Greetings, Agents of Impact!
Featured: Capitalism Reimagined
A stock market test for stakeholder capitalism as public benefit corporations go public. All of a sudden, there is a public market for public benefit corporations. In the decade or so since the first states created the new legal corporate structure, most public-benefit corporations have been privately held. That reflects not only the smaller size of the early adopters, but the assumption that public-market investors would shun companies that deviate from the strict shareholder-value ethos that still holds sway at most publicly-traded corporations. Before last year, only one public-benefit corporation, Laureate Education, was publicly traded. In the last 18 months, roughly a dozen public-benefit corporations have gone public, either via initial public offerings or mergers or conversions, including Vital Farms, insurance company Lemonade and Coursera. In January, Veeva Systems became the first publicly-traded company to convert to a public benefit corporation. “We didn’t view it as a tradeoff in financial performance or execution,” Veeva’s Josh Faddis told ImpactAlpha. “We viewed it as a change that would help us be a more durable company for the long term.”
Public-benefit corporate structures, now in 37 states and Washington, D.C., allow for-profit companies to enshrine their social missions and protect the interests of employees and communities, in addition to shareholders. “It’s a holistic approach that I believe produces better companies, better employee engagement and better returns,” says Nicole Neeman Brady of Renewable Resources Group, which raised $316 million for a public-benefit SPAC in a February IPO. The January conversion of Pleasanton, Calif.-based Veeva, a life-sciences cloud-computing company valued at $47 billion, won the support of 99% of shareholders and signaled that public-markets investors won’t run away from “stakeholder” structures. Low support from shareholders in votes this year at 15 companies, including Alphabet, Facebook, Salesforce and Goldman Sachs, show more education is needed. The case made by Shareholder Commons’ Rick Alexander: Companies that extract value from stakeholders to maximize returns to shareholders hurt the interests of diversified investors in the broader economy.
Keep reading, “A stock market test for stakeholder capitalism as public benefit corporations go public,” by Dennis Price on ImpactAlpha.
- Capitalism Reimagined. Meet Leo Strine, who as top judge in Delaware played a key role in establishing public benefit corporations, on ImpactAlpha’s Agents of Impact call next week. “Just one thing has to happen to make the benefit corporation model the dominant form of corporate governance in U.S. capital markets: the Business Roundtable and mainstream institutional investors must rally behind it,” Strine writes, with Bob Eccles and Timothy Youmans, in Harvard Business Review. Join The Call No. 29, “Rewriting rules and designing policy for the stakeholder economy,” Tuesday, June 29 at 10am PT / 1pm ET / 6pm London. RSVP today.
Dealflow: Low-Carbon Transition
Spring Lane Capital invests $20 million in ‘EVs as a service’ in Canada. Vancouver-based 7 Generation Capital develops electric-vehicle charging and vehicle-leasing projects for commercial fleet operators (see, “Electrification of vehicle fleets sparks disruption of energy and transportation”). 7 Generation’s initial targets: last-mile delivery and waste removal. The deal is the first in electric vehicles for Spring Lane, which finances small-scale, sustainable energy, food, water and waste projects. “We are on the cusp of widespread adoption of electric vehicles by commercial fleets,” said Spring Lane’s Nathaniel Lowbeer-Lewis.
- Leading the charge. Ford Motor acquired San Francisco-based commercial EV fleet and energy management provider Electriphi. Ford pledged to pump $30 billion into electric vehicles by 2025 and aims to generate $1 billion in charging revenues by the end of the decade.
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Berkeley Energy raises €130 million for second Africa Renewable Energy Fund. The London-based affiliate of sustainable investment firm Earth Capital is looking to build hydro, wind and solar projects, as well as battery storage facilities, to meet Africa’s accelerating electricity demand. Berkeley Energy is targeting grid-connected projects in Cameroon, Kenya, Angola, Madagascar and Malawi. The firm reached a first close for its targeted €300 million ($356 million) fund with backing from seven development finance institutions: Italy’s CDP, the U.K.’s CDC, the Netherlands’ FMO, France’s Proparco, Swedfund, the African Development Bank and the Climate Investment Funds. Berkeley made nine investments in six countries with its first Africa Renewable Energy Fund of $200 million.
