Greetings, Agents of Impact!
Featured: Muni Impact
Mass migration, stranded communities and ‘chronic’ climate disruptions challenge the muni market. The municipal bond market has barely begun to grapple with the risks posed by climate change. Investors trading bonds issued by seven states that rely on the shrinking Colorado River, for example, show no evidence that they see the bonds as any more risky than bonds in states with more secure water supplies. It’s a sign of the wider reckoning to come in the municipal bond market as one-off climate events give way to chronic droughts, floods, wildfires and other degradations. The $4 trillion muni market has long been complacent, assuming someone – like the federal government – will bail it out, according to Thomas Doe of Municipal Market Analytics. He says there may not be enough time “to avert the economic and social stresses that are a consequence of the evolving climate.”
- Stranded communities. Americans have migrated in recent decades from high-tax states to low-tax ones. Yet many of the states that have attracted the biggest population shifts are at greatest risk from a changing climate, facing drought, extreme heat or sea level rise that could make parts uninhabitable. The resulting out-migration could leave once-flush communities with stranded assets and withering tax revenues, Evan Kodra of ICE Data Services warned at a recent climate risk event hosted by MMA. Up to 63 million people might be at risk, along with as much as $626 billion of municipal debt, according to ICE Data’s modeling.
- Financial risk. State and municipal budgets face increasing strains from climate change-driven weather extremes, as revenues decrease and costs balloon for public insurance plans and to rebuild damaged infrastructure. “In areas with local declines in tax revenue and rising climate change costs, municipal bankruptcies may be increasingly likely,” the White House’s Council of Economic Advisors warned recently. Credit rating agencies have a critical role to play. “I really would consider it a huge red flag and a statement on the quality of governance if issuers weren’t able to communicate the risks they’re facing on climate change and what they’re doing to mitigate it,” says MMA’s Lisa Washburn.
- Keep reading, “Mass migration, stranded communities and ‘chronic’ climate disruptions challenge the muni market” by Andrea Riquier on ImpactAlpha. Follow all of our Muni Impact coverage, made possible with support from the Robert Wood Johnson Foundation.
Dealflow: Catalytic Grants
ReFED’s catalytic grant fund backs seven consumer food-waste solutions. Berkeley, Calif.-based ReFED launched its catalytic grant fund last year to provide organizations with $20 million in recoverable and non-recoverable grants to de-risk new food waste solutions. Among the cohort of new grantees is Seattle-based Transparent Path, which is developing a mobile app that provides real-time information to consumers on food freshness to avoid spoilage. Wisely is building a smart food storage container that uses sensors to track the duration and conditions in which perishable foods are stored. Growing Places Garden Project, a Massachusetts-based nonprofit, is working to increase produce consumption and reduce waste in food-insecure communities.
- Catalytic capital. “Grant funding can be particularly catalytic, in that this type of capital can support high-potential solutions that are not traditionally appropriate for market-investments,” ReFED’s Caroline Vance said. ReFED hopes that the fund will have a similar impact to the Bill and Melinda Gates Foundation’s $100,000 research grant that launched Apeel, which makes a food preservation coating, in 2012. Vance said Apeel “has grown to be a widely-recognized leader in shelf-life extension, saving 33 million pieces of fruit from going to waste at grocery stores in 2021.” ReFED’s aims to divert close to 236,000 metric tons of food waste through its portfolio of grantees.
- Check it out.
Native Women Lead secures backing from Comcast to finance Indigenous women-owned businesses. Indigenous women-owned businesses employed more than 61,000 people and generated $11 billion in revenues last year. Women are the primary breadwinners in two-thirds of American Indian and Alaskan Native households. Albuquerque-based nonprofit Native Women Lead’s Matriarch Revolutionary Fund aims to help 200 Native women-led businesses overcome a persistent funding gap. “Access to capital remains a significant barrier for women entrepreneurs but is particularly challenging for Indigenous communities,” said Dalila Wilson-Scott of Comcast, which is supporting the fund’s launch with a $650,000 grant. Native Women Lead is looking to raise $10 million to cut checks of $50,000 to $250,000.
- Experimental finance. The new fund will continue Native Women Lead’s experimentation with funding models for female entrepreneurs. Its Matriarch Restorative Fund provides 3% loans of $10,000 to $50,000 for small businesses, and its Matriarch Creative Fund offers loans of up to $10,000 to female artists, makers and other creatives (see, “The Indigenous wisdom of lending based on character, not collateral”). “It’s important for us to design capital, tools, and products that meet the needs of Native communities,” said Native Women Lead’s Jaime Gloshay. “Being able to see someone succeed closes that belief gap in oneself and empowers one another to continue to push and take this journey of entrepreneurship.”
