Greetings, Agents of Impact!
Signals: Ahead of the Curve
Hiro’s Journey: Japan’s pension fund chief rallies ‘universal owners’ around sustainable finance. ImpactAlpha last month featured Hiro Mizuno, chief investment officer of Japan’s $1.6 trillion Government Pension Investment Fund, as an “Agent of Impact.” At this week’s Milken Institute Global Conference, Mizuno was indeed a man on a mission, mobilizing other institutional investors around sustainability in global financial markets. As a “universal owner” of roughly 1% of all global assets, GPIF can’t dodge systemic risks. “We own the universe. We own the capital markets,” Mizuno said in a panel with other institutional investors (video). “When the systemic risks hit the market, all our efforts to beat the market are not going to be good enough.” To managers of public pension funds in California, Texas and Colorado, he said, “As a group, we should make the capital markets sustainable.”
Mizuno’s strategy of choice is “ESG integration,” and he pressed conference organizers to give the topic higher visibility (video). GPIF two years ago required all its asset managers to integrate such environmental, social and governance factors into their analysis. GPIF recently added the direction ‘and into investment decisions,’ as well. “We heard that they are integrating it into the analysis, but in decision-making they don’t care,” he joked.
- Change the index, change the market. On paper, GPIF’s biggest equity manager is BlackRock. In reality, Mizuno said, indexes such as MSCI largely determine managers’ holdings. MSCI’s Henry Fernandez touted the $150 billion in assets benchmarked to MSCI’s ESG indices. “So why don’t you integrate ESG into your major index, rather than selling a (separate) ESG index?” Mizuno asked Fernandez. Maybe in 10 years, Fernandez replied.
- How long is long-term? GPIF is structured as a 100-year fund to meet future obligations to Japan’s aging society, when there will be too few workers to carry the burden. Other asset owners professed to be long-term investors as well – sort of. “We have to consider opportunity costs in the short- and medium-term as well,” said Amy McGarrity of the $49 billion Colorado Public Employees’ Retirement System. “When we’re picking an oil and gas company, we may not take a 30-year view on stranded asses. We may take a five- to 10-year view on that security.”
- Track the inevitable. Mizuno said he is more confident in his ability to forecast climate change, Africa’s population explosion and global migration “than in my prediction of the interest rate in 10 years time.” The financial industry spends too much time analyzing the unknowable, he said, and not enough on social and environmental trends hiding in plain sight. “But our industry is failing or refusing to bring that into the analysis,” he said.
- Lead, follow or get out of the way. Mizuno’s closing takeaways: GPIF expects passive managers to become active owners, engaging corporate leaders on sustainability issues. Don’t let the lack of data or standardization around ESG practices get in your way. Likewise the fear of greenwashing (“I’m afraid to tell you, 99% of the sushi you are eating is not authentic,” he laughed. “But you still enjoy it”). Lastly, he said GPIF trusts human asset management and human wisdom to bring sustainability into finance. If they don’t, he warned, “We need to ask AI to do it.”
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Dealflow: Follow the Money
Credly raises $11.1 million to grow digital credentialing. Credly issues and manages credentials that give students and workers portable, verified evidence of their skills. Thousands of employers, training organizations, associations and certification programs use the platform to navigate the labor market. Impact, strategic, and growth capital investors piled into Credly’s latest round of funding. ZOMA Capital and Strada Education Network joined existing investors New Markets Venture Partners, University Ventures, Pearson, Lumina Foundation, and Lion Brothers Company. The firm has raised $18.2 million to date. More.
Mfine raises $17.2 million for online medical consultations. India has one doctor for every 1,700 people. The mfine platform allows patients to consult a network of doctors for acute illnesses like viral infections and chronic diseases such as diabetes. In 15 months, more than 100,000 customers have made inquiries to 500 doctors (60 in-house doctors work with the firm’s artificial intelligence system to diagnose and triage over 1,200 common diseases). Mfine helps hospitals expand their reach to more than 800 towns in India. Japan venture capital firm SBI investment led the $17.2 million Series B. The firm plans to onboard 2,500 new doctors from 250 hospitals. Dig in.
Dealflow overflow. InCred, a lender to Indian consumers and small businesses, raised Rs 600 crore ($86 million) from Dutch development finance institution FMO, US hedge fund Moore Capital and impact investor Elevar Equity… UK impact investor Social and Sustainable Capital invested £250,000 ($326,498) in Futures, a provider of jobs and apprenticeships… Nexus Venture Partners and Omidyar Network India seeded Mumbai-based WhiteHat with $1.3 million to teach next-gen coders…
Signals: Ahead of the Curve
Urban-X cohort targets smart infrastructure, electric transportation and city waste. Urban-X, a partnership between smart-city venture firm Urban Us and BMW-Mini, graduated its fifth class of smart-city startups in its Brooklyn offices. The startups’ pitches included products and services targeting safe and efficient construction, smart garbage trucks, electric car ride-sharing and financing, and e-commerce platforms for second-hand goods. The teams were distributed geographically, Urban-X’s Micah Kotch told ImpactAlpha. “It makes it more challenging to provide them with the resources that they need for product development.”
- Urban innovators. Among this year’s cohort were Buildstream, an internet of things and artificial intelligence effort to make construction safer and more efficient; GreenQ, based in Ohio, which installs sensors on garbage trucks to optimize waste collection; Borrow, an electric-car lease provider; and Circuit, formerly Free Ride, an all-electric ride-sharing app.
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Agents of Impact: Follow the Talent
Follow the talent. Jason Henning, ex- of Global Partnerships, joins Illumen Capital as senior vice president of investor relations… California Clean Energy Fund rebrands as New Energy Nexus, and has openings in Oakland, Bangkok, Manila, and Jakarta.
Seize the opportunity. MNF Global is hiring a social impact corporate lawyer in San Francisco… Goodwell Investments is recruiting an investment associate in Cape Town… New York edtech company Kinvolved is looking for a sales operations and marketing associate… New Media Ventures seeks an operations associate in Oakland.
Where to be. Octopus Investments’ Nita Colaco, Paul Crewe of Anthesis and Annona’s Ashley King-Bischof are on the agenda at C5 Accelerate’s ‘tech for change’ themed Impact Investing Summit, May 7 in London… Renewal Funds’ Joel Solomon, Esther Park of Cienega Capital, Betsy Moszeter of Green Alpha Advisors and others join the Net Impact chapter at the University of Oregon for an Impact Investing Forum in Eugene, May 9.
— May 2, 2019.