Greetings, Agents of Impact!
Agents of Impact Call: Catalytic capital for climate adaptation and social equity. The new $100 million mandate from Nuveen to invest in climate-resilience companies in Africa and Asia (see Dealflow, below) highlights climate adaptation as an investment opportunity – and an imperative for the world’s most vulnerable communities. The Call will explore strategies for catalyzing capital for climate adaptation and financial models for a resilient and equitable future. Join Apollo Agriculture’s Benjamin Njenga, the Lightsmith Group’s Jay Koh and other Agents of Impact next Tuesday, Apr. 19 at 10am PT / 1pm ET / 6pm London. RSVP today.
- Adaptation finance. Lightsmith Group raised $186 million for one of the first private-equity climate resilience funds (see “Climate adaptation gets a fund of its own to invest in data, analytics and resilience”).
Featured: Impact Management
Benchmarks for impact performance promise to help investors drive ‘impact alpha.’ Financial benchmarks such as the S&P 500 give investors something to beat in their own portfolios. “We want investors around the world waking up every day to also think about how they can drive greater impact performance,” says Amit Bouri of the Global Impact Investing Network, which has released an impact performance benchmark for financial inclusion, the first in a series of sector-based benchmarks. Chief investment officers want a data-driven approach to gauge the impact of their impact investments, Bouri tells ImpactAlpha. “Impact measurement and management has moved up the org chart in significance.”
- Why it matters. Data on the impact of impact investments has proliferated, but “what do you do with it?” asks Bouri. “How do you focus your attention on how to drive greater performance?” The benchmark gives investors a tool to assess whether or not their investment strategies are moving the dial, relative to their peers, on expanding access to finance and whether it’s necessary to correct course.
- Informed investments. The pilot benchmark includes investment-level data from about a dozen impact investors including BlueOrchard Finance, Community Investment Management and LeapFrog Investments. Of interest: investments that aim to create high-quality jobs broadly through financial services delivered more benefits to women, on average, than investments with an explicit gender lens. Impact targets are important, say the GIIN researchers. Tracking both intended and unintended results, “drives more informed investment decisions.”
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If you like the alpha in ‘E,’ you’ll love the S-factor. ESG investors who pay more attention to the “E,” for environmental than the “S,” for social, may be missing important signals for financial performance, not to mention social equity and human rights. Real-time monitoring of safety violations, permit applications, lawsuits, news reports and other data points produce actionable signals months before the market reacts, says Toronto-based analytics firm The S Factor Co. “There’s no excuse for saying that social is soft and immaterial and unquantifiable,” S Factor’s Bonnie-Lyn de Bartok tells ImpactAlpha. “We’ve just proven that we can outperform the market with the most responsible companies on the planet.”
- Quantamental. S Factor enlisted Quant Pioneers’ Herbert Blank and the Toronto-based Boosted.AI to demonstrate the correlation between more than a thousand social indicators and market performance. The study found that S-Factor’s index of top-scoring companies outperformed MSCI’s ACWI global equity index by nearly 50% over the last seven years. “In terms of the alpha in the financial data, the bottom line is, it’s fantastic,” Blank says of the method’s ability to distinguish between future winners and losers.
- Social forecasting. Just as climate-risk firms overlay real estate maps with weather data to forecast floods, droughts and sea-level changes, social factors can predict risks that are just as significant, de Bartok says. “The social pattern – labor issues, community issues, geopolitical issues, new modern slavery acts, forced-labor practices – those things are as predictable for supply chains and business operations as weather patterns.”
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Dealflow: Adaptation Finance
Nuveen and Shell Foundation to deploy $100 million for climate resilience in emerging markets. The $1.3 trillion asset-management arm of TIAA enlisted Shell Foundation to allocate growth capital to companies helping vulnerable communities in Asia and Africa get clean energy and build resilience in the face of climate change. “To reach underserved consumers in a way that is affordable, commercially sustainable and scalable, game-changing social enterprises require an appropriate continuum of capital,” said Shell’s Ashish Kumar. He said the five-year partnership “will catalyze entire markets into addressing the Sustainable Development Goals.”
