Greetings, Agents of Impact!
Featured: Worker Power
Flex of worker power raises the stakes for quality jobs. Human capital management is an increasingly material business issue. A threatened strike by 340,000 UPS drivers could snarl commerce if the parties can’t come to an agreement by the end of the month. Hollywood is paralyzed as actors join screenwriters in a walk out. Across the US, more than 120,000 workers were on strike in May, almost double the number a year earlier. With a tight labor market and a reinvigorated union movement, worker empowerment in the aftermath of the Covid pandemic has proved remarkably durable, even in the face of higher interest rates. In such an environment, a firm with a strategy for quality, sustainable jobs can generate higher profits “while creating value for its employees at all levels, from basic needs such as a living wage, to higher order needs, such as equity, retirement benefits and career development,” write Ulrich Atz and Tensie Whelan of New York University’s Stern Center for Sustainable Business in a guest post for ImpactAlpha.
- Measurement and management. Woe to the investor relying on accounting or corporate environmental, social and governance metrics to assess the treatment of workers. Critical human-capital metrics are rarely tracked or reported, including the share of employees making a living wage, the cost of turnover, and the value of benefits, Atz and Whelan found while examining material jobs metrics tracked by six major providers of ESG data. “Investors, regulators, and the managers themselves rely on that incomplete data to make decisions that have a significant impact on employees, society, and the bottom line,” they write.
- Policy priority. A new human capital management disclosure rule is expected from the US Securities and Exchange Commission later this year (see “Get ready: ESG critics are coming for ‘S’ issues”). Disclosure of human capital metrics need to tie back to financial metrics and corporate corporate management practice, argue Atz and Whelan. “Does underpaying fast food workers in an industry that has turnover rates of more than 100% make financial sense?” the authors ask. “What about factoring in the negative customer reactions to disgruntled employees?” Another key question: “How much does a company’s positive reputation with workers improve its overall prestige, productivity, and ability to recruit the best employees?”
- Keep reading, “Flex of worker power raises the stakes for quality jobs,” by NYU’s Ulrich Atz and Tensie Whelan on ImpactAlpha.
Dealflow: Energy Access
Caribbean Investor Capital eyes $4.5 million stake in Solengy for solar in Haiti. Poor grid infrastructure and fuel shortages are driving demand for off-grid solar in Haiti, where less than half the population has reliable electricity. “The whole country runs off diesel generators, so the market signal to switch to solar is very clear,” said Jamie McInerney of impact investing advisory firm CrossBoundary, which is facilitating the sale of a minority stake in Port-au-Prince-based Solengy to Caribbean Investor Capital, a locally-owned and backed private equity firm. Solengy is tackling financing challenges to solar adoption in the Caribbean country, providing off-grid solar home systems and commercial and industrial systems on a lease-to-own basis. It designs its systems in-house to meet local customers’ needs.
- Locally-led. Haiti is a prime example small island nations’ vulnerability to climate climate and natural disasters. Haiti has been devastated in recent years by multiple high-magnitude earthquakes, hurricanes and floods. Decades of political instability and violence have deterred private investors. The Solengy deal marks a rare locally-led climate impact transaction.
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T-Mobile backs Pano AI to detect wildfires using its 5G network. San Francisco-based Pano AI has built a wildfire detection device that uses cameras, satellite feeds and artificial intelligence to pinpoint where new wildfires are starting and alert firefighters and other first responders. T-Mobile partnered with the climate tech startup last September to use its 5G network, which covers 1.9 million square miles in the US, to collect and analyze real-time data for faster wildfire detection and response. T-Mobile had been looking for creative ways to use the network; Pano AI was an obvious partner because of intensifying wildfire seasons in the US, T-Mobile’s John Saw told ImpactAlpha. “We know it’s going to get worse because of climate change,” he said. “We are doubling down on our commitment to bring this life-saving technology to more areas.”
