The Brief | January 25, 2019

The Brief’s Big 6: Impact measurement, ESG’s impact, future of food, rebalancing local investing, climate activist Agent of Impact

The team at


TGIF, Agents of Impact!

The World Economic Forum did a good job in Davos this week serving up billionaires and other elites to be skewered by their increasingly emboldened critics. Michael Dell, to nervous chuckles, was called upon to rebut U.S. Rep. Alexandria Ocasio-Cortez’s call for a 70% marginal tax rate on incomes above $10 million. “Name a country where that’s worked, ever,” Dell said. Fellow panelist Erik Brynjolfsson, an MIT economist, had a quick answer: “The United States.” (Until the 1980s, the U.S. for decades notched strong economic growth with top rates above 70%, and above 90% in the 1950s). A 16-year-old Swedish girl went beyond gotchas to issue a clarion call for climate action (see No. 4, below). “I don’t believe for one second that you will rise to that challenge, but I want to ask you all the same,” Greta Thunberg told the Davos delegates. “I ask you to prove me wrong.”

– David Bank, editor

Featured: The Brief’s Big 6

1. Behind the mixed welcome for The Rise Fund’s impact-measurement spinoff. Impact investing pioneers have been sticklers for impact measurement. But when a brash newcomer staked out an ambitious approach, the knives came out. TPG Growth’s Rise Fund launched Y Analytics as a standalone impact measurement and research firm to burnish the private-equity firm’s impact cred among institutional investors. The impact faithful have yet to be convinced. Critics suggested the Rise Fund’s “impact multiple of money” calculation is ripe for manipulation and grouse the method may cherry-pick positive outcomes without accounting for negative consequences. The emerging industry is beginning to converge around shared norms for impact measurement and management. With its first $2 billion impact fund nearly fully committed and a $3.5 billion second fund in the works, The Rise Fund has a seat at the table, but apparently not a free pass. It’s all love.

2. ESG may boost returns and reduce risk, but does it drive impact? ‘ESG’ covers any of dozens of environmental, social and governance factors that can affect the performance of public equities and other assets. ESG is not a cure-all for the world’s ills, but the long-term impact of ESG measurement and disclosure may be profound. Rewarding good corporate actors and punishing the bad ones is driving splits that system-changers can build on. “The discussion moves forward, the predicate gets laid, the data gets collected and that sets the stage for the next set of demands,” ImpactAlpha’s David Bank argues in the latest Returns on Investment podcast. “I don’t want to spend our time trashing ESG. I want to get on with what we’ve now got the platform to do.” Divide and conquer.

3. Sustainable food’s investment imperative. Improving the sustainability of the $7.8 trillion global food industry is what analysts call an “inevitable imperative.” That makes all the more compelling investment opportunities in companies improving the efficiency of farms, decreasing food waste and shifting eating habits toward healthy, plant-based diets. A new report from Village Capital rounds up the market drivers and deal flow driving a more sustainable food system. One insight: Go where food is grown. Almost 90% of the more than 100 startups that applied to Village Capital’s 2018 food and agriculture accelerator were headquartered outside the venture capital corridors of New York, San Francisco and Boston. The roundup.

4. Agent of Impact: Greta Thunberg, climate activist. The only reason the 16-year old isn’t leading this week’s student strike outside Sweden’s parliament is because she’s in Davos to scold global business and political leaders for inaction on climate change. So she’ll join a School Strike 4 Climate Action in Davos, instead. Thunberg traveled 32 hours by train – not private jet – to the World Economic Forum in order to reduce her carbon footprint. She didn’t pull punches. “Someone is to blame,” she said in a video message. “Some people, some companies and some decision-makers in particular have known exactly what priceless values they are sacrificing to continue making unimaginable amounts of money.” She later joined a climate panel with Bono, Jane Goodall,, Kengo Sakurada and fellow Agent of Impact Christiana Figueres. Student strikes for climate action have spread rapidly since Thunberg first chided world leaders at last month’s U.N. climate conference in Poland. On Thursday, more than 35,000 students marched in Brussels, following strikes in Germany, Belgium and Switzerland last week. “The year 2078, I will celebrate my 75th birthday,” Thunberg said in Poland. “If I have children maybe they will spend that day with me. Maybe they will ask me about you. Maybe they will ask why you didn’t do anything while there still was time to act.” Follow ImpactAlpha on Instagram.

5. Deals of the week. Drink from the deal firehose all week long on A few that stood out:

6. The meaning of Ujima. The Swahili word is a Kwanzaa principle meaning ‘collective work and responsibility.’ In Boston, it represents a challenge to the investor-centric investment model that even most impact investors have adopted. How? Boston Ujima Project allows community members to invest and to prioritize the types of businesses their neighborhoods need. Then they vote on what gets funded. In a guest post on ImpactAlpha, Transform Finance’s Curt Lyon breaks down how the fund shifts risk and spreads returns: Unaccredited investors in Massachusetts get lower minimums and higher returns, and more loan-loss security. Institutional, philanthropic and accredited investors get higher minimums and lower returns. That shifts the balance of risk toward those who can most bear it. Go local.

— January 25, 2019.