The Brief | May 29, 2019

Q&A with George Serafeim, farmer financing in India, EcoEnterprises’ livelihoods fund, student-led impact funds, global goals in Pakistan

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Greetings, Agents of Impact!

Last call for Agents of Impact Call No. 9. Guests in our Beyond Trade-offs podcast series will share strategies for integrating impact, risks and returns. ImpactAlpha subscribers can join Prudential Financial’s Ommeed Sathe, Elevar Equity’s Sandeep Farias, Blue Haven Initiative’s Liesel Pritzker Simmons and Omidyar Network’s Robynn Steffen in conversation with David Bank, this Thursday, May 30th, at 10:00 am PT / 1:00 pm ET / 6:00 pm London. Last chance to RSVP.

Featured: ImpactAlpha Original

Q&A with Harvard’s George Serafeim: The link between corporate governance and environmental and social impact. In the public-equities markets, attention to environmental, social and particularly governance issues seems to correlate with reduced risks. Impact investors looking to drive positive benefits across their portfolios, however, have to ask a tougher question: Does ESG performance actually make any difference in terms of actual social and environmental impact? To get at the question, we caught up with George Serafeim, a professor at Harvard Business School, who has emerged as a leading thinker on corporate impact. “If every large consumer goods company has a great deforestation policy, why are the forests still disappearing?” Serafeim asks. “At the end of the day does this accumulate to something that is moving the needle, or are we playing in the margins?”

Serafeim is a master of three-part frameworks. In a Q&A with ImpactAlpha, he laid out the three deficits that hinder corporate sustainability efforts, the three stages of corporate organizational maturity around such issues and the three obstacles to corporate transformation. “In many cases transformational change requires a short-term decline in performance and return on capital because you need to invest in future long-term growth,” says Serafeim. “That issue of managing the worse-before-better is a very difficult issue.” It’s imperative, he says, for impact investors to engage large corporations as well as innovative startups. The 1,000 largest companies in the world represent more than half of global GDP, he says. “That gives you the scale of the challenge in terms of shifting what we have now, which is an economy that optimizes for risk and return, to an impact economy that optimizes for risk, return and impact.”

Keep reading, “Q&A with Harvard’s George Serafeim: The link between corporate governance and environmental and social impact,” by David Bank on ImpactAlpha.

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Dealflow: Follow the Money

TIAA’s Nuveen backs farmer financing company Samunnati. Impact investors have supported Chennai-based Samunnati in providing financial and agricultural support services to India’s smallholder farmers. The company’s growth has now attracted Nuveen, the investment management arm of TIAA. Nuveen led Samunnati’s 3.9 billion-rupee ($55.6 million) Series D funding. Nearly 60% of Indians earn their living in agriculture. Impact investor Elevar Equity backed Samunnati’s Series A round in 2017 alongside early-stage venture capital firm Accel (see, “Elevar Equity: Growing demand, growing companies and growing opportunities for impact at scale). ResponsAbility joined in last year’s Series B, and Dutch development bank FMO and Swiss investment firm Symbiotics have provided debt financing. Having expanded to 14 states and more than 16 billion rupees in loans, the company is attracting more mainstream capital. Samunnati joins the likes of healthy school lunch company Revolution Foods in Nuveen’s $1 billion private impact investing portfolio, a small part of its roughly $1 trillion in assets under management. Read on.

FinDev Canada invests in EcoEnterprises’ third fund. Costa Rica-based EcoEnterprises Fund launched 20 years ago to boost sustainable livelihoods in agriculture, ecotourism and forestry sectors in Latin America. It has raised two funds and invested in 30 companies in 11 countries, including wild açaí grower Sambazon and organic beverage company Runa. EcoEnterprises claims to have impacted more than 200,000 people and conserved 10.5 million acres of land. Development finance institution FinDev Canada is backing the firm’s third fund, which launched last year. EcoEnterprises reached a $74 million first close towards a $100 million goal, Latin Finance reports. Managing director Nathalie Prado hinted at new focus areas for the fund, including emerging technologies and biopesticides. FinDev Canada backed the women-led fund as part of the global 2X Challenge to encourage development finance institutions to get more capital flowing to women. More.

Dealflow overflow.

  • Ohio-based Miami University is partnering with Cincinnati’s Flywheel Social Enterprise Hub on a social venture fund. It joins the University of Michigan and Wharton Business School in the small group of student-led impact startup funds.
  • Pakistan’s Inaara Impact Ventures invested in four social startups targeting Sustainable Development Goals in Pakistan. Inaara’s investments include equity stakes in freight logistics company Freightex and online job site Tecbeck and pilot grants to clean cookstove company Jaan Pakisatan and period products company Her Ground. The fund, started by social entrepreneur Sadia Malik, is among a small number of venture funds—much less impact funds—in the country, where 2018 venture funding was below $300 million.
  • AXIS and Innpact launched a fund management platform to encourage more Africa-focused impact funds from new managers. The Mauritius Impact Finance Gateway to Africa (MIFGA) aims to help fund managers launch new funds and lend credibility for first time managers.

Agents of Impact: Follow the Talent

U.K. development finance institution CDC Group seeks an investment associate for its impact funds, based in London… Accion is hiring a director of digital communications in Washington, D.C… TechForGood and the Academic Center for Impact Investing and Entrepreneurship (ACTO) are hosting the Israel Impact Summit at the College of Management in Rishon LeTsiyon, Israel this week… The Global Entrepreneurship Summit is happening June 3-5 in The Hague, the Netherlands.

May 29, 2019.