The Brief | March 6, 2019

JPMorgan’s prison break, climate-risk analytics, Ola goes electric, catalytic loans for arts organizations

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Featured: ImpactAlpha Original

Activists – and activist investors – force JP Morgan Chase and private prisons to break up. JPMorgan Chase’s decision to cease lending to private operators of prisons and immigrant detention centers shows that social risks related to human rights are becoming “material” risks. For the largest U.S. bank, the risks of sticking by private prison operators such as CoreCivic and GEO Group outweighed the benefits. “We will no longer bank the private prison industry,” a JPMorgan Chase spokesman told Reuters. Wells Fargo, another big prison industry lender, said in January that it would reduce its lending to private prisons as part of its “environmental and social risk management” process. Last June, New York City’s pension funds divested almost $50 million in stocks and bonds from private prison companies.

Other banks, including Bank of America, Citizens Bank, US Bancorp and BNP Paribas are likely to face pressure from activists as well. “Providing capital to private prisons enables them to grow and thrive,” said Mary Beth Gallagher of the Tri-State Coalition for Responsible Investment. “We recognize that as a main financier of the industry, JPMC was benefiting financially from harm caused to detainees and immigrant communities.” Protesters have dogged JPMorgan Chase CEO Jamie Dimon and staged rallies at Chase’s private-client offices and retail branches across the country. “Public sentiment towards value-aligned business does not bode well for companies who are not proactively addressing their social footprint,” Candide Group’s Morgan Simon told ImpactAlpha. Candide’s Real Money Moves initiative is part of the Families Belong Together coalition, which on Valentine’s Day organized actions at more than 100 JPMorgan Chase and Wells Fargo branches and collected 150,000 signatures calling on the banks to “break up” with private prisons. Says Simon, “Banks like Chase are seeing it’s time to get ahead of these issues.”

Read, “Activists – and activist investors – force JP Morgan Chase and private prisons to break up,” by Dennis Price on ImpactAlpha.

Dealflow: Follow the Money

Jupiter Intelligence raises $23 million for climate-risk analytics. The data analytics company works with public agencies and private companies in real estate, insurance, energy and infrastructure to plan for severe weather incidents, intensifying storms and rising sea levels and temperatures. Jupiter Intelligence’s software has been adopted in New York City, south Florida, Houston and Europe for infrastructure site selection, supply chain management, investment valuations and shareholder disclosures. The Bay Area-based company’s $23 million Series B round was backed by the energy investment firm Energize Ventures, impact investor SYSTEMIQ, and insurance firms QBE, Mitsui MS&AD and Nephila. Go deeper.

India’s Ola launches electric vehicle business with $56 million in funding. India’s goal is to convert one-third of its road vehicles to electric by 2030. The country’s homegrown ride-hailing service Ola has tested two- and three-wheel electric vehicles, battery-charging stations, and battery-swapping stations. Now the company is creating an independent company to build its electric vehicle presence and battery charging stations. Ola Electric Mobility has raised $56 million from Tiger Global and Matrix India, early backers of Ola itself. The new venture will accelerate Ola’s partnerships with EV equipment and battery manufacturers. “The first problem to solve in electric mobility is charging,” Ola Electric Mobility’s Anand Shah said. Read on.

Chile’s eco-eyeglasses maker Karün secures €2.5 million. The Santiago-based company launched in 2013 to make designer eyewear from fishing nets, reclaimed wood and other materials recovered by informal Chilean workers and micro-entrepreneurs. Swedish investment fund Blue AB and Walton Family-backed Luna backed Karün’s early funding round. Karün’s business sits at the intersection of emerging trends: the merger of fashion and ocean plastics, like Stella McCartney’s fashion line; waste-conscious fashion, like Repassa in Brazil, For Days in the U.S. and Vinted in Lithuania; and support for informal workers and micro-businesses, like waste management company Nepra is doing in India. Find out more.

Impact Voices: Pass the Mic

A catalytic loan fund helps arts and cultural organizations thrive in Chicago. The MacArthur Foundation created the Arts & Culture Loan Fund to fill a capital gap that particularly affects nonprofit arts organizations. Theaters face cash shortfalls for production costs to put on a show in advance of grants and ticket sales. Conventional banks often perceive small non-profits as too risky and consider loans to them too costly. In the last decade, the Arts & Culture Loan Fund has assisted 36 small- to mid-size Chicago organizations with budgets from $250,000 to $5 million, providing access to working capital loans and support to improve financial management skills. In the process, the transactions have helped build the organizations build credit histories to meet future financing needs.

“When MacArthur created the Arts & Culture Loan Fund a decade ago, we expected that it would be a tactical tool that provided flexible funding to organizations to address the seasonality of cash flow,” write Cate Fox and Allison Clark of the MacArthur Foundation in a guest post on ImpactAlpha. “What we learned is that in addition to meeting tactical goals, it is also a strategic investment in building resiliency for arts organizations.”

Read, “A catalytic loan fund helps arts and cultural organizations thrive in Chicago,” by MacArthur Foundation’s Cate Fox and Allison Clark, on ImpactAlpha.

Agents of Impact: Follow the Talent

John Palfrey will take the helm of the John D. and Catherine T. MacArthur Foundation starting Sept. 1… Pacific Community Ventures seeks a credit analyst for its small-business lending group in Oakland, Calif… The U.S. Impact Investing Alliance is hiring a program assistant.

March 6, 2019.