The Brief | November 30, 2021

The Brief: Today’s Call: Capitalism reimagined, sustainable robo-advisors, health-equity investing, independent media, convergence of impact standards

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Greetings, Agents of Impact! 

🏦 Hop on today’s Call: Capitalism Reimagined. In their first public briefing, participants of the New Capitalism Project will share with ImpactAlpha subscribers their work to redesign the rules, practices, narratives and power relationships of our broken economic system. Join Meredith Sumpter of the Coalition for Inclusive Capitalism, Carol Anne Hilton of Indigenomics Institute, Eli Kasargod-Staub of Majority Action, and Amit Bouri of the Global Impact Investing Network, in conversation with Omidyar Network’s Chris Jurgens and ImpactAlpha’s David Bank, today at 10am PT / 1pm ET / 6pm London. Zoom right in (no RSVP required).

Featured: Personal Finance

How to invest sustainably with a robo-advisor. Over the last five years, a succession of investment advisors have sought to help everyday investors build sustainable portfolios with automated, algorithm-based stock screening. Impact “robo-advising” turned out to be a tough market to crack; early movers like Swell, Motif and OpenInvest shut down, changed strategies or got acquired (for background, see “Retail platforms for sustainable investing struggle to differentiate themselves – and to attract customers”). But plenty of options remain for conscious investors, writes SustainFi’s Anna Yen, who reviewed the surviving robo-advisors in a guest post for ImpactAlpha. “You can source sustainable investing options from about a dozen robo-advisors that offer varying degrees of environmental, social and governance, or ESG, compliance.” 

The similar look of most of the sustainable and impact robo-advisors extends to the portfolios constructed using the same ESG exchange-traded funds, or ETFs, like the iShares ESG Aware MSCI USA ETF (ESGU), which invests in mid- and large-cap U.S. stocks. Betterment, the largest robo-advisor, offers three impact portfolios focused on “broad impact,” climate impact and social impact; it charges a premium for its impact strategies but is still lower-cost than using a human advisor. Acorns, a subscription-based savings app, recently added a sustainable investing option. Ally Invest, Ellevest, E*TRADE, Marcus Invest, Personal Capital, Sustainfolio and Wealthfront also offer robo-advisory services with ESG options. To track the broader market, most of the portfolios still invest in fossil fuel companies or utilities, notes Yen. EarthFolio offers a 100% fossil fuel-free portfolio but requires a $25,000 minimum investment. “No robo-advisor offers a perfect sustainable portfolio (yet),” writes Yen. “As the demand for sustainable investments grows, so will products designed to meet those demands.”

Keep reading, “How to invest sustainably with a robo-advisor,” by Anna Yen on ImpactAlpha.

Sponsored by J&J Impact Ventures

Impact investing to support health equity. The twin pandemics of systemic racism and COVID-19 made the fight for racial health equity in the U.S. more urgent than ever, writes Johnson & Johnson’s Michael Sneed. J&J’s $100 million Our Race to Health Equity initiative invests mostly in nonprofits working to eradicate racism as a public health threat. Its impact investing arm, J&J Impact Ventures invests in entrepreneurs tackling healthcare challenges in under-resourced and diverse communities. A Startup Showcase, in partnership with Village Capital, brings together health tech entrepreneurs, investors and public health stakeholders. “We must connect leaders and innovators across all sectors of our society and put resources in the places where they’re most sorely needed,” Steed writes. “There can be no justice until there is justice in healthcare.”

Dealflow: Gender Smart

Jefa raises $2 million for fintech services for women in Latin America. Women make up more than half of the world’s unbanked population. Jefa, a Mexico City-based neobank, is helping women take charge of their finances with digital savings and investment products tailored to their distinctive financial behaviors. Jefa, which has a waitlist of 115,000, is launching its app in Mexico, to be followed by Colombia and Central America. Its investors include FINCA Ventures, Foundation Capital and The Venture Collective.

