The Brief | April 27, 2021

The Brief: Inclusive real estate in Philadelphia, community solar in NYC, scaling edtech in India, regulating greenwashing, insurgents at Exxon

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Greetings, Agents of Impact! 

Featured: ImpactAlpha Original

How a collective of Black developers is raising equity for inclusive real estate in Philadelphia. Decades of failed policies and extractive investments have left Black neighborhoods in Philadelphia with undervalued housing, underfunded services and a lack of access to financing. A group of seasoned Black developers, along with investment professionals and public policy experts, have teamed up around a more inclusive vision and a new investment vehicle. The thesis of The Collective: investment strategies that deliver real community benefit will also outperform financially. To demonstrate the proposition, The Collective and 17 Asset Management are aiming to raise a $100 million Philadelphia Real Estate Impact and Equity Fund and expect to reach a first close this summer. The fund’s target size is meant to be large enough to attract institutional capital that has too often overlooked individual Black developers.

The Collective is putting capital “in the hands of the people who know those neighborhoods and have a vested interest in recreating them and rebuilding them for the residents who are there,” said policy expert Sandra Dungee Glenn, a co-founder of The Collective with Beltraith Capital’s Steven Sanders and Little Giant Creative’s Tayyib Smith. The Collective’s seven developers have identified a pipeline of over $300 million in projects, covering 4.1 million square feet in 10 Philadelphia neighborhoods. They say progress on the projects has been stalled by a shortage of equity capital that allows developers to acquire properties and access construction financing. “There is a great need to develop the new starting rotation for impact-oriented developers,” said Paul Rabinovitch of New Island Capital. “This is a great conduit to do so.”

Keep reading, “How a collective of Black developers is raising equity for inclusive real estate in Philadelphia,” by Dennis Price on ImpactAlpha.

Dealflow: Follow the Money

Shared solar generates savings and jobs for New York City Housing Authority residents. Sunwealth Power, a Cambridge, Mass.-based impact investor that finances small-scale solar projects helped develop the 1.8-megawatt solar array at the authority’s Queensbridge Houses. The project will generate $1.3 million in lease revenue over two decades for the housing authority and discounted energy for nearly 500 low- and moderate-income units.

  • Just transition. Bright Power and Sol Purpose, along with Sunwealth, trained and hired 13 Queensbridge residents and other locals to complete the installation. The combination of renewable energy and job training “is showing how we deliver a just transition to a green economy,” said Ben Furnas of the NYC Mayor’s Office of Sustainability.
  • Community solar. Separately, New Jersey-based Nautilus Solar Energy secured $110 million in tax-equity financing from Credit Suisse to finance 22 community solar projects in Colorado, Maryland, Minnesota, New York and Rhode Island.
  • Plug in.

Bloomberg and Goldman Sachs to seed clean energy investments in emerging markets. The “innovation fund,” backed by both Bloomberg LP and Bloomberg Philanthropies, will help emerging-market project developers identify financing “from sovereign wealth funds to pension funds to private banks,” and work with the Asian Development Bank and other lenders to back projects for mass transit, green buildings and sustainable agriculture.

India’s LEAD School secures $30 million to scale its edtech platform. The Mumbai-based education venture launched in 2012 to provide management services to schools serving low-income students. Its mobile app, which offers live and recorded classes, chat with teachers, homework and quizzes, is used in more than 2,000 schools with 800,000 students. LEAD has raised a total of $69 million. It will use the Series D investment for acquisitions and aims to reach 25,000 schools in five years. The company in December acquired the AI-powered edtech startup QuizNext.

Dealflow overflow. Other investment news crossing our desks:

  • Geneva and Minneapolis-based Endeavour Vision closes $375 million for its second growth-stage medtech and digital health innovation fund.
  • Mighty Networks raises $50 million to help creatives build income-generating courses, networks, memberships and events.
  • Lagos and Washington, D.C.-based Atlantica Ventures is raising $50 million to invest in seed-stage companies in Africa.
  • Blue Haven Initiative and Kepple Africa Ventures back Nairobi-based TIBU to enable home-based primary care visits in Kenya.
  • PowerX secures $4 million for its home energy monitoring network to help households save on energy costs.

Signals: Ahead of the Curve

Regulators in the U.S. and Europe put ESG fund managers on notice for ‘greenwashing.’ A sure sign that environmental, social and governance performance has arrived: governments want to regulate it. The Sustainable Finance Disclosure Regulation in Europe and the recent ‘risk alert’ from the U.S. Securities and Exchange Commission are delivering the message: Investors claiming “impact” or “ESG” or “sustainability” must back up their labels with evidence (see, “Sustainability is at risk when asset managers are the judge, jury and executors of the ESG agenda”). “If you are saying you’re using ESG criteria, tell us what, when and how,” says US-SIF’s Lisa Woll. The generally positive reaction from impact investors contrasts with the response to the former U.S. Trump administration’s efforts to stymie ESG investing (see, “Trump administration seeks to turn back the ESG tide”). “These efforts aimed at clamping down on greenwashing and impact-washing in the investment management industry are welcome developments,” said Tideline’s Ben Thornley and BlueMark’s Christina Leijonhufvud.

  • Sustainable snapshot. “The Risk Alert represents a wake-up call for the investment industry to take up the challenge of developing widely-accepted standards and more precise sustainable investing definitions,” writes Henry Shilling of Sustainable Research and Analysis in his latest “Sustainable Snapshot” on ImpactAlpha. In a paper last year, Shilling and Michael Cosack said sustainable investment products that diverge from expectations run the risk of being tagged for greenwashing. Their solutions: standardized sustainable investing definitions, classification of investment products and strengthened disclosure practices. Sustainable snapshot.
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Pension funds press for overhaul of Exxon’s board. The California Public Employees Retirement System (CalPERS) threw its weight behind an insurgent board slate ahead of the oil major’s shareholder meeting next month. The activist hedge fund Engine No. 1 is pushing a slate of four nominees with energy-transition experience (see, “Stewardship challenge: How to press fundamental change at ExxonMobil?”). The $444 billion pension fund joins New York State Common Retirement Fund and the California State Teachers Retirement System, or CalSTRS, in supporting the nominees.

Agents of Impact: Follow the Talent

Zachary Carter, ex- of HuffPost, joins Omidyar Network as a writer-in-residence in its Reimagining Capitalism practice… London-based Snowball is recruiting a COO/CFO and a senior investment analystGAM Investments is looking for a senior ESG analyst in London… EVHybridNoire has openings for a national policy manager and a national communications managerYova Impact Investing is hiring a head of impact in Frankfurt, Berlin or Zurich… The University of Zurich’s Center for Sustainable Finance and Private Wealth is hiring a head of training in Zurich.

The Small and Growing Business Evidence Fund, an effort of the International Growth Centre and the Aspen Network of Development Entrepreneurs, is accepting research proposals… The Predistribution Initiative is hosting “ESG 2.0: Measuring & Managing Investor Risks Beyond the Enterprise-level” (see, “How capital structures in high-risk asset classes can undermine positive impact”).

Thank you for your impact.

– Apr. 27, 2021