TGIF, Agents of Impact!
We’re taking a “Brief” break for the long weekend in the U.S. We’ll be back in your inbox Tuesday, Sept. 3.
– The ImpactAlpha team
Featured: ImpactAlpha’s Big 7
1. Next up: New definitions of ‘fiduciary duty’ and ‘materiality’ (podcast).The revised definition of ‘corporate purpose’ signed by 181 CEO members of the Business Roundtable opens the way to update notions of fiduciary duty and materiality as well. The logic: By embracing as ‘stakeholders’ customers, employees, suppliers and communities, along with shareholders, CEOs make environmental, social and governance issues material to the long-term performance of their companies. In the latest episode of ImpactAlpha’sReturns on Investment podcast, Imogen Rose-Smith expressed doubt that the CEO statement would have such a knock-on effect. “At best, it’s accepting that there has been a shift in the discourse,” she said. CounteredImpactAlpha’s David Bank: “That heat is what we have to turn up.” Adjust the dial.
- Leverage point. In a guest post on ImpactAlpha, Laura Campos of the Nathan Cummings Foundation calls out the Roundtable for seeking to restrict shareholder resolutions. To fulfill the new pledge, she writes, “CEOs and the Business Roundtable should be lobbying to safeguard shareholder voices, not silence them.” Impact voices.
- Get to work. In a full-page ad in The New York Times, CEOs of Ben & Jerry’s, Danone, Sundial Brands, and dozens of other certified “B Corps” called for Business Roundtable CEOS to work together “to make real change happen.” As for investors still resisting stakeholder capitalism, “This is more in their interests than anyone’s!” tweeted B Lab’s Andrew Kassoy. Check it out.
2. The Impact Alpha: Deadline time for sustainable, inclusive prosperity.On the way to the G7 meeting in Biarritz, France, President Trump advisor Larry Kudlow disparaged the G7’s efforts on behalf of a broad set of “stakeholders” and “niche” issues like climate change. It’s worth remembering that, officially, the global agenda remains strong for climate action under the Paris climate accord and progress toward the 2030 Sustainable Development Goals, both of which have been approved by virtually every nation. “It may no longer be possible to pretend that powerful headwinds have not seriously stalled progress toward the 2030 global goals for sustainable and inclusive development,” writes ImpactAlpha’s David Bank in his latest The Impact Alpha column. “But the rationale for such a massive mobilization has only become stronger. Leaders who know better have a decade to deliver.” Read on.
3. “Impact” adds value to Opportunity Zone investments. Sure, capital gains tax incentives have spurred developments that generate few benefits for residents of low-income communities. At the same time, impact-led collaborations are showing that deep engagement with communities can boost investment success, by mitigating project risks and accelerating timelines. “If you can understand the risk in these communities, you can make really good returns,” SoLa Impact’s Martin Muoto told ImpactAlpha. In Erie, Pa., local institutions and developers are betting that Opportunity Zone investments in a downtown culinary arts district will help “shock the market back to life,” says John Persinger of Erie Downtown Development Corporation. Opportunity Zone projects that take a collaborative, impact-focused approach can move “farther, faster,” says Economic Innovation Group’s Rachel Reilly. Dig in.
4. Blackstone’s “impact” faces scrutiny. When the $512 billion private equity giant announced its new impact investing platform in May, Blackstone’s Jon Gray said the firm seeks to deliver value for investors “while also having a positive impact on the communities in which we operate.” That made the firm’s decision not to sign the Business Roundtable’s recent commitment to “stakeholders” stand out. As legacy private equity firms move into impact investing, the impact of the rest of their portfolios is getting a closer look. In Blackstone’s case, that means scrutiny of investments in an oil and gas pipeline company and infrastructure projects in Brazil that may contribute to deforestation in the Amazon. Impact watch.
5. Agent of Impact: Derrick Morgan of KNGDM Impact Fund. Indianapolis Colts quarterback Andrew Luck wasn’t the first NFL veteran to step away from football on his own terms this summer. In July, Derrick Morgan, a linebacker with the Tennessee Titans, retired after nine years in the league to pursue a long-time passion: impact investing. Over the last few years, Morgan built up a portfolio of investments in social justice startups, including community investment platform CNote, tech ecosystem Bitwise Industries, affordable housing financier Community Housing Capital and Macro, a production company representing perspective of persons of color. Now, Morgan has launched KNGDM Impact Fund to mobilize hundreds of millions of dollars for Opportunity Zones investments in Nashville (where he played pro ball), Atlanta (where he went to college), Austin (where his business partner lives) and Coatesville, Penn. (his hometown). Morgan’s goal: promoting ownership, empowerment and upward mobility in underestimated communities.
Morgan is redefining what it means to be an athlete. In an essay, Morgan shares how an injury early in his career left him alone on the sidelines. He discovered himself outside of the game, became a father and reconsidered his future. While continuing on in the NFL, he invested in himself – getting an MBA – and companies that represented his values. He built a network that includes long-time impact investor Morgan Simon, whose Candide Group advises Morgan, to help fill gaps in his investing knowledge. With the NFL behind him, he plans to leverage his new platform for good, he says, and write a new narrative for what athletes are supposed to be. “The types of projects we’re doing, they’re going to change the whole market,” Morgan told ImpactAlpha. – Dennis Price
- “Like” Derrick Morgan’s story on Instagram.
- Follow the talent with ImpactAlpha’s weekly report on career moves, job openings, events and opportunities.
6. Deals of the week. Stay on top of the dealflow all week long on ImpactAlpha.com. A few that stood out:
- Big deals. LGT acquires Aspada from Soros fund to expand its Lightstone impact investing platform… Quadria secures IFC investment for second Asia healthcare fund.
- Spotlight: Africa. Mitsubishi adds off-grid solar assets in Africa with stake in BBOXX… Palladium makes two investments in Africa from its first impact fund… UK Climate Investments backs three renewable energy projects in South Africa.
- Age-tech. CARU snags €2.4 million for voice-command home sensors for seniors.
- Plant-based. Vegan products review site Abillionveg raises $2 million.
7. Nine policy ideas for catalyzing private capital for public good. Boosting businesses that improve livelihoods, build communities and restore the environment is a platform any politician should be able to get behind. Indeed, accelerating impact investing by passing tax incentives for investments in low-income communities (Opportunity Zones), modernizing the U.S. development agency (BUILD Act) and jumpstarting equity crowdfunding (JOBS Act) have all attracted bipartisan support. The Global Impact Investing Network wants to know what’s next. As part of ImpactAlpha’s What’s Next series, Social Capital Partners’ Bill Young suggests taxing non-impact earnings to encourage foundations to do more impact investing; Conservation Finance Network’s Allegra Wrocklage wants to see more public grants fund research and development; and Angel Span’s Joe Milam thinks there’s untapped potential in Qualified Small Business Stock tax incentives, already on the books. Wonk out.
- In the inbox: Investors have a fiduciary duty to integrate environmental, social and governance factors in their investment decisions, says Will Martindale of United Nations-supported Principles for Responsible Investment. The PRI, the UN’s Environment Programme Finance Initiative and the Generation Foundation launched A Legal Framework for Impact to understand how investors in major jurisdictions can manage their fiduciary and impact duties within existing legal frameworks, and what happens if they are in conflict.
Thank you for reading.
– Aug. 30, 2019