Greetings, Agents of Impact!
Featured: ImpactAlpha Original
Climate makes a comeback in coronavirus recovery plans (just don’t call it climate action). If the logic of a sustainable recovery is inescapable, so are the politics. Even in the first few months of the Great Pandemic, climate politics have gone through several spin cycles. Amid the initial shocks of hot zones and shutdowns, many sought solace in cleaner air and a dramatic reduction in global carbon emissions – not to mention the crash of the global oil market. In the U.S., however, early efforts to tie COVID relief to the climate action agenda ran aground in the Republican-controlled Senate. Then the spectacle of fossil fuel companies receiving coronavirus aid fueled an effort to prevent government policy from bailing out an industry in decline (see, “The carbon bubble has burst. Let’s not re-inflate it”). To drive proactive investment in the low-carbon transition, advocates on the left, and at least some parts of the right, are coming together to again push for support and incentives for renewable energy, as well as agriculture, forestry and water solutions that create climate resiliency. The key: call it jobs, call it infrastructure, call it good economics – call it anything but climate action.
“In the era of COVID-19, the only way to talk about addressing the climate emergency is through the creation of sustainable jobs,” said i(x) investment’s Trevor Neilson, who today is launching the Coalition for Sustainable Jobs with right-of-center evangelicals, hunters, farmers and entrepreneurs, as well as environmentalists. A policy plan floated by think tank Third Way emphasizes clean infrastructure projects, such as modernizing rail networks and electrical grids, accelerating electric vehicle charging infrastructure, and building storage and transport infrastructure for captured carbon. Even small policy changes could unleash a wave of private investment. More ambitious green deals are moving forward in Europe and South Korea. After analyzing hundreds of past stimulus policies to assess the potential of various approaches, economist Joseph Stiglitz declared a green recovery “is precisely the kind of thing that can grow the economy and transform the economy into the 21st century modern economy that we need.”
Keep reading, “Climate makes a comeback in coronavirus recovery plans (just don’t call it climate action)” by David Bank and Amy Cortese on ImpactAlpha.
Dealflow: Follow the Money
Novastar Ventures’ second fund to invest in basic goods and services in Africa. The Nairobi- and Lagos-based investment firm invests in startups delivering basic goods and services to Africa’s low-income households. It raised $108 million for its second fund and has already invested in three companies: pharmacy supply-chain tech venture mPharma; off-grid refrigerator manufacturer Sure Chill; and motorcycle ride hailing company MAX.ng.
- Impact capital. Novastar’s investors include AXA Impact Fund, along with a roster of development finance institutions, which represent a growing share of Africa’s impact capital in the COVID crisis. They include: CDC Group, European Investment Bank, Dutch Good Growth Fund, FMO, Proparco, Norfund and the Swiss Investment Fund for Emerging Markets, or SIFEM.
Acumen fund re-ups in Peruvian edtech venture Crehana. Crehana offers low-cost online graphic design, photography, video production and other digital skills courses in Spanish in an effort to improve youth employment prospects in Latin America. Acumen Latam Capital Partners, a fund launched by impact investor Acumen in 2016, invested an undisclosed amount in Crehana as a follow-on investment from the company’s $4.5 million Series A round last February.
Nasdaq launches sustainable investment impact tracking service for investors and advisors. Nasdaq ESG Footprint analyzes stock and bond portfolios’ environmental, social and governance (ESG) performance, tracking metrics like carbon footprint, board diversity and human rights issues. Nasdaq’s offering is the latest in a sustainable investing data services race. Last month, Morningstar acquired ESG research firm Sustainalytics. Moody’s and MSCI also made recent acquisitions to boost their sustainable and climate data capabilities.
Signals: Ahead of the Curve
A post-pandemic plan for the creative economy in Kenya. Kenya’s musicians, DJs, fashion designers, visual artists, event planners, chefs and other creatives are on the frontlines of COVID’s economic shocks. Half of Kenya’s creative professionals have seen 80% or more of their normal income disappear, as events were cancelled, creative spaces closed and tourism stopped, according to Nairobi-based HEVA Fund, which has supported 40 creative businesses and 8,000 practitioners across East Africa with grants, investments and technical assistance since 2013. “There’s a worry that some will completely leave the sector—that we will see limited cultural output and loss of specialized labor in this space,” HEVA’s George Gachara and Wakiuru Njuguna told ImpactAlpha. HEVA has suspended interest accrual indefinitely and restructured terms for its investees. But, says Gachara, “we need to see more shared spaces and infrastructure to create a more resilient ecosystem.” The firm’s five-part plan:
- Rescue finance. HEVA is planning a $1 million short-term relief facility to ensure that creatives, the majority of whom are freelancers, have financial resources to continue to produce. It’s also eyeing $20 million for a long-term fund. A “creative industry guarantee facility” is also needed to unlock additional commercial capital, the firm says.
- Hire local. Creative talent can help advance the government’s COVID health campaigns and preparedness, like producing local media broadcasts and manufacturing protective equipment.
- Tax incentives. Effective public policy can unlock and stimulate creative productivity.
- Savings groups. Artists need stronger representative bodies, dedicated artist savings groups and credit unions, and an arts council.
- Reliable royalties. Administrative action can help creatives secure digital sales, royalties and licenses from online and streaming platforms.
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Overheard at Mission Investors Exchange: Systemic change. Today’s impact investors have it easy: they have capital to invest for change. “I’m an impact investor from the civil rights movement,” said 88-year-old Andrew Young, “where we had only our lives.” The former mayor and confidant to Martin Luther King Jr. rallied attendees at the closing plenary of the Mission Investors Exchange virtual conference. “This is a time of massive social change,” he said. Impact investors are attempting to use the tools of the capital system to solve problems of the capital system. But “is impact investing a systemic-change tool?” asked Beeck Center’s Lisa Hall.
- Heal thyself. Calls for “systems change” permeated the three-day conference. Heron Foundation’s Dana Bezerra agreed the time is ripe but challenged her audience to look at themselves as well. “I have a growing sense of frustration that as philanthropy, as institutional investors and private foundations, when do we turn that finger back around and ask when are we willing to take on systemic change inside our own shops?” Bezerra shared Heron’s plans to turn over foundation assets to local communities (see, “Stretch goal for foundations: Shift power, as well as assets, for the post-COVID economy”). “We are intending to convey power and control to locals,” she said.
- Flexibility and scale. Impact investing has advantages of flexibility and scale, said Gates Foundation’s David Rossow. The foundation is investing to develop, manufacture and distribute COVID drugs at unprecedented scale and speed. Flexibility can be catalytic as well: The Gates Foundation broadened its guarantee to UNICEF to allow the agency to purchase COVID-related medical supplies like oxygen and PPE in advance of country demand (see, “Investors that demonstrate flexibility and patience prove catalytic in COVID crisis”).
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Agents of Impact: Follow the Talent
Prudential Financial seeks a vice president of impact investing in Newark, N.J… Open Road Alliance is recruiting a senior risk officer in Seattle, New York or Washington, D.C… Cornerstone Capital Group is hosting the third part of “COVID-19 and Impact Investing,” on May 28… SOCAP is seeking session ideas for its virtual Global Impact Summit in October. Pitch them!
Thank you for reading.
–May 14, 2020