Greetings, Agents of Impact!
Featured: Policy Corner
The SEC’s new rules (Part One): An opportunity to rein in greenwashing in asset management. Fossil fuel industry-supported activist groups and politicians have launched a campaign to discredit ESG investing, moving beyond climate change denialism into cultural warfare and dismissal of concerns about social and environmental justice as elitist and hypocritical. “Investors must speak out and defend their rights to deploy their assets as they see fit, including, if they so choose, divestment from fossil fuels,” writes John Kostyack of Kostyack Strategies in a guest post on ImpactAlpha. “The rights of investors to pursue ESG goals includes the right to obtain accurate information from asset managers marketing ESG funds.”
Two rules proposed in May by the U.S. Securities and Exchange Commission, the Fund Names Rule Amendment and the ESG Disclosure Rule, aim to improve the reliability and comparability of ESG investment products and strategies. Under these proposals, if a fund doesn’t make one or more ESG factors a significant focus in its investment selections, it cannot be marketed as an ESG fund; if a fund makes ESG factors a significant focus, it must disclose how well-established ESG investing strategies are being employed. (Similar rules in Europe caused fund managers to pull the ESG label from some $2 trillion worth of funds.) In the first of two posts detailing how investors can take action to support the proposed changes, Kostyack writes that “for the first time ever, investors in ESG funds would have reliable information on investment selection.”
- Comment period. The proposals come as regulators brace for challenges in the wake of the Supreme Court’s decision to clip the Environmental Protection Agency’s ability to rein in greenhouse gasses (for context, see “Supreme Court’s attack on regulatory policy threatens SEC climate-disclosure rules”). “This is a critical moment for supporting and strengthening the S.E.C.’s efforts to help those investing in ESG funds to secure reliable and comparable disclosures from asset managers,” says Kostyack. The deadline is August 16 for comments from investors and other stakeholders. Check back tomorrow for Kostyack’s take on five elements of the new rules investors should consider.
- Keep reading, “SEC’s new rules (Part One): An opportunity to rein in greenwashing in asset management,” by John Kostyack on ImpactAlpha. And check out our Policy Corner, sponsored by the U.S. Impact Investing Alliance.
Dealflow: Gig Economy
Brazil’s Mottu secures $40 million to train, insure and finance motorbikes for gig workers. In a country with high youth unemployment, Sao Paulo-based Mottu aims to make it easier for Brazil’s un- and underemployed to pick up more motorcycle-delivery gigs. Mottu allows gig workers to rent motorbikes on a weekly basis (unlike Uganda’s Tugende and other vehicle-finance companies, Mottu does not support vehicle ownership). Mottu founder Rubens Zanelatto says the company’s model and services are aligned with the rapid uptick in Latin American e-commerce, and they fill a need in the market because most of its customers don’t qualify for traditional vehicle financing. Customers pay roughly $150 per month for the bike rental, or about half of a monthly minimum-wage income in Brazil. Base Partners and San Francisco-based family foundation Crankstart led Mottu’s $30 million Series B round. Verde Asset provided $10 million in debt capital.
- Connected services. Mottu has 10,000 motorcycles in operation in Brazil and Mexico. In addition to a bike, Mottu provides driver training, motorcycle maintenance, insurance and an app for picking up delivery gigs.
- Rev up.
Black-led OppZo raises $260 million to connect small businesses with financing. The Miami-based fintech startup provides up to $1 million in asset-based working capital loans to small and medium-sized businesses in Opportunity Zones. Borrowers can secure loans for rates as low as 8% for up to 18 months, with no personal guarantees. Investors and local banks can hand pick distressed communities where small businesses are struggling to access capital. The company’s mission is “to build thriving communities,” said OppZo’s Warren Reed. “We understand first hand the impacts of disparity in funding, and we’re delivering the optimal solution to the market.”
- Inclusive lending. Arcadia Funds led OppZo’s $5 million equity and $255 million debt funding. The investment will be used to tap into new private and public capital sources for small businesses in distressed communities, “by focusing on building relationships and understanding first,” said OppZo’s Randy Garrett. The company says it has secured nearly $1.3 billion to fund the loans and has a pipeline of more than 2,000 small business borrowers.
Dealflow overflow. Other investment news crossing our desks:
- Twelve (formerly Opus12) raked in $130 million from investors including DCVC, Microsoft Climate Innovation Fund and Capricorn Technology Impact Fund to replace fossil fuel feedstocks for products from apparel to jet fuel with captured CO2. Twelve also secured a strategic investment from Chan Zuckerberg Initiative.
- India’s Lendingkart clinched $9.5 million of debt funding from GMO and Triodos Investment Management to deploy working capital loans to small enterprises.
- Meritize scored an undisclosed investment from the impact investing arm of Aegon Asset Management to finance worker training in high-demand jobs in healthcare, aviation and industrials.
- Neomoon snagged $850,000 in a seed round led by Borderless Capital to democratize access to banking services in Latin America and other emerging markets.
Agents of Impact: Follow the Talent
Witold Henisz will lead Wharton’s ESG Initiative as vice dean and faculty director… TriLinc Global promotes Maxwell Lynch to ESG and impact manager… Stone Alliance Group is hiring an impact investment analyst in St. Louis… The California Endowment is looking for an impact investing portfolio manager in Sacramento… ImpactAssets is recruiting a remote investment services officer… NatureVest seeks a remote impact investing associate.
VC Includes seeks nominations of emerging funds for its fellowship for first-time BIPOC fund managers… ECMC Foundation is looking for a senior associate in Los Angeles for its education innovation ventures program… Taskforce on Inequality-related Financial Disclosures is hosting its first global meeting virtually on Thursday, July 21.
Sopact and Miller Center for Social Entrepreneurship are hosting “Increasing impact data capacity for social entrepreneurs,” Tuesday, July 12… Asia Development Bank is hosting “Building Forward Together – Towards an Inclusive and Resilient Asia and the Pacific,” with Armida Alisjahbana of UNESCAP, Woochong Um and Bernard Woods of ADB, Claire Van der Vaeren of UNDP, Joyashree Roy of Jadavpur University, Alkesh Wadhwani of Gates Foundation and Beverley Postma of Grow Asia, Tuesday, July 12.
Thank you for your impact!
– July 6, 2022