Greetings, Agents of Impact!
Call No. 39: Operationalizing impact and ESG inside the enterprise. On one of last year’s most popular Calls, Cathy Clark of Duke’s Fuqua School of Business provided a how-to on “optimizing for impact.” The sequel: How to operationalize ESG and impact inside major corporations and other enterprises. On the next Agents of Impact Call, Clark will step through the process with Brendan Morrissey of Walmart, which is undertaking Project Gigaton to reduce greenhouse gas emissions from the retail giant’s supply chain.
- Join The Call, Tuesday, Mar. 8, at 10am PT / 1pm ET / 6pm London. RSVP today.
Featured: After the Invasion
Sanctions are only the beginning as Russia’s invasion of Ukraine slams global networks of capital and talent. Western allies will bar some Russian banks from the SWIFT international system for cross-border payments. Western nations also are sanctioning the Bank of Russia to prevent Russia’s central bank from deploying its $630 billion in international reserves. The announcements have already caused a devaluation of the ruble and runs on Russian banks. Among the second-order effects:
- Risk off. Norway’s $1.3 trillion sovereign wealth fund is divesting its Russian assets. U.S. public pensions from New Jersey, Illinois and Colorado are moving to do the same. BP will exit its nearly 20% stake in Russia’s state-owned oil giant Rosneft. “I am convinced that the decisions we have taken as a board are not only the right thing to do but are also in the long-term interests of BP,” said BP’s CEO Bernard Looney. Teams and competitions are canceling games in Russia and dropping Russian sponsors.
- Practical assistance. Chef Jose Andres’ World Central Kitchen deployed to feed thousands of refugees in Poland, Romania and inside Ukraine. Ukraine’s government and Ukrainian organizations raised over $16 million in cryptocurrency donations, which can bypass financial institutions, according to Tom Robinson of blockchain analytics firm Elliptic (others have noted Russia can use the same tools). TalentPools and Techfugees quickly stood up RemoteUkraine to help Ukrainians leaving the country offer their services remotely to employers. “I don’t think new investment (impact or otherwise) is really the first tool we turn to in times of crisis or war,” Sean Hinton of Soros Economic Development Fund told ImpactAlpha. “What we look out for first: is there a need to provide extra financial support/investment to existing investees? Second, can we enable business enterprises (social or pure for-profit) that can utilize their existing platforms to provide critical services that can be valuable?”
- Brain drain. Russian startups and social enterprises, even those outside the country, are being caught up in the sanctions. Bank accounts have been closed, contracts paused or canceled, and the SWIFT crackdown is blocking payments. “Some people are saying all of my last year’s work has just been wiped clean by this one thing,” Daniel Kozlov of the Global Venture Alliance told ImpactAlpha from Moscow. The alliance, based in Moscow and San Francisco, creates accelerator programs for corporations, governments and investors. “The ecosystem will keep shrinking,” Kozlov said. “Even Russian investors – why the hell would you invest in venture in Russia right now, where things like this just completely annihilate any value that has been created?” Expect an exodus: “Anyone who has an opportunity to move outside is beginning to pack their bags.”
- Social mobilization. Protests erupted over the weekend in Russia, Europe, former Soviet republics such as Georgia, and in the U.S. Twitter and Facebook have been restricted in Russia; Russians are being told that authorities will regard “negative comments” about the invasion as “treason.” Economics writer Matthew Klein tweeted, “If this ends with regime change in Russia, the West should be prepared to be magnanimous and assist as much as necessary in economic reconstruction.”
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Dealflow: Catalytic Capital
AgDevCo raises $90 million to invest in African agri-businesses. The London-based nonprofit impact investor has invested $150 million since 2010 in small agri-businesses providing inputs, logistics and production assistance to Africa’s smallholder farmers, particularly women. Development finance institutions of the U.K., Norway and the U.S. committed the latest round of capital. CDC Group’s Tenbite Ermias said the investment aimed to help farmers in emerging markets “that are most vulnerable to the impacts of the climate emergency.”
- Across the value chain. CDC and Norfund collectively invested $70 million in equity, while the DFC committed $20 million in senior debt. AgDevCo provides up to $10 million in capital for agri-input, production and logistics businesses like Kenyan farmed-fish producer Victory Farms, equipment leasing company EFAfrica Group, and Tanzanian grain-storage provider Pee Pee Tanzania. AgDevCo also secured $5.4 million to provide technical assistance. It has invested in 80 early-stage businesses.
- Check it out.
Social Finance will deploy $100 million from Google to upskill tech workers. The four-year program aims to help 20,000 low-income workers gain “Google Career Certificates” in data analytics, IT support, project management, and user-experience design. Boston-based Social Finance has pioneered student-friendly “career impact bonds,” a form of income-sharing agreement, to reduce the risks to workers of training for jobs in healthcare, IT and even diesel mechanics. For Google, Social Finance will contract with nonprofits Merit America and Year Up to provide coaching, interview prep, job placement and stipends for expenses like childcare and transportation. Students will repay interest-free loans of about $6,000 at $100 per month only when they get jobs that pay at least $40,000 per year. “This fund is a new kind of financing model,” said Google’s Sundar Pichai, combining balance-sheet and grant capital to make training available to job seekers at no upfront cost.
- Talent shortage. “We’re in the perfect moment to have these strategies because we have 10.7 million unfilled job openings around the country,” Social Finance’s Tracy Palandjian told ImpactAlpha. “A lot of the skills of the American people have not transitioned to the new economy.” Separately, Achieve Partners helps portfolio companies set up two-year apprenticeship programs in fields facing skills shortages.
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Dealflow overflow. Other investment news crossing our desks:
- Investors commit $120 million to community solar venture Aspen Power Partners (for context, see “Solar proves a pathway for private capital to flow into low-income communities”).
- Denver-based Project Canary clinches $111 million for analytics software that helps companies monitor greenhouse gas emissions and energy and water usage.
- Kentucky-based Virtual Peaker raises $16.6 million to help utility companies manage power supplies from rooftop solar, wind, batteries, electric vehicles and other distributed energy sources.
Agents of Impact: Where to Meet
Don’t miss these upcoming ImpactAlpha partner events:
- New Ventures is hosting its Latin American Impact Investor Forum, or FLII, in Merida, Mexico, Mar. 15-17. ImpactAlpha subscribers save 45% with code IMPALPHA22. Sign up today.
- Phenix Capital is convening its Impact Summit Europe in The Hague, Mar. 29-30. Register now.
- AVCA is convening its annual conference, “Private Capital in Africa at a Crossroads,” in Dakar, Apr. 25-29. Register today.
- Island Innovation is hosting its Island Finance Forum virtually, Apr. 25-29. Register for free.
- ImpactPHL is convening “Total Impact: Investing for New Economies,” in Philadelphia, May 16-17. ImpactAlpha subscribers get $300 off with code IMPACTALPHA. RSVP today.
Thank you for your impact.
– Feb. 28, 2022