The Brief | March 20, 2024

The Brief: Shareholders get their say

ImpactAlpha
The team at

ImpactAlpha

Greetings Agents of Impact!

In today’s Brief:

  • Previewing proxy season
  • Green bond for water infrastructure in Tanzania
  • Interest rates hit community lending

Zoom in to today’s Call: The Great Deployment. It’s a policy-meets-execution moment. Community lenders are preparing to underwrite rooftop solar and storage, microgrids, water efficiency, affordable housing, net-zero homes, and electric vehicle charging stations, especially in underserved communities. The new funding comes through the $27 billion Greenhouse Gas Reduction Fund, the “green bank” component of the Inflation Reduction Act. Scaling up will require a blend of public and private capital, including bread-and-butter muni bonds. Join Finance New Orleans’ Damon Burns, Calvert Impact Capital’s Beth Bafford, Solar and Energy Loan Fund’s Doug Coward, and Growth Opps’ Michael Jeans, tomorrow at 10am PT / 1pm ET / 5pm London. Register now

Background reading:

Featured: Shareholder Engagement

This proxy season, shareholders will have their say on AI, biodiversity and corporate political activity.  Spring is in the air, and for many shareholders, that means proxy season. Ethical guidelines for artificial intelligence and biodiversity protections for deep sea mining are among the newcomers on the ballot this season. Shareholders will also have the chance to vote on long-running proposals on climate change, corporate political influence, diversity, decent work conditions and human rights. This year’s corporate general meetings come amid an accelerating attack on environmental, social and governance, or ESG, investing. “This anti-ESG crusade is a well-funded and centrally orchestrated attempt to maintain the status quo against prevailing market forces,” says Andy Behar of As You Sow, which presented its annual Proxy Preview

  • Climate disclosure. The number of climate proposals dropped this year. The anti-ESG backlash is partly to blame. And uncertainty surrounding the SEC’s new climate risk disclosure rule may have kept some investors away. The final rule omitted disclosure requirements for indirect “Scope 3” emissions, but has prompted lawsuits nonetheless. New York City Comptroller Brad Lander is asking banks to report on a new climate finance metric: their “clean energy supply financing ratio,” or the share of a bank’s total financing going to clean and low-carbon energy versus fossil fuels (see, “Another election, another flurry of climate activity from New York City’s pension plans). 
  • AI risks. The generative AI hype has pumped the stock valuations of Nvidia, Meta, Microsoft and Alphabet. But the technology’s rapid rollout has brought new risks to corporations and shareholders. Nearly a dozen proposals have been filed at tech and media companies on AI this year; seven ask companies for reports on their ethical AI guidelines. Meta and Alphabet will field proposals asking about AI-generated misinformation risks and human rights impacts. An As You Sow proposal asks Meta to curtail political advertising in the run up to the US presidential election to “combat divisiveness and misinformation.”
  • Combative corporations. ExxonMobil made headlines last month by suing Arjuna Capital and Follow This, a Dutch investor group, to block their proposal asking the oil major to set Scope 3 emission targets. Even after the proposal was withdrawn, Exxon pushed a federal court to proceed with the litigation. The suit represents “a serious threat to shareholder rights” and “a clear attempt to undermine the SEC’s authority and its credibility” on managing proxy disputes, said Michael Passoff of Proxy Impact, an author of the Proxy Preview. 

Dealflow: Water Access

Tanzania turns to green bond market to improve urban water infrastructure. The East African country is new to the global green bond market but has quickly become one of Africa’s most active issuers. The water management body of the northern coastal city of Tanga is floating a 53.1 billion shilling ($20.8 million) green bond on the Dar es Salaam Stock Exchange. The Tanga Urban Water Supply and Sanitation Authority hopes to be able to provide water piping and 24-hour delivery to 100% of the city and to 95% of nearby townships by next year. The “Tanga Bond is a demonstration that capital markets are a viable option for financing national development needs without increasing the national debt limits,” said Peter Malika of the UN Capital Development Fund, which is providing technical assistance for the bond alongside FSD Africa

  • Green bond activity. Just eight countries in sub-Saharan Africa have issued green bonds; their engagement accounts for less than 1% of more than $2.5 trillion in global green bond issuances. Tanzania’s CRDB Bank issued a $300 million green bond last year to fund climate mitigation projects in renewable energy, manufacturing, water and infrastructure. NMB Bank issued a $400 million green bond to fund sustainable energy, transport and water treatment projects. The Tanga Bond is part of Tanzania’s three-year-old Alternative Project Financing strategy with UNCDF to mobilize domestic capital for infrastructure projects.
  • Check it out.

