Greetings, Agents of Impacts!
Featured: The Impact Alpha
Let’s make this s**tstorm matter. The world’s shift from extraction and inequality to regeneration and inclusion was always going to require some screeching of the brakes and quick three-point-turn in another direction. The brakes have screeched. Time to pivot. “We’re facing a complete economic reset opportunity,” says Cynthia Muller of the Kellogg Foundation, who joined a call of ImpactAlpha’s braintrust to chart that pivot. The consensus among the few dozen impact investing leaders last week: Seize the opportunity for system-change. “Unshackling GDP growth from the destruction of the planet is what this generation needs to figure out,” said Elizabeth Littlefield of Stonebridge Group. Muller sees an opportunity to “right-size” policies to fully include communities, especially communities of color, in the eventual upswing.
The pandemic disruption must become the sustainability disruption, ImpactAlpha’s David Bank argues in his occasional column, The Impact Alpha. Already, the skies are clear over Los Angeles, the water is clear in the Venice canals, and carbon emissions are set to fall faster this year than was ever thought possible. The social disruption may be even more urgent, with “all the issues of social inequality coming home to roost,” as Equilibrium Capital’s Dave Chen put it on the call. The G in ESG, for governance, sometimes called leadership, remains a wildcard. The immediate frontline of system change is the massive package of spending and loans being hashed out in the U.S. House and Senate (see Signals, below). From universal basic income to banning corporate stock buybacks to flexible financing for small and growing businesses – even nationalization of oil companies – once-niche ideas have moved from the sidelines to the center ring of debate about “the new capitalism.” The opportunity, says Brian Trelstad of Bridges Fund Management, is “to reframe impact investing as private investment in public goods, whether they are for public health or climate sustainability resilience.”
Keep reading, “Let’s make this s**tstorm matter,” by David Bank on ImpactAlpha.
Signals: Disruption Watch
Creative destruction. “Economic data in the near future will be not just bad, but unrecognizable.” Credit Suisse titled its U.S. economy briefing GDP Shuts Down. By April, Credit Suisse expects air travel to have fallen 60%; hotel spending 50%; in-person recreation services 70%; and restaurants 25%. “This would be many multiples of the largest historical moves in these categories,” the bank notes.
- Green stimulus. Dozens of local and environmental leaders and academic experts signed an open letter to Congress calling for a package of at least $2 trillion “that creates millions of family-sustaining green jobs, lifts standards of living, accelerates a just transition off [of] fossil fuels, ensures a controlling stake for the public in all private sector bailout plans, and helps make our society and economy stronger and more resilient in the face of pandemic, recession, and climate emergency in the years ahead.” The plan calls for an allocation of 4% of GDP (roughly $850 billion) until the economy is decarbonized and unemployment is below 3.5%. “A Green Stimulus would make short-term interventions, restructure political and economic power towards workers and communities, and build toward deep long-term change,” the authors write.
- Growth sectors. As sources of green growth, Greenbiz’s Joel Makower points to the circular economy (a $2 trillion opportunity), carbon tech (a trillion-dollar opportunity), sustainable food and land systems ($4.5 trillion), low-carbon cities ($24 trillion), climate action ($26 trillion) and more.
- Investors ready. Boston-based Clean Energy Ventures and more than a dozen other early-stage climate fund managers jointly pledged to move “in full force to seek out and invest in promising organizations that can make a meaningful difference in creating a more sustainable planet and way of life.”
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Fossil fuel wind-down. You know the ground has shifted when nationalization of the oil industry is considered “a moderate proposal” as The New Republic put it. The market has already written down the oil majors as growth stocks and values them mostly as cash cows. The government could snap up the four biggest U.S. oil producers for just over $300 billion, as The Atlantic’s Annie Lowrey points out. The Democracy Collaborative’s Carla Skandier suggests a “51 Percent Solution for the Climate Crisis.” With a majority stake in privately-owned fossil fuel firms, the public could vote on boards that oversee the winding down of production while giving 1.6 million oil and gas workers a path to new opportunities, rather than mass unemployment in a crashed economy.
- Decarbonizing air travel. More than 100 entrepreneurs signed an open letter to Congress demanding that any bailout of the airline industry be contingent on strict sustainability accounting, including a 50% cut in greenhouse gas emissions from 2005 levels by 2030. The Climate Emergency Fund, organized by i(x) Investments’ Trevor Neilson, has hired a lobbyist to get the language included in the bailout bill.
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Dealflow: Follow the Money
Alt-protein company Nature’s Fynd clinches $80 million. The startup ferments microorganisms found in hot springs into proteins for consumer foods and beverages. Previously called Sustainable Bioproducts, the company says it can make protein using a fraction of the land and water resources required by traditional agriculture. Generation Investment Management backed the company, alongside Breakthrough Energy Ventures, for its “highly efficient solution to help address the climate crisis.”
Indonesia’s Chilibeli raises $10 million for farm-to-consumer marketplace. Chilibeli’s online shopping platform sources from Indonesia’s farmers and aims to provide additional income for women by recruiting them to be selling agents in their communities. Lightspeed Ventures led the company’s funding round.
Ireland’s My Money Jar secures early funding for savings app. The fintech startup is the latest to raise capital to help consumers develop savings habits using behavioral psychology and goal setting. Ireland’s business and economic development agency, Enterprise Ireland, backed the €700,000 ($750,000) round.
Agents of Impact: Follow the Talent
Climate scientist Ken Caldeira joins Gates Ventures “to develop the knowledge and human capacity needed to address the global climate/energy problem”… Kinvolved is hiring a vice president of sales in New York… Prudential’s Tony Berkley is hosting “Impact Investing in the Time of Coronavirus” on Wednesday, March 24… The Mass Poor People’s Assembly & Moral March, originally set for June 20 in Washington, D.C., is going virtual.
Thank you for reading.
— Mar. 24, 2020