  • Visa partnership. Jefa’s partnership with Visa will let it offer cards and contactless payment options, starting in Mexico. “Financial and digital inclusion transform economies,” said Visa’s Sonia Michaca. “Women, who control the lion’s share of everyday household spending, should be at the core of this transformation.”
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MDIF backs Pluralis to invest in independent media in Europe. The decline of independent global news outlets has accelerated with rising news censorship and danger for journalists. Media Development Investment Fund’s Emerging Media Opportunity Fund has invested in nearly a dozen media companies in emerging markets. In Europe, MDFI backed Amsterdam-based Pluralis to invest in independent media organizations providing quality reporting in Europe. Other investors include King Baudouin Foundation, Soros Economic Development Fund, Tinius Trust and Mediahuis, “all of whom value the importance of media pluralism and independence,” said MDIF’s Harlan Mandel.

  • Independent media. Pluralis acquired a 40% stake in Gremi Media, a Polish business and law-focused media company, after taking a 34% stake in Slovakia’s Petit Press. Gremi and Petit Press are “leading sources of reliable and diverse opinion in their countries and our investments can help them deliver on their growth strategies,” said Pluralis’ Thomas Leysen.
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Nigerian B2B marketplace Sabi raises $6 million to support Africa’s informal businesses. The Lagos-based startup is among a wave of enterprise tech ventures applying technology to fix market failures and inefficiencies. Sabi’s tech platform provides sales and inventory management tools, performance data and financial services. It charges customers a transaction fee for sales on its marketplace, but also provides financing. Since Sabi launched last year, it has facilitated more than $200 million in transactions.

  • Africa expansion. Africa’s informal sector of more than 41 million micro and small businesses contributes 60% of Africa’s GDP, worth around $244 billion. Sabi’s funding round, led by existing investor CRE Venture Capital, will help the company expand to Kenya and South Africa. The company is a spinoff of Rensource, a distributed energy services company.
  • More.

Dealflow overflow. Other investment news crossing our desks:

  • Woman-led Mainstream Renewable Power raises €90 million ($102 million) to build out gigawatt-scale wind and solar facilities in Latin America, Africa and Asia.
  • Tiamat Sciences, a woman-led biotech startup, raises $3 million to manufacture plant-based biomolecules for cellular agriculture, regenerative medicine and vaccine production.
  • Cincinnati Development Fund secures $50 million in development finance to build affordable housing in the city.

Signals: Impact Management

The great impact measurement and reporting convergence. Broad financial accounting standards were pushed forward over decades by professional associations and standard-setting organizations. A similar process is now harmonizing the alphabet soup of environmental, social and governance, or ESG, metrics, with the ultimate aim of converging them. The latest development: Harvard Business School’s Impact Weighted Accounts initiative is collaborating with the Value Balancing Alliance to sync up their competing methodologies for assessing corporate sustainability performance. “Efforts to standardize the definition, measurement and valuation of positive and negative impacts from business on society and enterprise value need to be intensified,” the two groups said in a statement. 

  • Sustainability standards. The move follows the establishment in early November of the International Sustainability Standards Board. The ISSB will merge the Climate Disclosure Standards Board, an initiative of CDP, and the Value Reporting Foundation, itself a consolidation of the International Integrated Reporting Council and the Sustainability Accounting Standards Board. Meanwhile, the Impact Management Project has wound down, as planned, and is transferring its activities to the Impact Management Platform, which will be overseen by the IFC, OECD and a range of U.N. agencies.
  • Open ESG. The ESG Data Convergence Project aims to streamline ESG reporting for the private equity industry. A consortium including the Ford Foundation, Omidyar Network and S&P Global launched Novata to simplify ESG measurement, data collection and benchmarking for private companies and private-market investors. Others advocate open-source ESG data and methodologies to spur innovation and convergence.
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Agents of Impact: Follow the Talent

Pirate Impact is looking for an investment intern in Berlin… The Aspen Institute is hosting “The Great Resignation and the Future of Worker Power,” Wednesday, Dec. 1… The Responsible Asset Allocator Initiative by New America and The Predistribution Initiative will explore findings from RAAI’s 2021 index of the responsible investing practices of the world’s largest asset owners, Thursday, Dec 2.

The SOC Investment Group (formerly the CtW Investment Group) is hosting “Board Accountability and Runaway CEO Pay: Do Shareholders Care?” followed by a keynote from Leo Strine, former chief justice of the Delaware Supreme Court, Wednesday, Dec. 8 (see, “Leo Strine on worker power and fair and sustainable capitalism”).

Thank you for your impact.

– Nov 30, 2021