Greetings, Agents of Impact!
Featured: Institutional Impact
The politics and power of asset management lead straight to the U.S. Supreme Court. ImpactAlpha contributing editor Imogen Rose-Smith is kicking ass and taking names. In the wake of the Supreme Court’s ruling overturning Roe v. Wade, her latest Institutional Impact column takes on those who are enabling “the extremist a**holes determined to impose their sexist, racist, reactionary Christian right agenda on the majority of the country.” In other words: the asset management industry.
Her targets are those powerful managers who have funded the GOP, Donald Trump and an extreme right-wing agenda, “all in the name of lower taxes and hands-off regulation (let’s not kid ourselves that this is fiscal conservatism).” The rogues’ gallery includes Blackstone’s Steve Schwarzman and certain other Miami-bound or nickel-trading hedge fund honchos who gave big to the GOP during the 2020 political cycle and are doing so again this year. The money those donors spent came from “fees paid by investors such as public pension plans, foundations, endowments, and individual citizens – many of whom probably quite like things like civil liberties, equality, and women’s right to make their own healthcare choices,” writes Rose-Smith. “We can no longer use the fig leaf of fiduciary duty to justify funneling money to people who then turn around and bankroll politicians and a party that is dismantling our civil rights – and will eventually take the economy down with them.”
- Keep reading, “The politics and power of asset management lead straight to the U.S. Supreme Court,” by Imogen Rose-Smith on ImpactAlpha. Catch up on all of Imogen’s Institutional Impact columns.
Dealflow: Impact Litigation
Aristata Capital raises £40 million for impact litigation fund to close the ‘justice gap.’ London-based Aristata launched a few years ago to carve out a slice of the booming litigation funding space for cases that deliver social or environmental impact (for background, see, “Aristata Capital looks for social benefits and lawsuit payouts with impact litigation fund”). The £40 million ($48 million) first close was anchored by Capricorn Investment Group’s Sustainable Investors Fund and the Soros Economic Development Fund. Capricorn’s early £10 million stake enabled Aristata to back two legal cases supporting underpaid workers in Australia looking to recover wages, and an indigenous community in the South Pacific harmed by a monopolistic service provider. “Being able to put the strategy to work has been a huge help…in demonstrating to the market and to other LPs that impactful commercial litigation is out there and is a winning strategy,” Aristata’s Rob Ryan tells ImpactAlpha. Private equity-like returns that are uncorrelated with the market don’t hurt either. Several foundations and family offices also backed the fund, which is targeting up to £100 million.
- Legal wave. Litigation is emerging as a disruptive force in impact and environmental, social and governance, or ESG, investing. Charges of greenwashing and new disclosure and fund labeling regulations may open the door to legal challenges on both sides of the issue (for context, see “‘Greenwashers’ on notice as global crackdown on ESG mislabeling continues”). Last year, an environmental nonprofit won a landmark decision against oil giant Shell, forcing it to accelerate its emissions reductions.
- Justice gap. Aristata sees an opportunity to address the systemic imbalances that pit small and historically marginalized litigants against deep-pocketed entities that have caused harm – what it calls “the justice gap” in commercial litigation. “We have a large and growing pipeline of opportunities that, without our investment and support, are very likely to go unfunded,” says Ryan. “So there’s a lot of work to do and we’re very, very excited.”
Goodr scores $8 million to combat hunger and reduce waste in underserved communities. Black and Brown communities are more likely to face food insecurity than white communities, says Feeding America. Jasmine Crowe launched Goodr out of Atlanta in 2017 to address hunger while reducing waste, after years of feeding people experiencing homelessness from her own kitchen. Goodr uses logistics technology to collect edible food waste from restaurants, event centers, airports, and businesses and donate it to local nonprofits to feed those in need. Goodr recycles inedible food for composting. Goodr has worked with partners including StateFarm, WeWork, Netflix, Wendy’s, Google and the National Basketball Association to serve 30 million meals and divert three million pounds of food from landfills to date. Partners receive a tax deduction for their donation.
