Greetings, Agents of Impact!
Year-end bonus. In lieu of our usual Friday roundup, we bring you the fifth in this week’s series of thematic lookaheads. It was as much a fool’s errand to try to encapsulate the year now mercifully ending, as it was to dig through this year’s nearly 250 daily Briefs, 56 podcasts, 15 Agents of Impact Calls and hundreds of Deals, Signals, Features and guest posts. We’ve tried to look ahead to 2021 to scout efforts to help small businesses in emerging markets survive and thrive, new tools for catalytic investors, the dramatic step-up in climate finance (or else!) and proactive visions for racial justice and reconstruction, as well as today’s roundup of signals of the coming “institutional shift.”
- On today’s podcast, I chat with host Brian Walsh about the year’s themes and preview my conversation with Equilibrium Capital’s Dave Chen, who has been helping us chart that same institutional shift. Tune in, share, and follow us on Apple, Spotify or wherever you get your podcasts.
- Next week’s Agents of Impact Call is a chance to share your own predictions, plans or even an ask for 2021. Join us to toast the year ahead, Tuesday, Dec. 22, at 10am PT / 1pm ET / 6pm London / 9pm Nairobi. RSVP now.
- Our subscription campaign runs through the end of the year, so please do let your networks know about our special offer, and let us know if it’s time for you to upgrade to a cost-effective enterprise license for your whole team.
We’ll close out the year next week before our holiday break. We hope you’re headed towards a well-deserved rest as well.
– David Bank, editor and CEO
Featured: Looking Ahead
Investors, asset managers and, yes, corporations, set their sights on impact outcomes in 2021. The COVID-19 pandemic revealed that global financial systems are one disruption away from disaster. If the markets’ legacies of shareholder primacy and short-term thinking are drivers of environmental damage, erosion of workers’ livelihoods, and economic and racial injustice, the crisis also revealed the limitations of current strategies to mitigate such downsides. Factoring environmental, social and governance, or ESG, issues into business operations and investment decision-making turns out to be necessary, but not sufficient. Stakeholders, including shareholders, are pushing asset managers to push companies, large and small, to mitigate systemic risks by contributing to solutions to urgent challenges, aka actual impact and tangible outcomes.
What we’re watching for: Growth in the share of companies’ revenues generated by strategies for environmental regeneration and social inclusion and market signals that reward producers of such “positive externalities.”
- Systemic risks and systemic opportunities. Risky: Fossil fuel companies running out the clock on their current business models. Resilient: Agricultural suppliers helping farmers adapt to a changing climate. “Most investors think systemic risks are beyond their control,” The Investment Integration Project’s Bill Burckart and Steve Lydenberg wrote in ImpactAlpha. “We believe they’re wrong.” TIIP, along with Moving the Market, released “Addressing systemic social risk: A roadmap for financial system action,” which calls on investors and market shapers to embrace long-term horizons and begin to treat social risks as material. Share this post.
- What would Peter Drucker say about ESG investing? Perhaps, “A good start.” The legendary management expert, who died in 2005, considered social responsibility to be a key part of corporate effectiveness, which he defined as “doing the right things well.” ESG accounts for perhaps 20% of the scores in the Drucker Institute’s annual rankings, which also integrate customer satisfaction, employee engagement, innovation and financial strength. “If you just follow ESG, you’re going to miss something important,” the institute’s Zachary First told ImpactAlpha.
- Claims on corporate cash. Non-financial corporations are sitting on a record $2.1 trillion pile of cash. What they do with it is of growing interest in the era of stakeholder capitalism. Among the ideas: investment in employee health and safety, greener data centers and fleets, and affordable housing. This year, corporations from Google to Netflix started to trickle their treasuries into Black-owned banks and community lenders as they tried to make good on racial justice pledges.
- Pressure on asset managers. We’re all universal owners now. At least 75% – and possibly as much as 94% – of investment returns are a function of such systemic or systematic risks, Sinclair Capital’s Jon Lukomnic said on Agents of Impact Call No. 22. Asset owners are scrutinizing the stewardship strategies asset managers are using to mitigate such risks. Out: Quiet engagement with executives. In: Naming and shaming – and voting against directors, and ultimately divesting – recalcitrant corporations.
Keep reading, “Looking Ahead: Investors, asset managers and, yes, corporations, set their sights on impact outcomes in 2021,” by David Bank, Dennis Price and Amy Cortese on ImpactAlpha.
