Greetings, Agents of Impact!
Featured: Shareholder Engagement
This season’s shareholder resolutions are proxies in the ESG culture war. Votes on climate action, corporate political influence and reproductive rights will liven up this spring’s corporate annual general meetings. And this year, the reflexive management opposition to such shareholder proposals is compounded by a coordinated outside attack on environmental, social and governance investing. Utah’s state treasurer has called ESG part of “Satan’s plan,” and 18 states, led by Florida’s Gov. Ron DeSantis, formed an alliance to combat “the pernicious effects of the ESG regime.” This week, President Biden vetoed a bill that would have repealed a Department of Labor rule allowing pension fund managers to consider ESG factors. “A small band of well-funded zealots is trying to inject politics and a ‘culture war’ into basic business,” As You Sow’s Andy Behar said in the shareholder advocacy group’s annual proxy preview. “The capital markets work best when shareholders and corporate executives make their own investment and business decisions.”
- Climate action. Of the 542 shareholder resolutions filed to date, 160 call for greater climate action or disclosure – that doesn’t count dozens of related requests about corporate political spending, board oversight and climate justice. Underscoring the urgency, the Intergovernmental Panel on Climate Change issued its “final warning” this week that time is running out to stave off the worst effects of global warming. One new proxy twist: for more accurate greenhouse gas accounting, shareholders are asking oil companies such as ExxonMobil and Chevron to exclude from their emissions calculations assets they sell off or transfer.
- Reproductive rights. A flood of reproductive rights issues are on the ballot in the first proxy season since the Supreme Court struck down Roe v. Wade. Rhia Ventures has spearheaded 30 such proposals this year, double last year’s tally. UPS, Coca-Cola and Lowe’s are among the companies being asked to explain how they are addressing the risks imposed by new restrictions. Companies including Alphabet, CVS, Meta, Walmart, Mastercard and PayPal are fielding requests to strengthen guardrails to protect women’s privacy. Other shareholders seek disclosures about racial disparities in maternal and general health.
- Anti-ESG. Proposals opposing the consideration of ESG factors in investment decision-making have surged by 60% this year, to 47. With proxy season yet to kick into high gear, that number could go as high as 70. Shareholders have so far shunned such proposals, which have attracted about 5% of votes, on average. Proxy season “is a laboratory. It’s a test case,” says Heidi Welsh of the Sustainable Investments Institute, one of the authors of the report. “It gives a good signal to management and to investors about what kinds of issues have traction and which ones don’t.”
- Everybody in. More shareholders are having their say. BlackRock clients representing $500 billion in assets under management have taken up the company’s vote-your-own-proxy option, Voting Choice. New tools and apps are helping individual investors to vote their values as well (see, “Retail investors get new tools to flex their collective power as engaged shareholders”). As You Sow is readying a retail version of its As You Vote, ESG-aligned voting tool. It is also working with startups including Iconik in the U.S. and Tumelo in the U.K. to make it easier for individual investors to vote their proxies. “There is no way for asset managers to vote these ballots without angering a significant percentage of their investors,” Iconik’s Alex Thaler tells ImpactAlpha. “The only logical solution to this mess is to flip voting control back to the investors and have fund managers vote proportionally according to investor preferences.”
- Keep reading, “This season’s shareholder resolutions are proxies in the ESG culture war,” by Amy Cortese on ImpactAlpha.
Dealflow: Regenerative Agriculture
Pepsico commits $216 million to three organizations fostering regenerative agriculture in the U.S. The $80 billion food and beverage giant has pledged to achieve net-zero carbon emissions by 2040 and to support the conversion of seven million acres of farmland to regenerative practices. “Regenerative agriculture is a powerful approach to address climate change,” PepsiCo’s Margaret Henry told ImpactAlpha in an email. Pepsico is investing in three organizations in the U.S. to achieve nearly half of its regenerative ag goal. The company called it a strategic business investment that “is essential to supporting the U.S. farming community as it makes changes that aim to secure production volumes and mitigate the impacts of climate change.”
- Regenerative shift. Pepsico’s investment will support Practical Farmers of Iowa, the Illinois Corn Growers Association, and the Soil and Water Outcomes Fund, which are using cost-share incentives and outcome-based incentives to encourage farmers’ regenerative shift. AgOutcomes and ReHarvest Partners’ Soil and Water Outcomes Fund, for example, rewards farmers for achieving environmental outcomes like improved water quality, through techniques like cover-cropping (see, “Farmers harvest ‘soil carbon’ to meet rising corporate demand for emission offsets”). For its work with Pepsico, SWOF will set environmental targets that are suited to the regions the company sources from, SWOF’s Adam Kiel told ImpactAlpha.
