Greetings, ImpactAlpha readers!
The good thing about exponential solutions is they can scale, well, exponentially. We’re going to need such backloaded progress to meet the 2030 Sustainable Development Goals and fulfill the Paris climate agreement. If you read between the lines of the pronouncements at UN Week in New York, or last week’s climate summit in San Francisco, it’s clear we haven’t yet turned the corner toward financing the low-carbon economy and a more equitable society. Frameworks, standards and collaborative initiatives can seem like so much posturing, until they take hold and shift the direction of flow. Things move very slowly until they move very fast.
– David Bank, editor
Featured: The Brief’s Big 7
1. The disruption is nigh. Global temperatures continue to rise, while falling cost curves for clean energy and battery storage are driving uptake and investment, especially in emerging markets. A U.S. map of “robot density” shows where automation is uprooting low-skilled jobs, while online skills marketplaces and up-skilling platforms are taking off. Generation Investment Management’s second Sustainability Trends Report includes 200 indicators around energy, urban mobility, health and wellbeing and the future of work. Through accelerated innovation, consumer demand or government intervention, “the likelihood of disruption is going up,” Generation’s Colin le Duc told ImpactAlpha. Sustainability risk is on.
2. SDG fund managers are scaling up their ambitions. Impact fund managers that have taken seriously the investment case for the Sustainable Development Goals are raising fresh capital for investments in healthcare, education, agriculture, energy access and other SDG priorities. Blue Like an Orange Sustainable Capital reached a first close of $100 million for SDG-aligned investments in Latin America. TPG Growth is moving to raise a second Rise Fund, targeting $3 billion, and is nearing a takeover of Abraaj’s $1 billion health fund aimed at SDG No. 3: Ensure healthy lives and promote well-being for all.
- How to expand the supply of SDG investment products. In a guest post on ImpactAlpha, Rockefeller Foundation’s Lorenzo Bernasconi and C-Change’s Carolien de Bruin and Josephine Damstra, call for “a step-change in the number and scale of fit-for-purpose investment products that are SDG-aligned.” More here.
- How to transfer risk, lower costs and get projects off the ground. Roughly 40 “fragile or conflict-affected states” are key to reaching Sustainable Development Goal No. 1: End poverty. A mix of direct funding, incentives and technical assistance can mitigate risks and crowd in capital, Dalberg’s Kusi Hornberger and Maria Camila Saad write in a guest post on ImpactAlpha. Lessons from the field.
- How to blend capital for development. The $100 billion tally in this month’s “State of Blended Finance” report already is out-of-date. The up-to-date number from Convergence, the blended-finance matchmaker, is $131 billion. Last year’s total was $51.2 billion. Take a look.
3. Authenticating impact. Investor demand for SDG-aligned investments has been stalled by confusion about what is and isn’t an investment in the Global Goals. Developments this week could bring impact clarity out of complexity.
- The World Benchmarking Alliance is providing free and public data benchmarks on the SDG performance of 2000 companies. More.
- The Impact Management Project brought together nine standard-setting organizations to standardize impact management. More.
- SDG Impact, a project of the United Nations Development Programme, will manage a new ‘seal and certification’ for investors and enterprises to authenticate their alignment with the SDG Impact standards. More.
4. Agent of Impact. Nathalie Molina Niño’s new book, Leapfrog: The New Revolution for Women Entrepreneurs, includes 50 “hacks” for start-up founders who don’t have access to old-boys networks or Silicon Valley connections. Her firm, BRAVA Investments, invests not based on whether the founders are women, but whether they benefit women economically. “My goal isn’t to find a woman and make her the next Zuckerbergian billionaire,” she writes, “so much as it’s to find companies that can level the playing field for a billion women.” Find Nathalie and other Agents of Impact on ImpactAlpha’s Instagram.
5. Deals of the week. Drink from the deal firehose all week long on ImpactAlpha.com. A few that stood out:
- 2030 finance. Impact Shares’ new ETF focuses on support for the Sustainable Development Goals… SunFunder raises $25 million from OPIC for Asia and Africa off-grid solar fund… MIT “solvers” target work, learning, coasts and health… WaterEquity’s third fund closes on $33 million.
- Inclusive economy. Detroit’s Entrepreneurs of Color Fund gets $4 million boost… WeWork Creator Fund will back “future of work” startups… Prodigy tops $1 billion in debt for international student lending.
- Well-being. Townhall Ventures secures $115 million for health access fund… Rise Fund backs Ceribell’s rapid seizure diagnostic device.
6. Off-grid energy access is gaining investment traction (podcast). About 100 million people a year are gaining energy access each year, likely pushing the number of people worldwide without electricity below one billion in the coming year. The Shine Campaign has identified 10 fund managers who expect to collectively deploy $1.3 billion in the next two years. Energy access is an impact investment even curmudgeons can love. Listen in.
7. One foundation’s journey to a 100% impact portfolio. The Edwards Mother Earth Foundation in Seattle decided in 2014 to invest 100% of its $35 million endowment for environmental benefits and competitive financial returns. With the help of Caprock Group, the foundation shared its three-year journey in a transparent case study that digs into asset allocation, liquidity, benchmarks, manager selection, impact measurement and more. The impact? More than three million megawatt hours of renewable energy, a reduction of more than two million metric tons of greenhouse gases, and 11,000 hectares of forest preserved. Take a deeper look.
— September 28, 2018.