The Brief’s Big 8: Climate optimism, Bezos’ down-payment, waiting and worrying in opportunity zones and emerging markets, inside Abraaj



Happy Friday, ImpactAlpha readers!

Global Optimism. That’s the name of the consultancy Christiana Figueres launched after her stint as U.N. climate chief, during which she shepherded the Paris climate deal into existence. She came to the Global Climate Action Summit in San Francisco this week to deliver a powerful dose of that optimism. #Exponential. “Unstoppable forces” are pushing decarbonization faster than anyone predicts, Figueres says. “Disruption is here.”

This week, you could feel that civilizational effort mobilizing. If it succeeds, optimists like Figueres could well be not only prophetic, but decisive. Sentiment frames expectations. Expectations underpin investments. Investments drive trends. Trends tip markets. We all have to be optimists now.

David Bank, editor

Featured: The Brief’s Big 8

1. Climate commitments. We don’t yet have a full accounting of the city, state, corporate and investor commitments at the summit. Here’s a sampler. A climate solution rising on the global agenda is trees; at least eight foundations pledged $459 million through 2022 for land-use and conservation. Core to the effort are indigenous people, whose lands hold about one-quarter of all above-ground tropical forest carbon. In the U.S., Native American tribes are cutting deals to sell credits on California’s carbon market. ImpactAlpha contributor Carol Clouse has the story.

2. Abraaj watch. The emerging-markets fund manager and champion of investing in the  Sustainable Development Goals “was spending beyond its means and towards the end using other people’s money to do it,” according to a sweeping Financial Times feature this week on Abraaj’s rise and fall. Abraaj spokespeople and Arif Naqvi, the firm’s founder and largest shareholder, continue to deny wrongdoing. Key questions: what will happen to Abraaj’s $1 billion Growth Markets Health Fund, which counts the Gates Foundation and other impact investors among its limited partners. Will the fall of Abraaj chill investments in the SDGs? In emerging markets (see #6 below)? In impact? Watch this space.

3. Billionaires’ bets. With a tweet, Amazon’s Jeff Bezos pledged $2 billion of his estimated net worth of $163 billion to the Bezos Day 1 Fund, which will back existing nonprofits that help homeless families and create a new network of nonprofit preschools in underserved communities. (No seed capital for “a new generation of makers, creators, and doers.” Sorry, Ross Baird!). The Day 1 Families Fund plans leadership awards to needle-moving organizations sheltering and feeding young families without a home. The Day 1 Academies Fund, Bezos said, would launch a network of Montessori-style preschools in low-income neighborhoods. “The child will be the customer,” he said. In a tweet that went viral, CNN economy reporter Lydia DePillis asked “Is this better than just taxing the wealth of the richest man in the world, and making that money democratically accountable?”

  • Alibaba’s Jack Ma (net worth: $36 billion) said last week he is stepping down to focus on education. “I will learn from Bill Gates, Warren Buffett and a lot of great philanthropists in the world, but I want to do something using my own way,” Ma told Bloomberg. Gates (net worth: $96 billion) and Buffett (net worth: $89 billion) have pledged to give away at least half of their wealth. Bezos and Ma have not made the Giving Pledge.

4. Waiting for guidance (on opportunity zones). Uncertainty reigns around rules for investments into low-income communities across the nation under new opportunity zone tax legislation. Lack of clarity from the U.S. Treasury Department (are rules coming soon?) “is stalling opportunity zone activity across the nation and may mean communities miss out on attracting capital to local businesses and projects,” Enterprise Community Partners’ Rachel Reilly wrote in ImpactAlpha this week. The information vacuum, notes Reilly, gives first movers the opportunity to model best practices. Some are seizing it.

5. Worrying about emerging markets. Currency routs in Argentina and Turkey. Political and economic isolation in Russia. Recession in South Africa. What’s an impact investor to do? “When short-term capital flees a country due to volatility, then the long-term sticky nature of impact or SDG capital can become even more valuable,” says ISF Advisors’ Dan Zook, a smallholder ag expert. “The very nature of impact capital plays an important role in protecting workers and communities from financial shocks,” adds Sebastián Welisiejko, Argentina’s secretary for socio-urban integration. More than half of impact investing AUM is in emerging markets.

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

7. De-risking immigrant entrepreneurship. A proposed rule that would allow foreign-born entrepreneurs to remain in the U.S. is under attack from the Trump administration. From the other direction, Unshackled Ventures is raising a new fund specifically to invest in immigrant entrepreneurs. Part of its mission: create 100,000 American jobs. Unshackled has made 32 investments in 25 companies since 2014. History is on their side.

8. Beware cures for ‘impact-washing’ that may be worse than the disease. “You’re seeing impact investing being used as a marketing tool by B- or C-list managers, who think they can use ESG or impact as a way to raise money from institutional investors they otherwise couldn’t raise money from,” charges Imogen Rose-Smith on this week’s Returns on Investment podcast. But self-appointed gatekeepers should be wary of creating barriers to entry to impact investing in the name of fighting such “impact-washing,” David Bank argues in the roundtable discussion. “Invite them in. Don’t bar the door.” Each new level of impact, he says, creates proof points, possibilities and constituencies for deeper efforts. Read on and listen in.

September 14, 2018.

You might also like...