- Dig in.
Piclo raises £8.3 million to add clean energy sources to electricity grids. The London-based company has developed a marketplace to help electricity system operators, which balance supply and demand on local electricity grids, procure power from clean energy sources, including electric vehicles and battery systems. The company’s goal is to speed grid decarbonization worldwide. Its home market has been wracked by soaring energy costs stemming from the war in Ukraine.
- Smart grids. Piclo says it has facilitated the transfer of 1.1 gigawatts of energy capacity worth £57 million ($70 million) in the U.K. and Europe. It raised its latest equity round from Future Energy Ventures, Clean Growth Fund, Toshiba Energy Systems & Solutions, Japan Energy Fund and others. It plans to expand in Europe and to the U.S. and Asia.
- Solar + storage. Separately, battery storage provider Electriq Power inked a deal worth up to $300 million with an undisclosed clean energy company to build “sustainable community networks” across California.
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Dealflow overflow. Other investment news crossing our desks:
- The African Development Bank, Islamic Development Bank, Nigeria’s Bank of Industry and the French development agency pooled $618 million for a digital and creative industry development initiative in Nigeria. A portion of the funds will be used to invest in 200 creative and tech startups. (AfDB)
- Nigeria’s OnePipe raised $4.8 million in debt financing from TLG Capital to provide back-end tech to institutions delivering financial services to small businesses. (TechCabal)
- Swedish investment firm Nidoco re-upped its investment in CollectiveCrunch, a Finnish company that uses AI to support sustainable forest management. (Tech.EU)
- Revolv raised $15 million in Series A financing, led by Greenbacker Capital, to help commercial vehicle fleets electrify. (PR Newswire)
Signals: World Water Day
Putting a ‘price on water’ and other opportunities to address the H2O crisis. In financial markets, water is becoming the new carbon. From early-stage startups and corporate supply chains, to public policy and municipal bond markets, water risks and opportunities are increasingly on the radar of investors. In New York, at the U.N.’s first dedicated water conference in 50 years, global leaders this week are hammering out a water action agenda of voluntary commitments, pledges and actions. “We can build resilient societies and economies,” said Stuart Orr of World Wildlife Fund, “if governments and businesses urgently pursue policies, practices and investments that recognize – and restore – the full value of healthy rivers, lakes and wetlands.”
- Valuing water. Companies such as Ford, L’Oreal and Whirlpool, in a survey by CDP, identified $436 billion in unexplored commercial opportunities in water-related markets, products and services, and supply chains. Similar to carbon, hundreds of companies already set an internal “price on water” to reflect the true cost of extraction, transportation, use and pollution. Those that have report the financial benefit of water efficiency-related opportunities to be six-fold higher than those without a price on water, according to CDP.
- Innovation and infrastructure. For water opportunities, look to early-stage startups and municipal bond markets, say analysts at Environmental Policy Innovation Center. Those driving innovation in the sector include startups such as SimpleLab, Varuna, 120Water and BioBot Analytic, and funds such as Burnt Island Ventures and Echo River Capital. Local municipal water utilities, largely financed through municipal bonds, account for roughly 85% of water infrastructure spending. Breckinridge Capital Advisors, Alliance Bernstein and Community Capital Management have track records with sustainable bond portfolios. Quantified Ventures has helped cities develop environmental impact bonds that link returns to investors with environmental outcomes.
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Agents of Impact: Follow the Talent
Harold Pettigrew Jr., ex- of the Washington Area Community Investment Fund, will become president and CEO of Opportunity Finance Network… Catherine Dun Rappaport, ex- of BlueHub Capital, joins Social Finance as vice president of impact advisory. Stephen Vicinelli, ex- of TIFF Investment Management, joins Social Finance as vice president of impact investments.
Gustavo Bernal Torres, ex- of Invartis Consulting, joins BMO Global Asset management as ESG integration manager and vice president… Investing for Good seeks an innovative finance lead in Barcelona… Nonprofit Finance Fund is recruiting a business development manager in New York… Allianz Global Investors is looking for a sustainable and impact investing business manager in Frankfurt.
Rally Assets is hiring a head of impact management and other roles in Toronto… Tsao Family Office is looking for an ESG and impact investment analyst in Singapore… CNote has an opening for a vice president of legal… Common Trust is hiring a sales marketing manager… 60 Decibels is on the hunt for a New York-based sales associate.
Symbiotics has an opening for a senior institutional marketing analyst in Geneva… The U.S. International Development Finance Corp. is recruiting an impact management and monitoring specialist for climate projects… Enterprise Community Partners is on the hunt for an investment communications manager… The Impact Facility seeks a mining investment officer in Tanzania.
Thank you for your impact.
– March 23, 2023