ImpactAlpha Open | January 23, 2024

ImpactAlpha Open: Investing in the ownership economy + Justice40’s impact

Dennis Price

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ImpactAlpha Editor

Dennis Price

Hi there, Agents of Impact!

Welcome to Open, ImpactAlpha’s free weekly newsletter with the top news and opportunities in impact investing and sustainable finance. Expand your access to job openings, fund databases and unlimited articles: Subscribe today with 25% off.

In this week’s Open:

  • Investing in the ownership economy (+ new searchable funds list)
  • Justice40’s accelerating impact
  • Impact within systems
  • AI and scientific discovery

Let’s get to it.  – Dennis Price

Must-reads on ImpactAlpha

  • Alternative ownership enterprises. Retailer Publix is employee-owned via a stock ownership plan. The food distributor Organic Valley is a cooperative co-owned by farmers. Outdoor lifestyle brand Patagonia is governed by a perpetual purpose trust to keep it true to its mission. Even OpenAI, maker of the buzzy ChatGPT, is controlled by a non-profit tasked with ensuring the technology benefits humanity. In a guest post on ImpactAlphaJulie Menter and Curt Lyon of Transform Finance offer a taxonomy of “alternative ownership enterprises.” Catch up quickly.
    • NEW SUBSCRIBER BENEFIT: Searchable funds database. Finance in the ownership economy includes private equity, private debt, venture capital and funds of funds, along with guarantees, blended finance and grants. Sourced from our own coverage and in partnership with Transform Finance, ImpactAlpha has identified more than 60 funds and tagged them by asset class, geography and ownership metrics. Speed your landscape analysis and build your pipeline with ImpactAlpha’s new Ownership Economy fund database.  
  • Justice40’s accelerating impact. Three years after President Biden launched the Justice40 initiative to prioritize underserved communities in an ambitious reimagining of federal spending, communities across the US are stepping up to jumpstart projects intended to create good jobs, reduce pollution and build economic and climate resilience, report Amy Cortese and Andrea Riquier. Get more.
  • Impact within systems. After backing 200 social enterprises, the DRK Foundation has come to appreciate that strategies that improve – rather than disrupt – systems of health, education and criminal justice are better able to withstand political headwinds, I report. Go deeper.
  • Mispriced climate risk in munis. The risks of climate inaction are starting to show up in muni bond ratings. “The adaptation responsibility is coming to state and local governments,” Tom Doe of Municipal Market Analytics told Andrea. Dig in.
  • Missing trillions. The risks of egregious income inequality were starting to show up even at last week’s annual meeting of the World Economic Forum in Davos. Take a peek.

Agents of Impact

🏃🏾‍♀️ People on the move

  • Joohee Rand, former associate partner at Tideline, succeeds Diane Damskey as head of secretariat for the Impact Principles at the Global Impact Investing Network.
  • Reinvestment Fund promotes Emily Dowdall to president of policy solutions and Tiffany Patterson to chief communications and mission officer. Caitlin Misiaszek, formerly of Johns Hopkins Center for a Livable Future, joins the organization as impact manager of its capacity building and capital access programs.
  • Vladimir Savic, formerly with agtech investor Cibus, joins Blue Vision Capital as managing partner.

The Week’s Call

🎥 Moving from the ‘why’ to the ‘how’ of impact incentives (video)

Impact investors have for years debated the need for embedded structures to incentivize impact outcomes. For the hundreds of Agents of Impact who registered for last week’s Call, the question now is how, not whether. But structures like impact-linked carried interest for managers can be complicated. “It doesn’t have to be perfect,” advised Aunnie Patton Power of The ImPact. “If we had waited to understand what the best practices of impact investing were in order to start impact investing, we wouldn’t have 10-year-old funds.” 

Short Signals: What We’re Reading

💥 State of social enterprises. Some 10 million social enterprises, half of them led by women, generate roughly $2 trillion in revenues each year while employing 200 million people. The investment opportunity: meeting the sector’s demand for at least $1.1 trillion in financing. (WEF)

✅ Voting matters. Just 3% of 257 shareholder resolutions aimed at improving companies’ social and environmental impacts received majority support in 2023. That’s down from 14% in 2022 and 21% in 2021. Large US managers drove the downward trend; European support grew. (ShareAction)

⚡ Climate tech returns. Investments in wind and solar mostly notched losses in 2023. Where were the returns in climate tech? Electrical grids that distribute clean energy generated double-digit returns. The Nasdaq Clean Edge Smart Grid Infrastructure Index (QGRD) rose more than 20% last year. (Bloomberg)

⚖️ Prison risk mitigation. Apple, Target, Intel and Starbucks top the most recent FreeCap Financial list of S&P 100 companies ranked by support for hiring workers with criminal records and minimizing engagement in prison labor. Freecap notes an increase in average total scores over last year’s report. (Freecap Financial)

🤖 AI and scientific discovery. Microsoft’s Quantum team used artificial intelligence to screen more than 32 million candidates and “discover and synthesize” a new material with the potential to improve solid-state batteries. The tech company says AI accelerated the discovery process “from years to weeks to just days.” (Microsoft)

💲Billionaire ambitions. New billionaires minted in 2023 accumulated more wealth through inheritance than entrepreneurship, according to UBS. Successor generations are “reluctant to gift money that they have not earned,” according to the bank. The alternative trend: “impact investing or managing businesses in ways that address environmental and social issues.” (UBS)

Get in the Game

💼 Step up

  • JPMorgan Chase seeks a vice president of impact finance and advisory equity fund investing.
  • Soros Fund Management is on the hunt for an impact strategy analyst.
  • Raven Indigenous Capital Partners seeks a people and culture director.

NEW SUBSCRIBER BENEFIT: Visit ImpactAlpha’s Career Hub for more impact investing jobs. Contact us for job postings.

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