Greetings, Agents of Impact!
Featured: ImpactAlpha Original
Impact On: Impact investing’s confident and compelling new narrative. Every day, with their commitment and their capital, impact investors and other Agents of Impact are writing a new narrative for business and finance. And every week, ImpactAlpha tries to encapsulate that narrative, rounding up our Friday Brief under a single phrase or word: Urgency… Agency… Mobilization… Justice. In its virtual summit this week, the Global Steering Group for Impact Investing – the GSG for short – is gathering global practitioners to craft a compelling narrative for impact investing. From Central America, VIVA Idea’s Shannon Music calls for an inclusive and flexible impact investing community. In Paris, ChangeNOW’s Rose-May Lucotte suggests how impact investing can cross the chasm from early adopters to the early majority. Amrit Ahuja, based in New Delhi, is using visual storytelling to cut through impact investing jargon. Fumi Sugeno of the Japan Social Innovation and Investment Foundation has been mapping the diversity of Japan’s impact investing ecosystem.
Impact Investing Australia’s Kadi Morrison has a simple elevator pitch: “Every dollar invested builds a better world.” The Skoll Foundation’s Shivani Garg Patel is repositioning impact from “nice to have” to imperative for long-term success. And Omidyar Network’s Chris Jurgens is linking impact investing to a broader narrative of reimagining capitalism. ImpactAlpha’s weekly words likewise trace the growth of an increasingly confident and mature financial marketplace and business ethos that is ready to supplant an increasingly archaic economic system. There’s no need to ask anybody’s permission. No invitation is needed. The old order will have a long tail, to be sure. But the COVID crisis has confirmed there is no business as usual; capitalism itself needs the reset, the refresh, the reimagining that impact investing represents. As many legacy investors go “risk off,” a new generation of forward-thinking investors is going “impact on.”
Read all the guest contributions in “Impact On: Impact investing’s confident and compelling new narrative,” by David Bank on ImpactAlpha.
- GSG TV. Watch Ford Foundation’s Darren Walker and the GSG’s Cliff Prior on the first day of the GSG 2020 Impact Summit. Other highlights.
Dealflow: Follow the Money
TPG’s ‘special purpose acquisition company’ takes aim at sustainable business. SPACs are becoming increasingly common as a way to raise capital through initial public offerings in order to acquire another company. TPG Pace Group, a holding company of TPG, launched TPG Pace Beneficial Finance to acquire an unnamed business on the grounds of its environmental, social and governance, or ESG, profile. The SPAC is looking to raise $350 million, though TPG has not indicated the type of business it plans to purchase.
- Blank check. Sponsors forming SPACs, like TPG, don’t need to specify their investment plans. In an SEC filing, TPG Pace said it is looking for businesses already creating a positive impact, using ESG to outperform their peers, or where TPG can help accelerate ESG initiatives to improve outcomes. TPG’s impact measurement arm, Y Analytics, will set impact goals (see, “Rise Fund’s new impact measurement business”).
- Sustainable SPACs. ‘Green’ companies that have announced plans to IPO through SPACs include QuantumScape, which makes batteries for electric vehicles. It is merging with SPAC Kensington Capital Acquisition and will trade on the New York Stock Exchange. Electric vehicle tech company Hyliion is merging and going public with SPAC Tortoise Acquisition. Also jumping on the SPAC bandwagon: EV makers Canoo, Lordstown Motors, Fisker and Nikola.
- Check it out.
SJF Ventures backs Terabase Energy’s $6 million raise. Software designed by Berkeley, Calif.-based Terabase helps monitor and automate utility-scale solar projects. The company is pushing to lower the cost of solar power below $0.01 per kilowatt-hour in the next five years. (A recent Terabase project in Qatar will sell power for $0.01449/kWh). Durham, N.C.-based SJF led the round. Powerhouse Ventures, City Light Capital and Trancoso Partners participated.
- Pandemic portfolio. The deal is SJF’s fourth since the pandemic shutdown. Investments from SJF’s fourth fund include food logistics company Perishable Shipping Solutions; poultry farming company Cooks Ventures; and online learning platform Springboard. In July, SJF portfolio company and B Corp Vital Farms completed an initial public offering on the Nasdaq stock exchange.
- Read on.
