Greetings, Agents of Impact!
Featured: Capitalism Reimagined
Companies scramble to get on the right side of Engine No. 1 – and of history. This year, companies are taking the call when Engine No. 1 reaches out. Chevron Corp., the world’s No. 8 oil company, is trying to avoid being the next ExxonMobil. Fund manager Engine No. 1, launched less than a year ago, made its name waging an unexpectedly successful proxy campaign that put three independent directors inside Exxon’s boardroom. Now it’s looking for new opportunities to engage. The firm is finding that much of the progress in prodding companies to clean up their acts come from the unsexy process of ‘engagement.’ “We can now have tons of impact without running a proxy campaign,” Engine No. 1’s Michael O’Leary tells ImpactAlpha. Chevron executives recently met with Engine No. 1, and Chevron’s board of directors reviewed the Exxon proxy campaign at its meeting this summer, The Wall Street Journal reported last week. The oil company plans to announce more ambitious carbon-reduction targets and is considering adding a director with environmental expertise.
Shareholders are emboldened after winning resolutions earlier this year on environmental, social and governance, or ESG, issues. “It’s like the shackles are off and let’s swing for the fences on some of these proposals,” O’Leary says. On climate, shareholders are expected to ask not just for emissions-reduction pledges, but detailed transition plans that take workers and communities into account. Other resolutions demand companies align their lobbying with their net-zero or other emissions-reduction pledges. “If the boards are not really monitoring and managing and implementing changes that address the ESG issues, they’re missing the opportunity to really create value for the investors,” said Kirsten Snow Spalding of Ceres. Inclusive Capital’s Jeffrey Ubben, who also gained a seat on Exxon’s board last year, told the Financial Times that Engine No. 1’s strategy “is not enough to create lasting change.” As it happens, the oil company’s shares have rebounded from their lows of last November, largely as a result of higher oil prices but also perhaps reflecting the public, and now boardroom, pressure on billion-dollar capital expenditures and other decisions that could improve, if slightly, the company’s prospects in the low-carbon transition.
Keep reading “Companies scramble to get on the right side of Engine No.1 – and of history,” by Amy Cortese and David Bank on ImpactAlpha.
- Join The Call: Capitalism Reimagined. Engine No. 1’s Michael O’Leary, Shareholder Commons’ Sara Murphy, Illinois State Treasurer Michael Frerichs and other Agents of Impact will dig into shareholder engagement, universal ownership, long-term stewardship and other strategies to affect change at public companies, Tuesday, Sept. 14 at 10am PT / 1pm ET / 6pm London. RSVP today.
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Dealflow: Climate Funds
Trio of climate funds launch ahead of fall climate summits. Climate action is in the air. Three new climate-focused funds debuted this week ahead of this month’s Climate Week in New York and COP26 in Glasgow in November. First up: 1.5 Degrees, a women-led hedge fund at global asset manager AllianceBernstein that will apply a long/short climate investment strategy to public equities. The fund is led by Dureka Carrasquillo and Savironi Chet, both ex- of Canada Pension Plan Investment Board, Bloomberg reports.
- Hydrogen economy. U.K.-based HYCAP has raised £200 million ($276 million) of a £1 billion target to invest in British businesses focusing on hydrogen power from renewable energy. The recent spate of hydrogen-focused funds and deals includes FiveT’s €260 million ($308 million) hydrogen fund; hydrogen-powered aircraft companies Universal Hydrogen and ZeroAvia; and hydrogen-based fuel producer Green Hydrogen Systems. Hydrogen-based transport company Hyzon Motors went public via a special purpose acquisition company.
- Oceans of opportunity. Ocean regeneration is the focus of Paris-based SWEN Capital Partners, which raised €52 million ($61.6 million) of a targeted €120 million ocean fund from Macif, Crédit Mutuel Arkéa, an American family office, and other French and foreign investors. SWEN is partnering with the French Research Institute for Exploitation of the Sea, or Ifremer, to lend scientific credentials to the fund’s investment process (for context, see “Is your fund serious about climate? Show me your scientists”).
- Dive in.
