TGIF, Agents of Impact!
Featured: The Brief’s Big 8
1. When Hiro Mizuno talks, people listen. We went to this week’s Milken Institute Global Conference in Beverly Hills to watch for an institutional shift toward sustainable investing. We found it in Hiro Mizuno, chief investment officer of Japan’s $1.6 trillion Government Pension Investment Fund, who may represent such a shift all by himself. At the Milken conference, Mizuno sought to enlist fellow “universal owners” in a collective effort. “When the systemic risks hit the market, all our efforts to beat the market are not going to be good enough,” he said. “As a group, we should make the capital markets sustainable.”
- Investor agenda. With the weight of the world’ largest pension fund, Mizuno is seeking to transform benchmark indices, notions of fiduciary duty, shareholder engagement – and the mindset of asset managers. GPIF two years ago required all its managers to integrate ESG, for environmental, social and governance, factors into their analysis. The fund has now added the phrase, ‘and investment decisions’ as well, because “we heard that they are integrating it into the analysis, but in decision-making they don’t care,” Mizuno joked.
- Tweak the algorithm. Mizuno said GPIF trusts human asset management and human wisdom to bring sustainability into finance. If they can’t, he warned, “We need to ask AI to do it.”
- Hiro’s Journey.
2. Packard Foundation takes part of the ‘impact tranche’ in New Forests’ tropical Asia fund. It’s common for different investors to take different tranches of debt that fit their appetite for risk and return. The Packard Foundation, with an appetite for more impact, took part of the ‘impact tranche’ in a planned $300 million tropical Asia forestry fund from Australia’s New Forest. The foundation agreed to receive a reduced return on its $10 million equity investment if New Forests delivers on specific goals for reforestation, biodiversity and community livelihood. That reduces the perceived risk for the fund’s commercial investors, who might balk at such “non-commercial” activities. “We’re still getting our capital back, we’re still getting a return, but it’s reduced versus the commercial investors,” Packard Foundation’s Susan Phinney Silver told ImpactAlpha. “The idea is to use that delta to drive the impact activities and prove out to commercial investors that this isn’t as scary as you think it is.” How’s your appetite?
- Getting paid. Impact tranches are part of a growing number of approaches that let companies monetize impact outcomes. See, “Impact-linked financial rewards help high-impact companies attract growth capital,” and “An incentive for companies that deliver on sustainability: lower-cost capital.”
3. Philadelphia Story: Capital markets are waking up to impact investments. Overheard at Good Capital Project’s Total Impact conference in Philadelphia this week: “ESG is a data set that helps us avoid land mines when we are making investments,” Jeff Gitterman of Gitterman Wealth Management told the crowd. As a sign of the times, State Street’s Lori Heinel pointed to the ESG mandate from Japan’s $1.6 trillion Government Pension Investment Fund (see No. 1, above). Sister Nora Nash of the Sisters of St. Francis of Philadelphia dished on her latest shareholder engagement effort. “We hold a tiny share of Chevron so we have a voice at the table,” she said, urging a vote on the sisters’ resolution on the Human Right to Water.
- Hat tips to Beth Bafford, Margaret Bradley and ImpactPHL for Total Impact insights.
- Our preview.
4. A New Revivalist develops a prototype for tech diversity in Pittsburgh. The New Revivalists in ImpactAlpha’s series with Village Capital are movers, shapers and doers driving inclusive entrepreneurship in small towns and big cities across the U.S. In Pittsburgh, Erin Gatz, is stirring up opportunity with the maker-space Prototype PGH, an on-ramp for women ‘makers.’ Prototype offers training and access to 3D printers and heavy woodworking and metal machinery, particularly for women and people of color. She’s seeking to correct the impression that the underrepresentation of those groups stems from a lack of interest in tech. Rather, she says, it’s bias. “Women are expected to do less. They’re taken less seriously. They’re given less funding,” Gatz told ImpactAlpha. “Yet, they’re doing more with what they’re given.” Join the revival.
- Take a spin through the full New Revivalist series.
5. Follow the talent with ImpactAlpha’s weekly report on career moves, job openings, events and opportunities.
6. Deals of the week. Stay on top of the dealflow all week long on ImpactAlpha.com. A few that stood out:
- Beyond Beyond Meat’s IPO: The plant-based meat company raised $241 million in an initial public offering on the Nasdaq stock exchange. By the end of the day, the plant-based meat maker was valued at more than $3.5 billion in another signal of the coming new world order of food. ICYMI: “Beyond Beyond Meat.”
- All India. Agtech startups connect Indian farmers to customers… India medical-consult platform mfine raises $17.2 million… India commuter-bus network Shuttl raises $5 million… Gray Matters Capital seeds platform to teach Indians to code in native languages… InCred, a lender to Indian consumers and small businesses, raises Rs 600 crore ($86 million)… Nexus Venture Partners and Omidyar Network India seed Mumbai-based WhiteHat with $1.3 million to teach next-gen coders.
- Future of work. Credly raises $11.1 million to grow digital credentialing… We Are Digital raises £1.5 million to bridge digital and financial skill gaps in the UK… World Bank dangles $50 million to draw early-stage impact capital to Egypt.
- Impact tech. Clara Foods raises a round for alt-protein ingredients… Bintel raises early funding round to streamline Sweden’s waste collection… Chicago’s Neopenda raises seed round to produce wearable neonatal monitors.
7. Urban-X’s smart-city startups. In the fifth year of a partnership between smart-city venture firm Urban Us and BMW-Mini, Urban-X showcased seven ventures with solutions that could make city life easier, safer and more energy and resource efficient. The products pitches included artificial intelligence to make construction safer (Buildstream), electric car ride-sharing (Circuit) and financing (Borrow), and e-commerce platforms for second-hand goods (Thrilling). A favorite: Ohio-based GreenQ, which installs sensors to make garbage trucks ‘smart.’ Take a spin.
8. Migrant-inclusion alpha. Investors are mobilizing to expand opportunities for migrants in Mexico. The Refugee Investment Network and Mexico’s Secretariat of Foreign Affairs launched the Initiative for Inclusive Investment in Mexico, or 3IM, to reduce displacement and create jobs for migrants. “Displaced people are contributors at their core,” said Refugee Investment Network’s John Kluge at this week’s Milken Institute Global Conference. Immigrant edge.
— May 3, 2019.