Signals: Ahead of the Curve
U.S. regulator urges a price on carbon to stem climate risks. As wildfires turned California skies in the western U.S. an eerie orange, the Commodities Futures Trade Commission warned that climate change poses serious risks to the U.S. financial system. Managing Climate Risk in the U.S. Financial System is a “first of its kind” report from a U.S. government agency – and is especially striking coming from the Trump administration, which has been hostile to climate action. The report’s top priority: establishing a price on carbon. “Financial markets will only be able to channel resources efficiently to activities that reduce greenhouse gas emissions if an economy-wide price on carbon is in place at a level that reflects the true social cost of those emissions,” the report suggests.
- Dueling agencies. The CFTC urged regulators to “confirm the appropriateness of making investment decisions using climate-related factors” in retirement funds and other fiduciary situations. That’s in contrast to moves by the U.S. Department of Labor to chill environmental, social and governance, or ESG, investing. The DOL has proposed rules that would stymie ESG investing and proxy voting in pension and retirement funds (see, “Another rule from the Department of Labor, another attack on ESG investing”).
- New models. The 163-page report includes recommendations for expanded loan authorities, co-investment programs and other government efforts to catalyze private sector clean energy and climate-related investment. It also suggests “climate finance labs” or regulatory sandboxes to speed innovation in climate finance (see, “Sandboxes for nature could speed up environmental innovation”).
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UBS recommends sustainable investments across its client base. The Swiss bank will make sustainable investments ‘the preferred solution’ for clients of its $2.6 trillion global wealth management business. “We believe sustainable investments will prove to be one of the most exciting and durable opportunities for private clients in the years and decades ahead, says UBS’ Iqbal Khan. UBS, which manages $488 billion in core sustainable assets, believes a 100% sustainable portfolio “can deliver similar or potentially higher returns” compared to traditional investment portfolios. Major sustainable indices have performed better than traditional equivalents. Share this post.
Voices: Pass the Mic
Trade finance provides ‘systemic liquidity’ to emerging-market businesses in the COVID crisis. The U.K.’s CDC Group is using one of the oldest forms of international finance to provide systemic liquidity in the COVID crisis. Trade finance avoids the traps of some other financing instruments in a crisis. Rapid-response equity investments are likely to assign a distressed valuation. Term debt could lead to excessive leverage. Tried and tested trade finance – along with other forms of invoice or inventory-backed working capital financing – can provide vital working capital without impacting a company’s capital structure. “We have yet to see impact investors active in this market,” lament CDC Group’s Yasemin Saltuk Lamy and Diana Kolar. For impact investors in need of lower risk opportunities that can absorb larger capital allocations, “this is just the ticket,” they say. As of July, CDC and other development finance institutions had announced more than $12 billion in trade-related COVID-response initiatives in emerging markets. “Impact investors can capitalize on this tried and tested toolkit,” the authors say, “and take comfort that their arrival will be innovative in itself.”
Keep reading, “Trade finance provides ‘systemic liquidity’ to emerging-market businesses in COVID crisis,” by Yasemin Saltuk Lamy and Diana Kolar on ImpactAlpha.
Agents of Impact: Follow the Talent
ImpactAlpha is recruiting reporters/producers. We’re looking for smart thinkers and quick writers eager to jump on the biggest story in business and finance. Drop a note to [email protected] about why you’re a fit, along with a resume and links to clips or other media.
Climate Leadership Council’s Ted Halstead, a long-time carbon tax advocate, died in a hiking accident last week. Greg Bertelsen is acting CEO… Echoing Green’s Cheryl Dorsey joins the board of directors at Skoll Foundation… The Academy of Motion Picture Arts and Sciences announce diversity and inclusion standards for Oscars eligibility in the Best Picture category… The Long-Term Stock Exchange opens for business… Southern Black Girls and Women’s Consortium kicked off a 10-year initiative to raise $100 million to support Black girls and women in the southeast U.S.
Harlem Capital launches More Equity, a virtual pitch competition for U.S.-based women and minority founders… SeedInvest and former Sacramento mayor Kevin Johnson launch Black Capital to boost access to startup capital for Black entrepreneurs and wealth in the Black community… Kesha Cash, Cheryl Dorsey, Arlan Hamilton, Mitch and Freada Kapor, Jacqueline Novogratz, Nancy Pfund, Liesel Pritzker Simmons and Jim Sorenson are among Forbes’ Impact 50… ImpactAssets releases 2020 impact report… Phenix Capital is hosting its Virtual Impact Summit from Sept. 15-17. Use code ImpactAlpha2020 at registration.
Thank you for reading.
–Sept. 10, 2020