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Climate-focused funds in Africa reach fundraising milestones. Nairobi-based Equator raised $40 million to back early-stage startups that are enabling Africa’s climate-resilient economic growth. Birda Innovation Ventures, which invests in ventures addressing climate impacts in food and agriculture, raised an additional $200 million from Morocco’s Mohammed VI Polytechnic University and fertilizer company OCP Group, both existing investors.
- Financial inclusion. Last week, impact investor Goodwell and Oxfam’s Netherlands-based operation launched Pepea, a fund for small and mid-sized businesses in East Africa.
Dealflow overflow. Other investment news crossing our desks:
- Bangalore-based Avanti Finance closed a $24 million Series B round backed by Rabo Partnerships, IDH Farmfit Fund, Oikocredit and others to ramp up credit and financial services for India’s smallholder farmers. (YourStory)
- Oil giant BP and Morgan Stanley’s India Infrastructure group invested $22 million in Magenta Mobility, a logistics company that uses an electric fleet of three and four-wheel vehicles to deliver goods in India’s major cities. (The Economic Times)
Signals: Faith in Investing
Church of England adds to the growing pool of faith-based assets invested for impact. This week’s convergence of Ramadan, Passover and Easter brings to mind another overlap among religions: a growing appetite for impact investing. A portion of the £100 million ($125 million) the Church of England set aside in January to address “past wrongs” for its involvement in the transatlantic slave trade will flow to impact funds targeting communities affected by slavery’s legacy. The Church Commissioners, the investment arm of the Church, manages a £10.1 billion investment fund and a £3 billion Church pension fund. “We increasingly believe, as a faith-based investor, that you should look at impact and look to effect change with any investments,” the Church Commissioners’ Tom Joy told the Financial Times. “What we’re really focusing on with that is how we can be catalytic, providing the sort of vital seed capital to impact-focused managers . . . and attract further investment.”
- Impact creation. The new commitment adds to a growing pool of Islamic, Dharmic, Christian, Jewish and other faith-based assets flowing into impact investing. Roughly 3%, or $150 billion, of about $5 trillion in faith-aligned assets are now committed to creating impact, socially responsible investing or ESG, according to the Oxford Faith-Aligned Impact Finance Project. More than 40 Catholic-based institutions have signed the Catholic Impact Investing Pledge to integrate impact investments into their portfolios, John O’Shaughnessy, founder of the Catholic Impact Investing Collaborative, tells ImpactAlpha.
- Growing pains. At least one challenge to the expansion of faith-based impact investing is the fragmentation of faith-based asset pools. Many organizations pursuing “faith-consistent” investing have less than $100 million in assets under management, according to U.K.-based FaithInvest. Networks like Catholic Impact Investing Collaborative and JLens Investors Network help smaller organizations coordinate activity and leverage resources. Pricier outsourced chief investment officer services, like those from Wespath Institutional Investments and eCIO, provide institutional-quality and tailored support for smaller religious organizations.
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Agents of Impact: Follow the Talent
Cindy McCain, former U.S. ambassador to the United Nations Agencies for Food and Agriculture, is named executive director of the U.N. World Food Programme… Former Georgia state representative Stacey Abrams is the inaugural Ronald W. Walters endowed chair for race and politics at Howard University… The DFC seeks a remote impact management and monitoring specialist for climate… As You Sow is hiring a remote private equity coordinator… Ford Foundation is looking for a mission investments technology fellow in New York.
Indigo is looking for a remote product marketing director for its carbon and sustainability programs… Morgan Stanley seeks a New York-based digital product manager for its sustainable investing and wealth management group… Shift Capital is hiring an operations assistant in Philadelphia… Gold Standard is recruiting a sustainable finance and innovation officer in Geneva… Health Forward Foundation is on the hunt for an impact strategist.
Prologis has an opening for a merger and acquisitions manager for global energy and mobility in San Francisco… David Erickson of the New York Federal Reserve Bank will discuss his new book, “The Fifth Freedom,” at a hybrid event, “Early investments: Improving opportunities for children at the neighborhood Level,” Monday, April 10… Tideline’s Ben Thornley and BlueMark’s Christina Leijonhufvud will co-host “Public equities: The case for impact at scale,” Thursday, April 20.
Thank you for your impact.
– April 6, 2023