Greetings, Agents of Impact!
Featured: Proxy Preview
Emboldened shareholders ready fights with management on human rights, climate and political spending. Grab the popcorn. This year’s annual general meetings season, when corporations face off with their shareholders, is shaping up to be a blockbuster. Emboldened by a series of big wins last year, capped by Engine No. 1’s takedown of ExxonMobil, investors are readying a bumper crop of proposals for votes at this year’s shareholder meeting. Proponents are being helped by the U.S. Securities and Exchange Commission’s rollback of Trump-era rules aimed at squelching shareholders’ voices. Eli Kasargod-Staub of Majority Action expects last year’s record number of shareholder wins to be exceeded this year. “How should shareholders respond when boards fail to heed these majority votes and actually address significant environmental, social and governance risks?” he tells ImpactAlpha. “The time has come for shareholders to hold these boards accountable.” Trends and issues we’re watching:
- Beyond disclosure on climate. ClimateAction 100+ has flagged for special attention a request that Berkshire Hathaway report on climate-related risks and opportunities (last year’s proposal won a significant majority of non-insider votes); that Valero Energy adopt greenhouse gas reduction targets; and that Imperial Oil halt oil and gas exploration. The proposals “carry a clear message from investors,” says Ceres’ Mindy Lubber. “Companies must act immediately and take ambitious, necessary climate action.”
- Holding directors accountable. Investors are increasingly willing to vote against board directors that do not heed their calls for better environmental, social and governance performance. Chevron is one of 27 companies at which Majority Action is urging shareholders to vote against the board chair and/or lead independent director. Investors including CalPERS, New York State Common Retirement Fund and the Illinois and Vermont state treasurers are using director votes to hold companies accountable.
- Human capital management. This month’s vote at Apple demanding a third-party civil rights audit was “a huge message from investors saying that they really care about human capital management,” says Nia Impact Capital’s Kristin Hull. Pfizer, Walmart and Amazon are facing similar resolutions.
- Multi-movement engine. Institutional investors have traditionally led shareholder campaigns. But a popular movement is bringing together workers, customers and communities in coordinated campaigns to hold corporations – and asset managers like BlackRock, Vanguard and State Street – accountable. Startups such as Tulipshare and Troop are helping retail investors weigh in on director votes and proposals. Tulipshare’s Antoine Argouges says 2022 is shaping up as a “cornerstone year” for shareholder action. “We can feel it in the market,” he tells ImpactAlpha. “We can feel it when we’re engaging with shareholder advocacy groups and institutional investors.”
- Keep reading, “Emboldened shareholders ready fights with management on human rights, climate and political spending,” by Amy Cortese on ImpactAlpha.
Dealflow: Housing Crisis
DBL Partners and Citi Impact back Pallet’s modular shelters as a response to homelessness. Surging housing costs have left more than a half-million Americans homeless, and made informal encampments a common site in many cities. Everett, Wash.-based social housing developer Pallet uses prefabricated panels to build temporary mini-homes that can be constructed in as little as 30 minutes and which come with beds, windows, storage and locking doors. Pallet is working with city and county governments to build shelter housing communities; local organizations provide case management, employment outreach, hygiene and laundry access, and mental health counseling. “We intentionally build the villages at a low cost compared to permanent housing structures because we want to leave funding for the municipalities to funnel into services for the residents at the shelters,” Pallet’s Brandon Bills told ImpactAlpha.
- Social housing. Pallet hires formerly homeless and incarcerated people and former drug users to build the villages. Bills says Pallet builds communities of roughly 50 shelter units on underutilized public land. “We have about 70 villages across the nation and will probably cross 100 in the next few months,” he said.
- National expansion. Pallet has built more than 2,000 shelter units in 11 states. With its Series A round, led by DBL Partners and Citi Impact Fund, Pallet aims to work with more U.S. cities. “This investment will ultimately help those cities and towns address the unsheltered homelessness crisis with the speed and scale it requires,” said Pallet’s Amy King.
Chatterbox snags over $2 million to connect tech-skilled refugees with jobs. The London-based startup launched in 2016 as an online language learning school for Syrian refugees to earn a living teaching Arabic to professionals. Founder Mursal Hedayat, an Afghan refugee, says her highly-skilled mother struggled to find work when she moved to the U.K. Today, Chatterbox works with professionals from companies including BNP Paribas, Unilever, FTI Consulting, PwC and the British Red Cross.
- Refugee lens. The pre-seed round will help the startup develop a platform to connect global refugee and marginalized communities with job opportunities in the digital economy. “As we’re seeing from the Ukrainian crisis, unfortunately, we live in a world where mass displacement of talented people from war, famine and even climate change is increasingly commonplace,” said Hedayat. “This funding will help us further our mission of helping businesses engage with this amazing pool of marginalized talent.”
- Inclusive economy. Chatterbox says there are around 40 million degree-educated and un- and underemployed professionals globally who could help fill talent shortages in the tech industry. Roughly 33 million workers have quit their jobs since the beginning of 2021. An estimated 34,000 Ukrainians who arrived in the U.S. before March 1 have been granted temporary protected status.
Dealflow overflow. Other investment news crossing our desks:
- The InsuResilience Investment Fund acquires a minority stake in Ghanaian micro-insurer Vanguard to expand insurance products to low-income and rural customers.
- Tunisia’s Wattnow scores $1.3 million led by Norwegian climate impact fund Katapult Climate to help businesses in Africa and the Middle East reduce their energy consumption.
- Boston-based Perch Energy raises $7.2 million in Series A funding to build a community-solar-as-a-service business.
Impact Voices: Policy Corner
ACE Act is a growth opportunity for impact investing. Donor-advised funds, or DAFs, have caught on with wealthy individuals and families as a way to manage their charitable giving. Some $160 billion is held in more than one million such funds in the U.S. The bipartisan Accelerating Charitable Efforts, or ACE, Act aims to make sure that money in DAF accounts translates into social impact by requiring speedier DAF payouts to charities in order for them to qualify for the upfront tax break (for context see, “From Elon Musk and crypto cashouts, more capital flows in than flows out of donor-advised funds“). “Increasing the capital available to create positive social impact is a laudable goal,” writes Beth Sirull of the Jewish Community Foundation of San Diego in a guest post. “But many of the tactics proposed miss the mark.”
Mandating payouts on DAFs will have a negligible effect on how dollars are distributed into communities for social impact, argues Sirull. A better idea: encouraging the funds sitting in DAF accounts to be invested for impact. She suggests an additional 4% tax credit for each year donor funds are invested in a community development financial institution, or CDFI. Alternatively, legislators could count investments in CDFIs toward foundations’ 5% distribution requirement. “Rather than focusing on grant distributions, as ACE does,” she says, “legislation should consider how the remaining 75% or so of assets sitting in DAFs are invested.”
- Keep reading, “ACE Act is a growth opportunity for impact investing,” by Beth Sirull on ImpactAlpha. Catch up on policy developments at ImpactAlpha’s Policy Corner, sponsored by the U.S. Impact Investing Alliance.
Agents of Impact: Follow the Talent
Perch Energy names Bruce Stewart, ex- of Direct Energy Home and Centrica US, as CEO… Nora Mead Brownell, a former Federal Energy Regulatory Commission member under President George W. Bush, joins Clean Energy Ventures as a venture partner… Chan Zuckerberg Initiative is looking for a program associate in Redwood City, Calif… Mercy Corp.’s Crypto for Good Fund is accepting applications from social enterprises piloting decentralized finance and blockchain technology projects aimed at advancing financial inclusion in emerging markets.
Thank you for your impact.
– Mar. 16, 2022