- Institutional impact. Nuveen made the commitment through Nuveen Global Impact, a dedicated private equity fund that raised $218 million in February. Nuveen’s Rekha Unnithan said the asset manager had vetted companies in Shell Foundation’s portfolio, many of which target the new fund’s strategies in agri-renewables, agri-finance, energy for business, mini-grid renewables, mobility and off-grid utilities.
- Answer The Call. Sign up for Agents of Impact Call No. 41 to explore strategies to catalyze capital for climate adaptation, next Tuesday, Apr. 19.
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Sigo Seguros scores $5.4 million to provide equitable auto insurance. Hispanic and Black drivers with clean driving records who live in majority-Hispanic and Black neighborhoods pay more for insurance than white drivers in majority-white neighborhoods with negative marks on their driving records. Insurance products from Austin-based Sigo Seguros remove unnecessary fees and biased rating factors. The company’s underwriting process doesn’t look at drivers’ immigration status, credit score, level of education or type of employment.
- Inclusive insurance. The seed financing round was backed by Revolution’s Rise of the Rest seed fund, Fiat Ventures, Chingona Ventures and others. The funding will help Sigo Seguros expand beyond Texas. The company raised $1.5 million in pre-seed funding last year.
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Waterplan snags $7 million to help companies manage water-related risk. Climate change is wreaking havoc on water supplies and quality. San Francisco-based Waterplan helps Coca-Cola, Colgate and other businesses in water-intensive industries track and manage their water usage with an AI-based data platform that identifies mitigation strategies and anticipates disruptions. Investors in the round include MCJ Collective, Giant Ventures, Leonardo DiCaprio and others. “Water-related disasters continue to be a major result of the ongoing climate crisis,” said DiCaprio, whose Regeneration VC fund raised $45 million last week.
- Clean water. Separately, Brooklyn-based Wisewell raised $2 million in pre-seed funding to develop a filtration system to remove chemicals, microplastics and other contaminants from tap water. WaterEquity secured $153 million last week to invest in water and sanitation in emerging markets.
- Dive in.
Dealflow overflow. Other investment news crossing our desks:
- Bangalore-based Menterra’s second social impact fund reaches a $30 million first close to invest in early-stage investments in healthcare, education and agriculture.
- Accenture acquires U.K.-based sustainability consultant firm Avieco to build out its ESG measurement and reporting capabilities.
- Vytalize Health raises $50 million in a Series B financing round to deliver personalized and value-based primary care to seniors.
- Melior Equity Partners secures €160 million ($174 million) to bridge the financing gap for 10 small and mid-sized businesses in Ireland.
Agents of Impact: Follow the Talent
Liesel Pritzker Simmons succeeds Charly Kleissner as board chair at ImpactAssets. The impact investing firm also added Radicle Impact’s Daniel Skaff to its board and Illumen Capital’s Daryn Dodson to its external investment committee… Tom Woelfel, ex- of Pacific Community Ventures, joins HCAP Partners as senior director of impact… Ben Beachy, ex- of the Sierra Club, moves to BlueGreen Alliance as vice president of industrial policy.
Climate investing hiring boom: Chris Sacca’s Lowercarbon Capital is looking for a chief of staff… Wellington Management is hiring a venture associate for climate innovation in Boston… Voyager Ventures seeks an associate in San Francisco, New York or Boston… Blue Bear Capital is hiring a venture capital associate in Los Angeles… Toyota Ventures seeks a remote portfolio engagement lead for its climate fund.
The Center for Economic Democracy is hiring a senior director of capital strategies in Boston… Morgan Stanley is recruiting a sustainability reporting director in New York… Economic Innovation Group is hosting a discussion on the new “Opportunity Zones Transparency, Extension, and Improvement Act,” today at 3pm ET.
Thank you for your impact.
– Apr. 12, 2022