Greetings, Agents of Impact!
Double Feature: ImpactAlpha Originals
Corporate laggards face sustainability’s new leaders at Davos. Microsoft is going beyond net-zero to “carbon negative.” Shell’s CEO is admitting the oil giant knew the risks of climate change all along and must retool for a low-carbon future. BlackRock is moving from paeans to “purpose” toward stronger shareholder advocacy. As corporate CEOs mingle with bankers and ministers at the World Economic Forum in Davos, a few corporate leaders are raising the stakes in the market-shift toward sustainability now under way. The flurry of announcements and initiatives masks the reality that most CEOs and investors at Davos and elsewhere have yet to seriously adapt their strategies and priorities to account for emerging risks, most notably climate change. JPMorgan Chase’s Jamie Dimon may find himself on a particular hot seat with climate activists for the bank’s financing of fossil fuel infrastructure. The bank is among the top targets of activists’ new campaign, Stop the Money Pipeline.
- “A list.” The Climate Disclosure Project unveiled a list of 179 companies leading on climate disclosure and performance, including Apple, Bank of America, Danone, Ford, Microsoft, Morgan Stanley, Nestle and Toyota. Microsoft announced last week that it would go beyond carbon-neutral to carbon-negative by 2030 and by 2050 remove all the carbon it has emitted since its founding in 1975.
- Winter of discontent. High-profile surveys, timed for release before the gathering, have spotlighted widening inequality, growing climate risks, and widespread distrust of capitalism. More than 100 billionaires are expected to jet into the Swiss alpine village for the forum’s 50th anniversary.
- Keep reading, “Corporate laggards face sustainability’s new leaders at Davos,” by David Bank and Amy Cortese on ImpactAlpha.
Blue like an Orange offers a report card for the Sustainable Development Goals (podcast). “The positive news is that more and more people know what we are talking about,” Bertrand Badré says on the most recent ImpactAlpha podcast. “The negative news is there is not enough action.” The former World Bank official and founder of Blue like an Orange Sustainable Capital (the name comes from a French surrealist poem) says needed changes in the financial system were not given enough thought when the Sustainable Development Goals were adopted five years ago. He’s writing a book on the topic; as a down payment, BlueOrange is releasing at Davos its internal rating system, SDG Blue, which scores investments against the SDGs in much the same way Moody’s scores companies’ credit ratings.
- Mandatory goals. Blue like an Orange selected four sub-goals as mandatory for all investments: job creation (No. 8), gender equality (No. 5), sustainability (No. 12) and innovation (No. 9) that account for 45% of an investment’s score. Another 55% comes from goals specific to a company’s activities. Companies can get a 10% bonus by targeting a supplemental goal. “There’s a real temptation to back into the icon or the goal that makes sense, and that’s how you get to your SDG impact. That didn’t feel right to us,” said co-founder Suprotik Basu.
- Ride hailing. Cabify, a ride-hailing service popular in Latin America that BlueOrange invested in last year, received a score of 6 on gender equality for its specific commitments to the safety of women drivers and riders, and a 7 on climate action (SDG No. 13). Cabify got innovation points for a pilot project in Lima that is testing pricing models to encourage use in poor neighborhoods. ”If you take the goals seriously, you’ll find that companies like Cabify knock it out of the park,” Basu said.
- Keep reading, and listen in: “Blue like an Orange offers a report card for the Sustainable Development Goals (podcast),” by David Bank on ImpactAlpha. Catch up on all our podcasts (and subscribe for free) on iTunes, Spotify, SoundCloud or Stitcher.
Dealflow: Follow the Money
Impact fund managers are lining up LPs from coast to coast and around the world. A sampling of some recent raises:
- SustainVC closes $27 million for early stage sustainability and inclusion startups. The second fund from the long-time impact investor was backed by institutions including LISC, and new and returning individuals, family offices and foundations. SustainVC, with offices in Boston, Durham and Philadelphia, has made five investments from the new fund, including Los Angeles-based Embodied Labs, an education platform for caregiver professionals (see, “SustainVC: Ten lessons from ten years of early-stage impact investing”).
- Obvious Ventures’ closes third “world positive” fund at $271.8 million. The Silicon Valley-based venture capital firm, cofounded by Twitter and Medium’s Evan Williams, will invest in startups committed to healthy living, sustainable systems, and fair and transparent education, finance and employment.
- ResponsAbility raises $151 million ‘climate debt’ fund. The Swiss impact investor’s planned $200 million fund will invest in companies providing clean energy access in Africa and Asia. ResponsAbility achieved a first close with backing from a long roster of investors including Bank of America, Facebook, Calvert Impact Capital, Shell Foundation, the European Investment Bank, and a number of European development finance institutions.
- Brazil’s Positive Ventures raises $5 million to invest in impact startups. The four-year-old investment firm is raising a planned $12 million impact fund for Brazil’s startups. It has made two investments so far: low-cost medical testing company Labi Exames and literacy-focused venture Letrus.
Citi deploys bank capital in $150 million impact fund. Citi’s new fund will make direct equity investments of up to $10 million in early and growth-stage companies addressing workforce development, financial inclusion, sustainable energy and water use, and high-impact infrastructure, like housing, healthcare and transportation. Women and other underrepresented founders will be a key focus of the fund.
- Early impact. Outside of renewable energy financing, Citi’s foundation has led on most of its impact initiatives. One example: the City Accelerator partnership with Living Cities, focused on closing urban infrastructure finance gaps. Other banks also use philanthropic dollars to catalyze and derisk lending in high-need communities. JPMorgan Chase earmarked more than $500 million for city-based funds, following a $150 million commitment to Detroit.
- Check it out.
Catalyst Fund gets $15 million to accelerate financial inclusion in emerging markets. The accelerator for early-stage financial tech startups in emerging markets pulled in the grant funding from JPMorgan and the U.K.’s DFID. The accelerator has backed 25 fintech startups building products to reach the global poor since 2016 (see, “The Catalyst Fund’s gateway to financial services for the world’s next billions”). Catalyst Fund, managed by BFA Global and Rockefeller Philanthropy Advisors, will support 30 more companies in Kenya, Nigeria, South Africa, India and Mexico. The accelerator’s latest cohort includes Kenya-based Pesakit, an app for mobile money agents; India-based Farmart, a digital credit platform for farmers; and Spoon, a South African startup providing savings and credit services for women-owned, subsistence enterprises. More.
FTSE Russell’s indexes government bonds based on climate risks. The British stock exchange says it is the first to offer an index weighed to countries’ climate resilience and risk exposure. The Climate Risk-Adjusted European Monetary Union Government Bond index uses a climate scoring method developed by the FTSE’s partner, Beyond Ratings.
Nestle earmarks $258 million to invest in renewable packaging companies. The planned investments are part of the food giant’s commitment to use 100% recyclable or reusable packaging by 2025.
Agents of Impact: Follow the Talent
SOCAP’s parent company, Intentional Media, is hiring a strategic content director and a content associate in New York or San Francisco… Global Partnerships is looking for a research and impact officer on its capital and impact team in Seattle… MIX is recruiting a senior director of strategic data initiatives in Washington D.C… Veris Wealth Partnersseeks an operations manager in San Francisco… Acre is hiring an ESG research analyst in London.
Thank you for reading.
– Jan. 21, 2020