The Brief | June 23, 2020

The Brief: Accelerating Black-owned businesses, wage-based COVID relief, microgrids in West Africa, Ford prices COVID bonds, social shareholder resolutions

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Greetings, Agents of Impact!

How to build an impact investing portfolio that works for all stakeholders. Alabama Power, the state’s largest utility, may also be its most unusual investor. Alabama Power Foundation has made loans to reduce opioid addiction through digital health coaching, and incubated Opportunity Alabama to connect local investors into Opportunity Zones. Join Alabama Power Foundation’s Myla Calhoun, along with Ford Foundation’s Margot Brandenburg and Grove Foundation’s Rebekah Saul Butler, to discuss Rockefeller Philanthropy Advisors’ new Impact Investing Handbook with authors Patrick Briaud and Steven Godeke, on The Call, Thursday, June 25 at 10am PT / 1pm ET / 6pm London. RSVP today.

  • Read an excerpt on ImpactAlpha and sign up to receive your copy of the Impact Investing Handbook: An Implementation Guide for Practitioners.

Featured: Impact Voices

The $55 billion plan: Accelerating Black-owned businesses to create wealth, jobs and growth. A systemic problem requires a systemic solution. Black-owned firms earn lower levels of revenue than similar white firms, and Black entrepreneurs are less likely to get loans than white peers in the same industry – and the COVID pandemic has disproportionately hit Black businesses. A lack of equitable access to capital means Black-owned companies cannot grow and hire like their white peers. “Not investing in Black businesses leaves money on the table,” writes CapEQ’s Tynesia Boyea-Robinson in a guest post on ImpactAlpha. Research indicates that getting just 15% of Black-owned businesses to such employment parity could create 600,000 new jobs and add $55 billion to the U.S. economy. Last week, CapEQ, with Surdna Foundation, the W.K. Kellogg Foundation and the Brookings Institution launched Path to 15|55 to accelerate Black-owned business growth and employment.

Boyea-Robinson says she has been fortunate and successful, but has struggled to get loans and access to capital. She was almost shut out of coronavirus relief funds because she did not have a formal banking relationship. “I am a Black, female small business owner with a family who relies on me,” she writes. With Path to 15|55, Boyea-Robinson wants to seize the moment to unlock investment in Black-owned businesses. The immediate goal: ensure that at least 15% of Black business owners have what they need to grow their businesses and hire at least one more employee. It is targeting existing businesses, rather than startups, and will support policy and advocacy groups working to remove barriers to capital for Black businesses. The bigger vision: a transformation in how business owners and investors view and value assets in the Black community. “I tell them the action we must take is clear: Support Black businesses,” she says. “These goals are incredible yet practical when you have the right resources, strategies and people coming together.”

Keep reading, “Accelerating Black-owned businesses to create wealth, jobs and growth,” by Tynesia Boyea-Robinson on ImpactAlpha.

Dealflow: Follow the Money

New York City restaurant fund ties COVID relief to wage increases. The $3 million Restaurant Revitalization Program is offering grants to 100 family-run restaurants as city businesses get back up and running. The terms: the restaurants must use the funds to hire (or re-hire) and pay workers $20 per hour for six weeks. They must also commit to paying $15-per-hour wages for all employees within five years, including staff that largely rely on tips. The fund is a collaboration between New York City and One Fair Wage. Grant recipients will be required to report on staff wages annually.

  • Replication. The model is based on High Road Kitchens, a program One Fair Wage supported in California.
  • Check it out.

Energicity raises $3.3 million to develop solar microgrids in West Africa. The five-year-old company develops, owns and operates projects of up to 20-kilowatts in rural communities in Ghana, Sierra Leone and Nigeria. Its systems serve 23,000 people. Ecosystem Integrity Fund led the company’s seed round.

Urbint secures $20 million for worker and energy infrastructure safety software. The New York-based company uses artificial intelligence to identify risks for utility companies’ facilities, machinery and workers. Its Series B round was backed by Energy Impact Partners, Piva, Salesforce Ventures and National Grid Partners.

Ford Foundation prices COVID impact bonds. Investors in the foundation’s 30-year “social bonds” will earn 2.4% while investors in the 50-year bonds will earn 2.8%. Morgan Stanley and Wells Fargo served as bookrunners. The foundation is looking to raise $1 billion to ramp up grantmaking for COVID relief and recovery over the next two years.

Signals: Ahead of the Curve

Investors push stakeholder protections with shareholder resolutions. For the first time, human rights and worker rights made up this season’s largest category of shareholder resolutions, edging out climate change. With resolutions prepared months in advance, management skirted flashpoints set off by the COVID crisis and the killing of George Floyd, such as worker health and safety, inequality and racial justice. Proxy veterans expect these issues to dominate next year’s shareholder meetings. Also on the agenda: excessive stock buybacks and executive pay at companies that laid off employees. “Investors need to be engaging companies and pushing companies much more about systemic risk,” the Interfaith Center on Corporate Responsibility’s Josh Zinner told ImpactAlpha. “The COVID crisis and the movement for racial justice have exposed and accelerated the urgent need for a real form of shareholder capitalism.”

  • Protecting shareholder voices. The proxy process has helped move issues like gender diversity and emissions reporting from the fringes to corporate policy. New rules proposed by the Securities and Exchange Commission would make it harder for investors to file resolutions and get independent advice. The changes amount to “the biggest attack on shareholder rights in its history,” the Council of Institutional Investors’ Ken Bertsch and US SIF’s Lisa Woll write in a guest post on ImpactAlpha. The rules, which could be finalized this summer, “would move power from investors to company management” and “prevent emerging environmental, social and governance issues from receiving the attention they merit.” Bertsch and Woll urge the SEC to withdraw the proposals.
  • Climate wins. Climate resolutions won record support this year. That may have been helped along by BlackRock, a recent Climate Action 100+ signatory. Although its full voting record has not yet been disclosed, BlackRock logged key votes against companies on the climate group’s target list. Among them: votes against two Exxon board members for insufficient progress on climate reporting and action; and votes in favor of disclosure of climate-related lobbying at Exxon and Chevron. The giant asset manager has come under fire in past seasons for not taking a stand.
  • Workers and consumers. Americans for Financial Reform last week called on SEC chair Jay Clayton – who is being considered as a replacement for fired Manhattan U.S. attorney Geoffrey Berman – to mandate that companies disclose steps they are taking to protect workers, prevent the spread of the Coronavirus, and responsibly use federal aid. Nearly 100 investors, state treasurers, labor unions, asset managers and others signed the letter, which argues that the COVID crisis has shown that human rights, worker protection and supply chain matters are material to companies’ financial performance. “Businesses that protect workers and consumers will be better positioned to continue operations and respond to consumer demand throughout the pandemic.”
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Agents of Impact: Follow the Talent

Venture capital firm Fifth Wall becomes a certified B Corp… Lumina Foundation is hiring a director of Lumina Impact Ventures in Indianapolis… JUST Capital and The Harris Poll will host “The Great Reset,” a discussion on COVID’s impact on corporate responsibility, on Wednesday, June 24 at 1pm ET.

Thank you for reading.

–June 23, 2020