- Catalytic capital. The African Development Bank’s Sustainable Energy Fund for Africa and Climate Investment Funds’ Clean Technology Fund provided first-loss capital to “offer private investors the ability to have an enhanced capital return in downside scenarios where the fund does not meet its targeted returns,” a spokesperson for Berkeley Energy told ImpactAlpha.
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Dealflow overflow. Other investment news crossing our desks:
- The Green for Growth Fund, which finances energy efficiency and renewable energy projects in Europe and North Africa, invests €3.5 million ($4.1 million) in Thor Impex for a 36-megawatt wind farm in North Macedonia.
- New York-based Carbyne raises $20 million to improve emergency response for callers, first responders, nurses and hospitals.
- Ed Partners Africa secures 205 million Kenyan shillings ($1.9 million) to provide access to credit for Kenya’s affordable private schools for low-income students.
- Mumbai-based Apna, an upskilling platform for blue-collar workers in India, scores $70 million to expand its mobile app.
Impact Voices: ESG Standardization
‘Buzzword bingo’ and other ways companies are gaming ESG. Demonstrating environmental, social and governance, or ESG, chops is now critical for almost any publicly-listed company seeking to raise capital. Some companies are getting wise to this, and not in a good way, warns Patrick Wood Uribe of fintech Util, which tracks companies’ Sustainable Development Goal-related impacts. “While many companies have a genuine, evidenced commitment to sustainability targets, others are less sincere, flooding their communications with keywords,” Uribe writes in a guest post on ImpactAlpha. Mentions of “carbon” and associated keywords in corporate earnings calls have tripled over the last three years. Needed: a way to objectively measure and compare ESG performance and materiality risk. Writes Uribe: “A metric of extra-financial value that lives up to that of financial value must be as universally objective, reliable and consistent as a currency.” Read the full post.
Europe paves path to standardized ESG disclosure with Sustainability Reporting Directive. Europe kept the sustainability flame alive during the Trump years. Now it is advancing the agenda with a Sustainability Reporting Directive, or SRD, that paves the way for universal disclosures for environmental, social and governance-based investing, or ESG. The SRD will be aligned with the European Union “taxonomy” establishing environmentally-sustainable activities based on six objectives, including mitigating climate change, protecting water resources, and transitioning to a circular economy. The directive is expected to come into force in 2024, but “companies would do well to shore up their climate programs now,” writes Persefoni AI’s Tim Mohin, who previously headed the Global Reporting Initiative. “The new rules in Europe will have global impact: they will affect companies doing business in Europe.” Read on.
Agents of Impact: Follow the Talent
Melanie Rose Rodgers, ex- of Safe Access Colorado, will lead the Cannabis Impact Fund in Denver… Winners of the Goldman Environmental Prize, known as the “Green Nobel,” include Peruvian activist Liz Chicaje; Gloria Majiga-Kamoto, a Malawian anti-plastics campaigner; environmentalist Maida Bilal from Bosnia-Herzegovina; American Sharon Lavigne, a campaigner against toxic waste and pollution; Thai Van Nguyen, a Vietnamese wildlife conservationist; and Japanese environmentalist Kimiko Hirata.
ISF Advisors is hiring a project manager, an investment analyst and a strategic analyst… The Great Barrington Cannabis Impact Fund is open for applications… The Shared-Use Mobility Center is hosting a “National Shared Mobility Summit,” throughout July with Christian Okoye of Sidewalk Infrastructure Partners, Chaarvii Amit Badani of American Family Insurance Institute, Danille Harris of Elemental Excelerator and Nneka Uzoh of Aligned Climate Capital/Greentech Noir.
Thank you for your impact.
– June 21, 2021