Employee Ownership Catalyst Fund raises nearly $5 million to back worker-ownership conversions. The open-ended fund, co-managed by Mission Driven Finance and Project Equity, received commitments from Living Cities and other impact investors, foundations, high-net-worth individuals and a donor-advised fund. The growing number of employee-ownership transition funds spare investors the burden of searching out direct investments (for context, see “These 12 impact funds are catalyzing transitions to employee ownership”). The Employee Ownership Catalyst Fund is looking to raise $20 million to provide flexible financing for small and mid-sized business owners transferring their ownership to employees. “Small businesses have a hard enough time accessing capital, especially for low-asset, service-oriented businesses,” Mission Driven’s David Lynn told ImpactAlpha. “When you throw employee ownership on top of it, most traditional capital can’t play.” The fund will finance all types of employee ownership deals, including employee stock ownership plans, or ESOPs.
- Inclusive economy. Mission Driven Finance and Project Equity are seeing a wave of retiring baby boomer business owners who are looking to transfer ownership to employees rather than selling or closing. “Now more than ever, employee ownership can help with employee retention and engagement” and help current business owners retire on a timeline that fits their needs, Project Equity’s Alison Lingane said.
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Dealflow overflow. Other investment news crossing our desks:
- Italy’s Intesa Sanpaolo and SACMI secure a €40 million ($47.4 million) loan, backed by the Italian government under Europe’s Green New Deal, to improve the sustainability of ceramics manufacturing.
- Australia’s New Forests and Canada’s Alberta Investment Management Corp. are buying Australian farmland owner and manager Lawson Grains from Macquarie Asset Management.
- Nigeria-based spices processing and export company Agricorp raises $17.5 million to grow its smallholder farmer network.
- TheCut raises $5 million, led by Nextgen Venture Partners, to help barbershops generate revenue.
Signals: Conservation Finance
Scaling nature investments to meet investor demand. Conservation funds from Apple and L’Oréal launched in the past year will invest hundreds of millions of dollars in land and water ecosystems to sequester tens of millions of tons of carbon dioxide. The corporate commitments are a signal of interest in conservation finance. Seven in 10 conservation investors are planning to make “substantially higher” investments this year, according to the Coalition for Private Investment in Conservation, led by South Pole, the Cornell Atkinson Center for Sustainability, and the International Union for Conservation of Nature. “There is growing interest from policymakers and investors to invest in nature,” says IUCN’s Elmedina Krilasevic. “Now is the time to power the nature investment revolution.”
- Broadening the market. Nearly all (99.7%) conservation investments last year originated from just seven countries: Australia, Germany, the Netherlands, South Korea, Switzerland, the U.K. and the U.S. Most (91%) were concentrated in private debt and equity, as well as real assets. The researchers say scaling conservation finance requires more publicly-traded conservation assets, and more opportunities in China, Japan and Latin America.
- Risk management. Developers can better use structures that streamline the risk factors of conservation projects, says NatureVest’s Charlotte Kaiser. Investors who can handle uncertainty “are much better equipped to commit to transactions that truly make a difference for conservation, rather than avoiding risks and allowing the untenable status quo to continue.”
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Agents of Impact: Follow the Talent
Olivia Albrecht, ex- of PIMCO, is named global head of ESG at TCW… DBL Partners is hiring a director of impact in San Francisco… Energy Impact Partners is looking for an ESG and impact associate in New York… Catalyst Opportunity Funds is hiring a commercial real estate associate in Salt Lake City… Beyond Capital Ventures seeks an investment fellow… Great Lakes Protection Fund is looking for a communications manager in Evanston, Ill.
The deadline for Convergence’s Asia Natural Capital Design Funding Window is Friday, Sept. 24 and for the Indo-Pacific Design Funding Window, Friday, Oct. 15… ImpactAssets is accepting applications for its annual ImpactAssets 50 list of impact fund managers… Impact Investors Council is hosting “India Climate Investment Conclave: Unlocking Capital for Early-stage Climate-tech Startups,” Sept. 9-10. ImpactAlpha subscribers get 25% off with code IIC-CLIMATEIMA25.
Planet Tracker is hosting “ESG and the Global Plastics Supply Chain,” with Gregory Fleming of Rockefeller Capital Management, Sharon Lavigne of RISE St. James, Dow’s Eunice Heath and Citi’s Courtney Lowrance, Tuesday, Sept. 14… CapShift and The Nature Conservancy are co-hosting “Catch and Release: Transforming the tuna industry for people and the planet,” with Mark Tercek, Catch Together’s Kelly Wachowicz, Gratitude Railroad’s Howard Fischer and The Nature Conservancy’s Mark Zimring, Tuesday, Sept. 14.
Thank you for your impact.
– Sept. 8, 2021