Greetings, Agents of Impact!
Featured: ImpactAlpha Original
Investors find common cause in pushing back against Trump’s anti-ESG rules. Investors may debate the merits of competing sustainability frameworks, or which environmental or social factors are truly material to corporate performance, or how fast they can align their assets with the 2-degree scenario called for in the Paris climate agreement. But a wide swath of investors appear united in pushing back against a proposal from the U.S. Department of Labor that would make it so onerous to deploy environmental, social and governance, or ESG, approaches in regulated retirement accounts as to effectively ban them. Contradictory. Contemptuous. Fatally flawed. These are just a few of the adjectives they have used to describe the proposed rule. “This is the classic common enemy,” says Sinclair Capital’s Jon Lukomnik, who has written a widely endorsed letter to the Department of Labor. “Everyone is united against this.”
With an unusually short comment period that ends next week, investors, asset managers and retirees have scrambled to register their opposition. In a departure from tradition, the Department of Labor has declined to make the comments public. To assist each other in responding, investors have shared their comments widely and organized Zoom calls (here’s a replay of last week’s call hosted by Predistribution Initiative and The Shareholder Commons). “This rule would put American pension beneficiaries at a significant disadvantage,” corporate governance pioneers Nell Minnow and Bob Monk wrote in their own letter to the Department of Labor. The administration’s efforts “have nothing to do with helping investors make better decisions or with helping working people achieve better returns for their retirements,” wrote Morningstar’s John Hale. “They have everything to do with the Administration’s desire to preserve an economic system that has promoted inequality, racism, and climate destruction.” He added, “This is why we have elections.”
Keep reading, “Investors find common cause in pushing back against Trump’s anti-ESG rules,” by Amy Cortese on ImpactAlpha.
- Weigh in. Comments (identified by RIN 1210-AB95) can be submitted to www.regulations.gov through July 30. The American Sustainable Business Council is hosting a discussion of the proposed rule, Monday, July 27.
Dealflow: Follow the Money
UWill raises $3.3 million to match college students with mental health services… The tele-therapy platform helps students connect to mental health professionals via video, text, phone, email and chat. The financing round was backed by childcare provider Bright Horizons’ Stephen Kramer, Princeton Review founder John Katzman, and musician Darryl McDaniels of Run-DMC. McDaniels noted his own mental health struggle and the strain on students from “the COVID-19 crisis and impacts of systemic racism.”
…While TeleTeachers clinches $2.8 million to boost distance learning for students with disabilities. The woman-led company aims to help schools address gaps in online learning options for special needs students, particularly amid pandemic-related school closures. Venture capital firm Seyen Capital led the round.
USAID taps Vital Capital for COVID relief funding for Kenyan businesses. Vital Capital set up a COVID relief fund for African businesses months before most countries on the continent were feeling the pandemic’s health and economic impacts (see, “The investment case for COVID relief for Africa’s essential businesses”). USAID’s Kenya Investment Mechanism has tasked Vital with identifying five transactions, totaling $5 million, to preserve 500 jobs. Agriculture will be a key focus.
Brazil’s residential solar finance startup Solfácil raises $4 million. The company offers consumer loans to help households unable to make a downpayment install solar panels. Valor Capital led the round.
Impact Voices: Pass the Mic
Maintaining momentum for the SDGs in the face of COVID. The estimated $2.5 trillion annual gap in financing to meet the U.N.’s Sustainable Development Goals is widening further with the economic fall-out of the coronavirus pandemic, particularly in emerging markets. It’s not just capital that is needed. “Deepening the impact investing market’s available products, tools and services should allow greater investor participation and higher capital volume flowing to impactful investments,” Tom Adlam and James Hills of the U.K. Department for International Development, or DFID, write in a guest post on ImpactAlpha. DFID is supporting market-building initiatives to increase the flow of impact capital in high-need regions like sub-Saharan Africa and South Asia:
- “Fit-for-purpose” investing. 17 Africa is developing a blueprint for an SDG-focused impact investment “merchant bank” in Africa. Cardano Development’s ILX Fund is being designed to coax more institutional investors into impact investing by emphasizing opportunities to mitigate risk and contribute to the SDGs. Athena Infonomics and Open Capital Advisors are developing a market-level financial, impact and risk analysis tool for sanitation in India and Kenya. Reall is exploring how to get lenders to extend mortgage financing to the base of the economic pyramid. Blue Finance Coenostrum is developing a project financing facility for marine protection in Cape Verde, Mozambique and the Seychelles.
- Keep reading, “Maintaining momentum for the SDGs in the face of COVID,” by DFID’s Tom Adlam and James Hills on ImpactAlpha.
Agents of Impact: Follow the Talent
Barbara Zvan, a former green finance advisor to the Canadian government, is named president and CEO of University Pension Plan Ontario… Big Issue Invest seeks a finance director in London… One Acre Fund is recruiting a global finance controller in Kigali… Spectrum Impact’s Rehana Nathoo is hosting “Impact Measurement and Management: A COVID19 Priority,” with Oxford University’s Karim Harji, Tideline’s Christina Leijonhufvud, and consultant Ellen Maginnis, July 30th.
Thank you for reading.
–July 23, 2020