The Brief | November 25, 2019

The Brief: Japan’s GPIF shakes up asset management, Samasource’s score, diverse teams, Sankalp’s entrepreneurial solutions

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Japanese pension fund pushes asset managers to get tougher on sustainability. A shift of up to $50 billion by the world’s largest pension fund has sent a message to global asset managers: We’re serious. Japan’s Government Pension Investment Fund, the world’s largest “supertanker” of institutional capital at $1.6 trillion, is stewarding its assets for the long term. It wants its asset managers to do so as well. A mandate of 5,373 billion yen, or about $50 billion, to Legal & General reflects GPIF’s push for more active oversight of the “negative externalities” created by companies in its portfolio. L&G, one of the U.K.’s largest asset managers, attracted attention this summer when it divested some holdings in ExxonMobil because of the oil giant’s inadequate response to climate change. Asset-management giants like BlackRock, which manages the largest share of GPIF’s assets, took notice.

GPIF’s tougher stance reflects a critical shift among owners of some the world’s biggest pools of capital. “Universal owners” who know they can’t escape systemic risks of climate change and income inequality are selecting managers willing to drive companies toward long-term sustainability. Active “stewardship,” sometimes called shareholder engagement, is the new competitive differentiator for managers of so-called passive portfolios. Expect more pressure on corporate management for climate-risk disclosure and other environmental, social and governance, or ESG, issues. “Negative externalities created by the portfolio companies will affect our portfolios at the end of the day,” GPIF’s Hiro Mizuno said at the London Stock Exchange last month. “Even for our active managers, delivering alpha is no longer good enough. We evaluate how you control externalities caused by your portfolio companies’ business.” Mizuno is pushing index providers and credit-rating agencies, as well as asset managers, on climate and ESG. “I don’t know how many of them really understood how serious we are,” Mizuno said. “So if you have a chance to talk to asset managers, please tell them, ‘We are serious.’”

Keep reading, “Japanese pension fund pushes asset managers to get tougher on sustainability,” by David Bank on ImpactAlpha.

Dealflow: Follow the Money

Samasource raises $14.8 million to connect tech giants with Africa’s talent. Behind “machine learning” are human minds that design algorithms and sort data. Leila Janah founded Samasource as a nonprofit in 2008 to help workers in emerging markets tap into tech companies looking to outsource work. The San Francisco-based company has evolved with tech trends: nearly 3,000 workers tag data to train artificial intelligence software for clients like Google and Walmart. Amazon’s Mechanical Turk relies on a gig-based workforce to do similar tasks, sometimes for pennies an hour. Samasource’s employees get “dignified digital work” and living wages, the company says. Earlier this year, Samasource converted to a for-profit company (partially owned by its non-profit arm) to prove the investability of its impact model. Its Series A funding round was backed by Ridge Ventures, Social Impact Ventures, Bestseller Foundation and Bluecrest Limited Capital. Read on.

Triodos and AlphaMundi back Colombian credit startup Finaktiva. The European impact investors committed $9 million in Series A funding to Finaktiva to boost online credit access for early-stage entrepreneurs in Colombia.

Searchlight secures $2.5 million to help employers build more diverse teams. The company’s human-relations software keys in on candidates’ references to attract employers to underrepresented talent. Accel Partners, Founders Fund, Y Combinator and Soma Capital invested.

Group14 secures $14.4 million to improve electric vehicle batteries. The Seattle-based startup is developing materials that enable batteries to hold longer charges. It secured the funding from an undisclosed group of investors.

FMO invests $17.4 million in Aye Finance. The Dutch development bank is backing the Indian financial services firm to expand female business owners’ access to microcredit.

Signals: Ahead of the Curve

Sankalp Global Summit keys in on entrepreneurial solutions to the Global Goals. The global forum brings together entrepreneurs and investors targeting lower income segments and the emerging middle class across Asia and Africa. More than 1,100 participants from 20 countries will descend on Mumbai this week. Hosted by Aavishkaar-Intellecap Group, the Sankalp forum will take stock of new ideas, innovative business models and investable opportunities to drive progress on the U.N. Sustainable Development Goals. ImpactAlpha is partnering with India Development Review for on-the-ground coverage. “We aim to keep the social entrepreneur at the core of what we do, linking them to the knowledge, capital, and networks needed to make them successful,” Intellecap’s Urvashi Devidayal told Smarinita Shetty.

  • On the agenda. The forum will cover India’s Social Stock Exchange, impact tech, gender lens investing and innovative finance to fill persistent capital gaps. Geeta Goel of the Michael and Susan Dell Foundation, Jayesh Parekh of Jungle Ventures, Virginia Tan of Teja Ventures and Beau Seil of Patamar Capital will talk capital gaps and impact investing trends in Asia.
  • Impact marketplace. “Sankalp attracts not just social entrepreneurs looking for funding but also investors looking for partners,” says Devidayal. In September, Aavishkaar, with portfolio assets of more than $1 billion, raised $37 million from Dutch development bank FMO to expand in Asia and Africa. Last December, the India-based impact investor raised $32 million from Nuveen.
  • Read the full primer, “Sankalp Global Forum keys in on entrepreneurial solutions to the Global Goals,” by Smarinita Shetty on ImpactAlpha.

Agents of Impact: Follow the Talent

Rockefeller Foundation appoints Agnes Binagwaho (Global Health Equity) and Ndidi Okonkwo Nwuneli (Sahel Consulting) to its board of trustees… Frances Reid, previously with CDC Group, joins Root Capital as chief operating officer… Lauren Fulton, ex- of Corporation for Supportive Housing and Social Finance UK, joins Elevate Health as director of the OnePierce Community Resiliency Fund… The DC Green Bank seeks an executive director/chief executive officer… Align Impact is hiring investment analysts for private funds and data analyticsTideline is recruiting a coordinator of operations and business development in New York.

Thank you for reading. 

– Nov. 25, 2019