- Impact tech. The Series A round was led by Precursor Ventures. Other investors include Collab Capital, Gratitude Railroad, Emerson Collective, Backstage Capital, Innovations For Impact, Christina andKimbal Musk, and TELUS’ Pollinator Fund for Good. “With this new infusion of capital, Goodr is poised to scale its mission,” said Collab Capital’s Jewel Burks Solomon, who will join Goodr’s board. Crowe says the company will expand into new markets and build new products to address hunger and help businesses reduce food waste.
Dealflow overflow. Other investment news crossing our desks:
- Proceeds from a $150 million bond issued by MNT-Halan, an Egyptian fintech for the un- and underbanked, will provide financing for the company’s growth across multiple lending business lines and expansion into new verticals.
- EVCS Charging Solutions, which manages a network of electric vehicle fast-charging stations on the West Coast, raised $50 million from Spring Lane Capital to expand into 35 new cities across California and Washington.
- Women-led Unconventional Ventures secured €30 million ($30.6 million) to invest in founders that identify as women, people of color, immigrants and/or members of the LGTBQ+ community.
- Kukua raised $6 million to create educational entertainment content for kids, mainly for those in Africa.
- Australia’s Okra Solar scored $3 million to scale up the distribution of solar hardware and software to off-grid households in Nigeria, Haiti, Cambodia and the Philippines.
Impact Voices: Policy Corner
The S.E.C.’s new rules (Part Two): Five features of the ESG proposal that warrant attention from investors. In Part One of a two-part article series, John Kostyack of Kostyack Strategies unpacked the S.E.C.’s transformational pair of proposed rules – the Fund Names Rule Amendment and ESG Disclosure Rule – that would lend clarity and comparability to the ESG investing market. In Part Two, Kostyack pulls out five features likely to be of importance to investors concerned about greenwashing and other ESG-related dupery by asset managers. “For the first time, a financial regulator is proposing a detailed set of rules to counter greenwashing and other deceptions regarding ESG funds by asset managers,” says Kostyack. Investors should offer technical comments, he says, “to help strengthen the rules and offer strong support of the S.E.C.’s actions in the public square.” Where to focus:
- Index tracking. Indexes are the invisible algorithms steering much of ESG investment (for background, see “Index Impact: Passive investors are actively tilting stock indexes toward sustainability”). The S.E.C.’s disclosure rule would require ESG funds to divulge the methodology for any index the fund tracks, including criteria for selecting or excluding components of the index that are based on ESG factors. “Investors should comment on whether additional disclosure may be needed to increase investors’ ability to evaluate and compare ESG indexes,” says Kostyack.
- Investing for impact. ESG Impact funds would be required to disclose in annual reports their progress in achieving their stated impact objectives in quantitative and qualitative terms. Kostyack urges investors to “closely review these requirements and identify any opportunities for strengthening the reliability and comparability of disclosures.”
- GHG emissions disclosure. Under the proposed rule, asset managers would not be required to disclose the Scope 3 emissions of portfolio companies if those data are not publicly available. Kostyack says the S.E.C. “should be encouraged to require Scope 3 emissions of portfolio companies to be disclosed and authorize reasonable estimates if the data are not publicly available.”
- Keep reading, “The S.E.C.’s new rules (Part Two): Five features of the ESG proposal that warrant attention from investors,” by John Kostyack on ImpactAlpha. Miss Part One? Read it here.
Agents of Impact: Follow the Talent
Erika Gucfa, ex- of abrdn, will lead business development for North Sky Capital’s impact private equity and sustainable infrastructure strategies as managing director… Jérome Joaug, a venture partner with Aster Capital, joinsCarbon13 as a part-time entrepreneur-in-residence… Invest.green is looking for a remote chief fundraising officer/director of investor relations.
The National Basketball Association seeks a social responsibility program director in New York… Also in New York, Capital Impact Partners is hiring an impact investments director and Neuberger Berman seeks an ESG investing associate for its fixed income platform… Upaya Social Ventures is looking for a remote director of institutional partnerships.
AllianceBernstein partners with Impact Engine to enhance purpose-driven investment offerings for Bernstein Private Wealth Management, AB’s private wealth business… Render Capital launched its second First Dollar program to support Black and Brown entrepreneurs in Louisville and Southern Indiana with “first dollar” grants… SOCAP extended the deadline to submit session ideas for SOCAP Open to July 13.
Thank you for your impact!
– July 7, 2022