimism,” writes Stax’s Anuj Shah in a 2024 look-ahead. Impact investing can emerge as a beneficiary with operational models that allow for scale and valuation premiums for impactful businesses. (Stax)

⬇️ Download project finance term sheets. To facilitate more capital flow, CrossBoundary Access has shared three project finance term sheets used for over $80 million of mini-grid projects in Africa. The documents “allow others to adopt a mini-grid project finance approach more quickly and at [lower] cost,” writes CrossBoundary’s Terry Otinga. (CrossBoundary Access)

🔮 Welcome to 2034. The single biggest threat to global prosperity in the coming decade is climate change, according to an Atlantic Council survey of nearly 300 (mostly American) strategists and foresight experts. A bright spot in an otherwise gloomy outlook is technology. Respondents have a positive view on the impact of biotechnology, quantum computing and artificial intelligence. (Atlantic Council)


Get in the Game

💼 Step up

  • CalSTRS seeks a portfolio manager for its sustainable investment and stewardship strategies team.
  • The Nature Conservancy seeks a senior investment manager.
  • BlueMark is on the hunt for an impact investing manager to focus on Europe.

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