- Climate adaptation. T-Mobile backed Pano AI’s $17 million Series A round through T-Mobile Ventures, its corporate venture capital arm. The funding will support Pano AI’s expansion into high fire-risk areas in North America and Australia. “The world has seen increasingly severe and frequent wildfires in recent years,” said Pano AI’s Sonia Kastner. “Even in an economic downturn, we must act rapidly to cope with these escalating effects of climate change.” Other investors include 5G Open Innovation Lab, Congruent Ventures and Convective Capital.
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Dealflow overflow. Other news crossing our desks:
- ICA Fund, a San Francisco-area small business accelerator, invested in co-working and childcare space Pillar, Black-owned bakery Rize Up, and three other local businesses via impact notes that incentivize impact by returning equity to business owners. (ICA)
- Coca-Cola is partnering with venture capital firm Graycroft on a nearly $140 million sustainability fund to reduce the beverage giant’s packaging, storage and supply chain carbon footprint. (AFN)
- Aristata Capital raised $67.2 million for its impact litigation fund for marginalized communities that would otherwise have difficulty paying for large, protracted legal battles, such as environmental disputes (for context, see, “Aristata Capital raises £40 million for impact litigation fund to close the ‘justice gap’”).
- Wells Fargo’s Innovation Incubator, backed by the US Department of Energy, supported St. Louis-based remote sensing startup HabiTerre, Portland, Maine-based ocean monitoring venture Running Tide, and 10 other startups developing climate-focused agrifood tech. (Wells Fargo Innovation Incubator)
Signals: Climate Finance
Managers vie for the mandate to stand up a national ‘green bank.’ Green banks, credit unions, community development financial institutions and other nonprofit lenders are scrambling for the mandate to manage the $14 billion National Clean Investment Fund, part of the national “green bank” created under the Inflation Reduction Act. The US Environmental Protection Agency on Friday opened the process to select up to three national nonprofit intermediaries to catalyze private capital and provide low-cost financing for local green projects, such as community solar and building energy retrofits. Another $6 billion will be awarded to up to seven nonprofit “hubs” under a separate Clean Communities Investment Accelerator. Applications are due by Oct. 12. At least $8 billion of the total $20 billion is earmarked for low-income and disadvantaged communities.
- Collaborative approach. Climate United, led by nonprofit impact lenders Calvert Impact, Community Preservation and Self-Help Credit Union, promises collaboration with lenders, technical assistance providers and other community partners. Opportunity Finance Network plans to provide training, tools and resources to its CDFI partners. Reed Hundt of the Coalition for Green Capital argued for a national entity to better offer deals at scale. Maggie Super Church and John Moon of the Lincoln Institute of Land Policy’s Center for Community Investment last month argued for a more “comprehensive, multi-sector, place-based approach.” “We have a lot of work ahead, but we’re pumped,” says Calvert’s Beth Bafford, who attended the briefing at Coppin State University in Maryland, where Vice President Kamala Harris launched the request for proposals.
- Keep reading, “Managers vie for the mandate to stand up a national ‘green bank,’” by Roodgally Senatus on ImpactAlpha.
Agents of Impact: Follow the Talent
In Africa, a group of national advisory boards for impact investing and task forces have launched the Africa Impact Investing Group to “mobilize capital for transformative change and sustainable development”… Justice Funders is hiring a remote senior director of transition investing… Purpose Foundation seeks a research lead.
LatinxVC is accepting through Saturday, July 22 applications from investment associates, senior associates and principals for its year-long mentorship program… Mission Investors Exchange is hosting a virtual meetup for emerging impact investing professionals of color, with a discussion featuring MIE’s James Wahls, ImpactAlpha contributing editor and The Investment Integration Project’s Monique Aiken, and Avivar Capital’s Tina Castro, moderated by Avivar’s Karla Moreno, Tuesday, July 25.
Thank you for your impact.
– July 17, 2023
