The Brief | September 2, 2020

The Brief: BlackRock’s case for impact in public equities, Oakland’s Black business fund, digitizing small businesses in Indonesia, AXA’s multi-asset impact fund

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Greetings, Agents of Impact! 

Featured: Impact Voices

BlackRock: The case for impact in public equities. Why should impact investors grapple with public equity markets? Because that’s where the money is, as Willie Sutton might have put it. “The global need for impact capital is an order of magnitude greater than what could conceivably be provided by the private markets,” BlackRock’s Eric Rice writes in an exclusive guest post on ImpactAlpha. Most portfolios, including of impact investors, include a heavy allocation of public equities. Conventional wisdom has held that it is difficult to identify much measurable positive impact generated by investments in publicly-traded equity securities, as the International Finance Corp. suggests. BlackRock, the manager of $7 trillion in mostly public equities, is trying to revise that wisdom with its BlackRock Global Impact Fund, launched earlier this year. “We see public equities playing a growing and indispensable role in the impact ecosystem,” says Rice, who manages the fund and heads BlackRock’s active equities impact investing strategy. The fund is one of the first to sign on to the IFC’s Operating Principles for Impact Management, which require signatories to establish, disclose and monitor how they manage for impact – and specify their own additional impact or “contribution” (see, Operating principles help investors hold asset managers accountable for impact).

ImpactAlpha invited Rice to make BlackRock’s case for impact in public equities. “A company’s need for capital continues throughout its business lifecycle,” says Rice. Public equity markets can provide exit pathways for impact-driven private enterprises through initial public offerings. “In the absence of public-markets impact investors, the social or environmental impact of such companies can become severely diminished as [companies] respond to the preferences of hedge funds and other short-term investors,” he argues. With follow-on funding, an impact-driven investor can provide capital to keep companies on mission even when markets are skeptical. BlackRock’s fund included stakes (as of July 31) in global companies like Safaricom and Bank Rakyat Indonesia, “sustainable” listings like Transalta Renewables and Xylem, a water solutions provider, and more typical equities such as Boston Scientific Corp. BlackRock expects portfolio companies to derive more than half their revenues from products and services addressing the U.N Sustainable Development Goals. And BlackRock requires a company’s products or services to address a need unlikely to be fulfilled by others, insisting on “additionality” for portfolio companies, if not for itself. Says Rice, “We are effectively investing in disruptive innovation helping to meet essential needs where there is strong demand but inadequate supply.”

Keep reading, “BlackRock: The case for impact in public equities,” by Eric Rice on ImpactAlpha.

  • What’s your take? Hop on our subscriber-only #Agents-of-Impact Slack channel to share your responses.

Dealflow: Follow the Money

Oakland Black Business Fund launches with COVID relief funding. The new nonprofit investment fund’s first aim is to help Black-owned businesses weather and recover from the COVID economic storm. Its broader vision is to seed economic opportunity and wealth creation for Oakland’s Black residents through business advice, grants, investment and real estate. OBBF has raised $150,000 to start cutting relief checks and is looking to raise and disburse $10 million. “We’re especially focused on funding brick-and-mortar businesses, which anchor the Black community culturally and economically, and establish a sense of place for Black communities,” said co-founder Elisse Douglass.

  • Movement origins. OBBF was founded in June by Douglass and fellow real estate professional Trevor Parham, amid protests over the killing of George Floyd in Minneapolis. “We saw a lot of businesses were being hit multiple times, with protests about racial justice where the businesses were getting their windows broken, with the pandemic that was shutting them down, and the general market conditions,” Parham told VentureBeat. It took only 10 days for OBBF to crowdfund its first $100,000.  
  • Place-based. OBBF’s backers and technical assistance partners include the City of Oakland, the Alliance for Community Development, commercial real estate owner and manager Oakstop, the Bay Area Organization of Black-Owned Businesses, Black Cultural Zone, Lyft and Clorox, which is headquartered in the city.
  • Check it out.

Priscilla Chan and Mark Zuckerberg commit $300 million to safe, fair elections. Two impact investors sounded off in ImpactAlpha this week about the importance of securing the fairness of the November U.S. election (see, “How impact investors can help ensure racial justice includes electoral justice,” and “Impact investors have a role to play in preventing worst-case election scenarios”). Now comes the Facebook founder and his wife, who committed $250 million to the Center for Tech and Civic Life and $50 million to the Center for Election Innovation & Research to help the nonprofits support state and local governments struggling under the weight of the COVID crisis secure the safety of elections. The Brennan Center has estimated that $4 billion is needed for local governments to ensure election resiliency. 

  • Election impact. The impact of the approaching U.S. election arguably dwarfs the impact of all impact investments (see, “Impact investors confront the impact of the November election). Chan and Zuckerberg’s big commitment reflects growing fears that a drawn-out or contested process could undermine legitimacy, roil markets and spark violence – as well as the running debate over Facebook’s role as a major distributor of information and disinformation. 
  • Read on.

Indonesia’s SIRCLO raises $6 million to help small businesses with online sales. Online shopping in the world’s fourth-largest country has quadrupled in the COVID crisis. SIRCLO helps small businesses set up online shops and manage sales from Indonesia’s large e-commerce platforms. East Ventures, OCBC NISP Ventura, Skystar Capital and Sinar Mas Land backed the round.

AXA Investment Managers rolls out impact debt-equity fund. The AXA World Funds Multi Asset Optimal Impact fund is the investment firm’s first multi-asset impact product. The fund will invest in equities and debt securities, including green and social impact bonds. Climate change is a key impact focus for the fund, Professional Adviser reports

Agents of Impact: Follow the Talent

Hemp CBD producer Charlotte’s Web earns B Corp certification… PCC Farmland Trust, which works with Washington farmers to protect and restore threatened farmland, rebrands as Washington Farmland Trust… Care seeks a vice president of impact and innovation in Atlanta… Also in Atlanta, Novogradac & Company is looking for a chief social impact officer… Luminate, Media Development Investment Fund and the team of Membership Puzzle Project launch a $400,000 Membership in News Fund to support independent media in Eastern Europe, Asia, Africa and Latin America.

Roots of Impact and Aqua for All seek applications for testing social impact incentive models from water, sanitation and hygiene enterprises (see, Early data signals success of social impact incentives)… Aspen Institute is hosting “Stakeholder Capitalism vs. Milton Friedman: What is the Future of American Capitalism?” with Ford Foundation’s Darren Walker and The New York Times columnist James Stewart on Tuesday, Sept. 15… Walker will also join producer Erika Alexander, Vien Truong of Tom Steyer PAC, and Capricorn Investment’s Michaela Edwards following a Ceres screening of John Lewis: Good Trouble on Thursday, Sept. 10.

Thank you for reading.

–Sept. 2, 2020