Nigeria’s Moove raises $100 million for revenue-based vehicle financing. Since launching in Lagos in 2020, Moove has provided revenue-based vehicle financing for over 20,000 ride-hailing and delivery drivers in Nigeria, South Africa, Ghana, India, the United Arab Emirates and the UK. Moove is expanding to Southeast Asia and Latin America. “We want to be at the forefront of electrification by putting more EVs on the road,” said Moove’s Ladi Delano. In Nigeria and other African markets, where borrowers are struggling with high fuel prices, Moove plans to add compressed natural gas vehicles, “in the hope that will reduce the impact of the increasing fuel price on the bottom line of our customers,” said Delano. The company plans to introduce EV options to its African customers as road conditions and charging infrastructure improve. 

  • Low-carbon transport. The Series B round, led by Uber, Moove’s largest fleet partner. Uber plans to fully decarbonize its fleet by 2040. Last year, the ride-hailing company led a $20 million funding round for Mumbai-based Everest Fleet to add 10,000 electric vehicles to its fleet by 2026. Other investors in the latest round for Moove include UAE sovereign investor Mubadala Investment Co., The Latest Ventures, AfricInvest and Future Africa. Moove will relocate its headquarters to the UAE as part of a strategic partnership with Mubadala.
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Dealflow overflow. Investment news crossing our desks:

  • ABN Amro committed to Nordic Alpha’s second European green tech fund, which is targeting €300 million ($326 million). The growth equity fund secured €150 million ($163 million) in a first close last year. (ABN Amro)
  • Women-led Emmeline Ventures is approaching the $25 million target for its inaugural fund, which focuses on women’s health, financial services and sustainability ventures. (Venture Capital)
  • Sugar.fit, which provides affordable health care for diabetes patients in India, raised $16 million in Series A funding. (YourStory)
  • Barcelona-based and women-led Poseidona raised €1.1 million ($1.2 million) in pre-seed financing to make alternative proteins from algae and seaweed waste in the Mediterranean. (Vegconomist)

Impact Voices: Community Lending

Three ways impact investors can help CDFIs provide stability in a high-cost environment. Inflation, high interest rates and supply chain disruptions have hit hard in affordable housing and community development, raising project costs, widening financing gaps and creating long delays as developers compete for scarce government subsidies and other low-cost funding sources. “That’s where community development financial institution loan funds come in,” writes Enterprise Community Partners’ Anna Smulkowski, who directs the Enterprise Community Loan Fund. She outlines three ways impact investors can participate in public-private partnerships to solve capital access challenges for CDFIs.

  • Recoverable grants. CDFIs are unlocking this tool for affordable housing providers through new sources like donor-advised funds. Recoverable grants through DAFs can be blended with other capital sources or passed through to defray early stage project expenses. For CDFIs, this provides credit enhancement for early-stage projects, lowering interest rates to borrowers.
  • Impact notes. An impact note is a broad classification for a fixed income security used to generate a positive social and environmental impact and financial return. Impact notes can generate a market-rate return or, in some cases, investors can give up some financial return for greater social or environmental impact.
  • Regional coalitions. The Washington Community Investment Coalition worked with the state’s Department of Commerce to create the Equitable Access to Credit Program, a tax credit program to award grants to CDFIs to provide access to credit for underserved communities. The New York State CDFI Coalition partnered with Impact Finance Center to create the NYS CDFI Investor Club to activate donors and investors.
  • Keep reading.

Agents of Impact: Follow the Talent

World Education Services promotes Smitha Das to investments senior director… The Washington Area Community Investment Fund appoints Shannan Herbert, former inclusive credit executive vice president at Stratyfy, to CEO… GingerBread Capital is hiring a remote investment associate… Dalberg seeks project managers and senior project managers in cities in the US, as well as Bogota and Mexico City… Echoing Green is recruiting a capital manager and other roles. 

Ford Foundation has an opening for a strategic communications officer in New York… Also in New York, Helmsley Charitable Trust is looking for an investment associate… The Aspen Institute is on the hunt for a senior impact associate in Washington, DC… Raven Indigenous Impact Foundation seeks a remote strategy and engagement analyst… Acre is recruiting for sustainability cities senior investment associate in Paris.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– March 20, 2024