Dealflow: Follow the Money
Solar irrigation subsidies aim to boost livelihoods for Togo’s smallholder farmers. Energy infrastructure and technologies often require subsidies to gain traction. That’s true for solar-powered irrigation. Kenya-based SunCulture is teaming up with off-grid solar provider BBOXX and French energy company EDF to make SunCulture’s solar irrigation devices available to 5,000 farmers in Togo. The Togolese government will subsidize 50% of the cost to make solar irrigation technology more accessible.
- Livelihood security. SunCulture’s Samir Ibrahim called the partnership “catalytic in promoting off-season and higher-value agriculture across Togo” and could serve as a model for other African countries to “mobilize resources to address food crises, improve livelihoods, and spur economic development.”
- Check it out.
Grameen America raises $17.5 million for second microfinance fund. Grameen America, founded by Grameen Bank’s Muhammad Yunus, has disbursed $1.7 billion in micro-loans to more than 132,000 low-income women business owners since 2008. The nonprofit’s new $17.5 million impact fund will focus on supporting women business owners impacted by COVID. The five-year fund aims to provide up to $200 million in loans by recycling repaid loans into new loans.
- Revolving capital. Grameen America offers six-month term-loans with weekly repayment schedules. “We constantly repackage weekly repayments into new loans, which is how Grameen America achieves a tremendous velocity of loan capital to women,” a spokesperson told ImpactAlpha.
- Impact growth. Grameen America raised $11 million for its first impact fund in 2018 (see, “Grameen America closes first microfinance impact fund”). The organization received $25 million from philanthropist MacKenzie Scott’s $1.7 billion in giving in July (see, “MacKenzie Scott, author and philanthropist”).
- Read on.
Dealflow overflow. Short takes on a few of the deals crossing our screens.
- Recycleye secures $1.5 million for AI-powered waste management. The London-based startup is developing a computer vision and robotics-based system to automate waste sorting and improve recycling. MMC Ventures led the round alongside Playfair Capital and the London Waste and Recycling Board.
- Turtle Tree Labs raises $6.2 million for lab-made milk. The Singapore-based company is developing cell-based dairy products to be used for infant formula. Its pre-Series A round, backed by Green Monday Ventures, Eat Beyond Global, KBW Ventures and Verso Capital, follows a $3.2 million seed round in June.
- The Novo Nordisk Foundation re-ups investment in Mirnervax to prevent newborn infections. Danish biotech company Minervax is developing a vaccine for Group B Streptococcus, a life-threatening bacteria for newborns that is increasingly resistant to antibiotics. Novo Nordisk Foundation invested in the company’s $57 million Series B round via its REPAIR Impact fund, which committed $4.1 million last year.
- Neufund clinches $4 million for blockchain-based startup crowdfunding. The woman-led, Berlin-based platform wants to simplify and democratize startup financing by making it easier for entrepreneurs to raise capital from investors outside of their home markets (see, “Business founders embrace equity crowdfunding to raise capital during COVID“). The Series A funding from Atlantic Labs and Freigeist Capital will help Neufund secure a financial license.
Agents of Impact: Follow the Talent
Happy birthday to ImpactAlpha’s MVP, Dennis Price! Tune into this week’s podcast to hear our team’s (embarrassing) birthday wishes… Joe Biden’s climate-ready (and diverse) team takes further shape: Michael Regan, North Carolina’s top environmental regulator, will head the Environmental Protection Agency, while environmental law expert Brenda Mallory will lead the White House’s Council on Environmental Quality. Both are Black. New Mexico lawmaker Deb Haaland will become the first Native American to head the U.S. Department of the Interior…
Omer Imtiazuddin, ex- of USAID, becomes managing director of FINCA Ventures… Innovate UK launches the Energy Catalyst Community, an online community for energy entrepreneurs in Africa and Asia… Standard Chartered Bank seeks a director of global impact in London… The Doen Foundation is recruiting an impact investment analyst in Amsterdam… Sustainalytics seeks a senior associate, also in Amsterdam.
Triodos Investment Management is looking for an impact manager in Utrecht, Netherlands… The London Stock Exchange is hiring a head of sustainable investment, based in Sydney… PwC is recruiting a climate change manager, also in Sydney… Fannie Mae is looking for a senior associate for its climate impact team in Washington, D.C… Macquarie Investment Management has an opening for an impact and sustainability analyst in Philadelphia.
Thank you for reading.
– Dec. 18, 2020