Happy Friday, ImpactAlpha readers!
You are an Agent of Impact. You work across issues and geographies and stages and asset classes. You are inside and outside “the system.” Yet you share a mission to move capital – human, social and financial – toward an equitable and sustainable, er, regenerative future. Each week, we’ll be highlighting Agents of Impact who are making things happen, have something to say or whom we just think other Agents should know about. We’ll feature investors, entrepreneurs, activists and advocates, along with the unsung operators and intermediaries who put deals together or make sure they don’t fall apart. First up: the 21 teenaged activists pressing the feds for a climate recovery plan in an historic climate-change trial set to begin next month (see below). Follow ImpactAlpha on Instagram and #agentsofimpact.
Growing the field of impact investing means creating pathways and attracting talent. ImpactAlpha’s Agents of Impact Call No. 4 is all about that rising talent, especially in MBA programs and other graduate and undergraduate schools, where interest in sustainable finance and impact investing is surging. To cut to the chase: “How do I get a job in impact investing?” Among the special guest will be Lauren Cochran of Blue Haven Initiative, who gets that question all the time. Sign up now for The Call, Thursday Sept. 27 at 10 am PT / 1 pm ET / 5 pm GMT. Register here.
– David Bank, editor
Featured: The Brief’s Big 10
1. The Impact Alpha: The reGeneration. In this week’s column, ImpactAlpha’s David Bank names and claims “the reGeneration” for those born since about the turn of the century, who are much more than Generation Z. Pile on and let’s anoint these rising leaders as they reach beyond “responsible,” “sustainable” and even “impact.” Anyway, they’re not asking anybody’s permission. Achieving the Sustainable Development Goals by 2030 will be a major feat for Millennials, X’ers and Boomers. The reGeneration will take it from there. Luckily for all of us, they’re not waiting to get started. Lead or get out of the way.
2. This week’s Agent of Impact. Victoria Barrett, 19 years old, is one of 21 young leaders taking the federal government to court over climate change. The trial starts Oct. 29 in Eugene, Ore., after the nonprofit Our Children’s Trust beat back furious attempts by the Trump administration to throw Barrett and her co-plaintiffs out of court. Barrett learned about environmental justice and racism in afterschool programs in New York City and “once I got involved in that, I just couldn’t ignore it.” Her own experience growing up, she says, taught her “there were people who needed more protection than others, and people who needed more protection than others and people who needed more kind words than others, more support than others, more resilience.” Meet Victoria.
3. Private debt meets impact. Private debt is discovering impact investing. The private-debt boomlet that emerged from the 2008 financial crisis grew to a record $107 billion last year raised by hedge funds and other asset managers. But few U.S. private debt funds have targeted impact; those that do collectively manage less than $1 billion. “It is time to realize the immense opportunity to apply an impact lens,” Chloe Zhu, a credit investor at White Oak Global Advisors, writes on ImpactAlpha. Her arguments: Impact strategies can reduce the risks of direct lending, lower the cost of capital and attract a new crop of investors. Don’t miss it.
4. Opportunity zone watch. Inclusive fund managers, data-driven strategies and California drove the opportunity zone story this week as investors await qualification and implementation rules from Treasury. Don’t miss:
- Catalytic capital. The Kresge and Rockefeller foundations identified 20 potential opportunity fund managers “driving positive outcomes in low-income communities” that could receive grants and support, and even impact investments. More.
- Problem-first investing. On ImpactAlpha, Reinvestment Fund’s Don Hinkle-Brown and Ira Goldstein overlay Opportunity Zone tracts with the areas of Limited Supermarket Access to identify markets and tackle U.S. food deserts. More.
- Opportunity California. At last week’s climate summit, Los Angeles Mayor Eric Garcetti told ImpactAlpha he’s working to marry climate action and opportunity zone investments, “so we can locate green factories in neighborhoods that also are low-income” and to press for federal guidelines so “we measure things like carbon output and eventually even carbon-neutrality.” The California Opportunity Zone Partnership will help smaller California cities take advantage of opportunity zone tax incentives, while a California Opportunity Zone portal will help investors find opportunities in environmental justice, sustainability, climate change, and affordable housing.
5. Deals of the week. Drink from the deal firehose all week long on ImpactAlpha.com. A few that stood out:
- Farmer, food and fish finance. The Meloy Fund closes $22 million for sustainable fisheries… Egypt’s FreshSource raises seed funds to link farmers to markets.
- Climate and clean energy finance. Climate Fund Managers invests $50 million in Singapore’s Cleantech Solar… Salesforce commits $10 million for climate startups… California Clean Energy Fund invests in Indian solar through cKers Finance.
- Innovative finance. UBS Optimus Foundation leads Indian education impact bond expansion. Update: IXO Foundation, which is using blockchain to collect and verify impact data, told ImpactAlpha it will measure impact on the India education impact bond.
- New Revivalists. LISC launches U.S. small-business venture to lend in all 50 states.
- Well-being. Andy Slavitt’s Town Hall Ventures raised $115 million for its first fund focused on improving the health of underserved Americans. LPs include four of the five largest non-profit health systems and non-profit health payors.
6. Blockchain’s environmental “game-changers.” The decentralized electronic ledger has the potential to “unlock and monetize value in environmental systems,” says the World Economic Forum. Use cases include: more efficient and decentralized utility systems; peer-to-peer trading of resources or permits; “see-through” supply chains; new financing models for environmental outcomes; and the realization of social and environmental value and natural capital. Get smart quickly.
7. The market opportunity in insuring the world’s small farmers. Small farmers on small plots of land are subject to health shocks, market fluctuations, severe weather and pests. Such risks limit income and economic advancement by causing farmers to underinvest in their own productivity, including in seeds, mechanization and irrigation. Some 270 million small farmers in developing countries require coverage for about $80 billion in farm inputs, according to a new report from ISF Advisors. Advancements in tech, data and computer modeling are eliminating the costs of in-person farm visits by shifting to index-based products based on weather, satellite and area-yield data. It’s an emerging market.
8. Bridging the gap in racial equity is investible. Investment vehicles designed to boost access to fair and decent work, housing and capital are proliferating. In venture capital, for example, Harlem Capital, Backstage Capital, Kapor Capital and others are creating funds to put capital into the hands of minority entrepreneurs. A new report from Cornerstone Capital Group outlines a multi-asset, multi-impact sector investment strategy to advance racial equity. Spoiler: It’s an impact alpha strategy.
9. Global investors expect sustainable investments to outperform. To be young, wealthy and outside the U.S… means to dig sustainable investing. A new UBS survey of 5,300 investors in 10 global markets shows that the majority of investors surveyed in China, Brazil and the UAE expect outperformance from sustainable investments. In the U.K. or the U.S., just 27% and 19% of investors, respectively, expect sustainable investments to outperform. Dig in.
10. Digging into the ‘why’ of impact investing. This week’s sampler of The Purpose of Capital shows off the new book from impact investing pioneer Jed Emerson. “I’ve realized we must redefine our understanding of the next step for impact investing and the evolution of our own understanding of the purpose of capital,” writes Emerson in the last excerpt. One very basic question: “How are we each called to act to remove injustice and its related barriers to each member of our human and non-human community and ecosystems attaining sustained freedom in our world?” The Little Book of Jed.
— September 21, 2018.