The Brief | August 27, 2019

The Brief: Deadline for global goals, renewables in South Africa, Rise Fund’s revision, low-cost storage tech, farmer markets, B Corp challenge

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Greetings, Agents of Impact!

Featured: The Impact Alpha

Amid chaos, global leaders face deadlines for sustainable, inclusive prosperity. Ah, now it’s clear: corporate CEOs were issuing a coded cry for help. Many people wondered about the timing of last week’s statement from nearly 200 CEOs redefining “corporate purpose”. Then came the weekend whirlwind of Trump tweets and G7 gymnastics in Biarritz, France. “Like hostages that blink messages in Morse code, the business leaders were sending a signal via the G7 to the world,” editor David Bank writes in his latest column, “The Impact Alpha.” Just kidding, as the president himself might say. But it’s true that, limited in their ability to maneuver individually, CEOs mustered collective strength. Their lobbying group, the Business Roundtable, may have realized farsighted CEOs need to muster all the “stakeholder” support they can.

As a savior, the G7 is sagging. But the G6, at least, has been a strong advocate for the Paris climate accords and the UN’s 2030 Sustainable Development Goals, each signed by at least 193 countries back in 2015.  On the way to France, Trump advisor Larry Kudlow disparaged the G7s efforts on behalf of “a broader set of “stakeholders,” and a focus on “niche” issues like climate change. “The signal from corporate America may have been: Hold the fort!” Bank writes. Corporate leaders have a chance to demonstrate leadership at next month’s United Nations gathering in New York. Michael Bloomberg, CEO of Bloomberg LP, convened the Climate Finance Leadership Initiative with Axa’s Thomas Buberl, HSBC’s John Flint, Goldman Sachs’ David Solomon, Enel’s Francesco Starace, Allianz Global Investors’ Andreas Utermann and Macquarie’s Shemara Wikramanayake. Climate change represents “one of the biggest systemic risks for the capital markets,” says another founder, Hiro Mizuno, chief investment officer of the $1.7 trillion Government Pension Investment Fund of Japan. “It may no longer be possible to pretend that powerful headwinds have not seriously stalled progress toward the 2030 global goals for sustainable and inclusive development,” Bank writes. “Leaders who know better have a decade to deliver.”

Read on, “Amid chaos, global leaders face deadlines for sustainable, inclusive prosperity,” by David Bank on ImpactAlpha.

Dealflow: Follow the Money

UK Climate Investments backs three renewable energy projects in South Africa. South Africa is a bit of a laggard in renewable energy; the country is 90% coal-powered. By 2030, South Africa aims to halve coal’s role and boost clean and renewable generation to more than 30%. UK Climate Investments is stepping in with a 253 million rand ($16.6 million) commitment to renewables developer H1 Holdings. The investor, a joint venture between the U.K.’s department for Business, Energy and Industrial Strategy and the Green Investment Group, is backing a 4-megawatt hydro project and two wind developments totaling 250-megawatts. H1 Holdings’ three projects are set to come online in 2020 with clean power for 200,000 homes. The projects are being driven by a black-owned business, which are given preferred status for business contracts and partnerships under South Africa’s Black Economic Empowerment policy. Read more.

TPG Growth revises down fundraising target for Rise Fund II. TPG Growth is expecting to raise $2.5 billion for its second impact fund, Bloomberg reports. The downward revision from its previous target of $3 billion (itself a revision from $3.5 billion) follows founder Bill McGlashan’s ouster from the firm in March after his indictment in the college admissions scandal. TPG Growth says the revision is due to the acquisition of Abraaj’s $1 billion healthcare fund and the firm says it’s not having difficulty fundraising. But competition is heating up with other 10-figure private equity impact funds in the market vying for big-ticket institutional investors.

Form Energy closes $40 million for low-cost storage tech. The Somerville, Mass.-based company raised Series B funds from Capricorn Investment Group, Breakthrough Energy Ventures, Prelude Ventures, The Engine and Macquarie Capital. The capital will speed the timeline for its renewable energy-focused battery technology.

Kedai Sayur raises $4 million to connect Indonesia’s farmers and vegetable vendors. The company is a go-between for farmers and informal vegetable kiosks, allowing kiosk owners to place orders through its app and make collections at drop off points. East Ventures, SMDV, Triputra Group and Multi Persada invested in the round.

Signals: Ahead of the Curve

B Corps to CEOs: Get to work. CEOs of Ben & Jerry’sDanoneSundial Brands, and 30 other certified “B Corps” called in a full-page ad in The New York Times for Business Roundtable CEOS to “work together to make real change happen.” Last week, nearly 200 CEOs declared their support for a new ethos of “stakeholder” capitalism that includes customers, employees, communities and suppliers, as well as shareholders.

  • Resistant investors. B Corp CEOs also called out “continued resistance” from investors on the new definition of business. The Council of Institutional Investors, for example, came out in opposition to the Business Roundtable’s new statement of corporate purpose. To achieve long-term shareholder value, the Council said, “it is critical to respect stakeholders, but also to have clear accountability to company owners.”
  • Shareholder stakeholders. “No question that our best hope in the capital markets is aligned investors who can lead the (Council of Institutional Investors) to a better place,” tweeted B Lab’s Andrew Kassoy. “As long term universal asset owners who need the whole economy and society to function well in order to meet their beneficiaries’ needs, this is more in their interests than anyone’s!”
  • Accountability. The Council, which supports efforts at shareholder engagement, argued the new pledge diminishes shareholder rights, “while proposing no new mechanisms to create board and management accountability to any other stakeholder group” (see, “Corporate accountability is key to the success of ‘stakeholder capitalism’). B Corp certification, along with separate state-registered “benefit corporations,” provide mechanisms to make corporations more accountable to stakeholders, including shareholders.
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Agents of Impact: Follow the Talent

Allison Shapiro, ex- of JP Morgan Chase, joins Closed Loop Partners as executive director… Salesforce is hiring a senior manager/director of ethical and humane use in San Francisco… Frankfurt School Financial Servicesseeks a principal in Frankfurt for a new fund investing into waste and recycling companies in developing countries… Finance in Motion is recruiting a senior investment officer in Bogotá… UBS is looking for an analyst of sustainable investing in Hong Kong.

Thank you for reading. 

– Aug. 27, 2019