The Brief’s Big 9: Climate finance tipping point, place-based investment, first-loss protections, Opportunity Zone opportunity



Greetings, ImpactAlpha readers!

We’re up on all the buzzwords after this week’s Mission Investors Exchange conference in Chicago, the SOLVE gathering in Cambridge, Massachusetts, and the big private-equity convening in Washington, D.C. We’re confident intentional, catalytic, flexible, place-based, patient capital, free from implicit bias, will drive measurable, long-term, systemic change and — you guessed it — impact alpha.

It was great to see so many ImpactAlpha readers. Have a great weekend, all.

Featured: The Brief’s Big 9

1. The Impact Alpha: The climate-finance tipping point is here. If falling costs and improving technology aren’t enough to convince you that hockey-stick growth is here, another driver may: huge institutional investors are increasingly demanding low-carbon investments. Yes, blue-sky thinking can be dangerous. But right now, unwarranted pessimism is the bigger risk. The case for climate-finance optimism.

2. Deals of the week. Drink from the firehose every morning in our Dealflow newsletter, or check the stream on ImpactAlpha.com. Let the deals flow:

3. Talking system-change and impact investing at Mission Investors Exchange. Impact investing foundations gathered in Chicago this week at the biennial Mission Investors Exchange conference. Hewlett Foundation’s Larry Kramer mixed it up with Ford Foundation’s Darren Walker and Heron Foundation’s Dana Bezerra over the efficacy “mission-driven” investments. Is 5% enough?

4. Impact investors rediscover the power of ‘place’. Everything old is new again, including investments in creating thriving economies in our own backyards. ImpactAlpha dug into the Urban Institute’s report on nearly two-dozen investor groups around the U.S. that are raising and deploying capital in the places they love. The movement is on.

5. Unlocking off-grid energy with first-loss protections. The increasingly robust off-grid solar market is bringing clean electricity to hundreds of millions of people. It’s a textbook example of the impact of catalytic capital that can take higher risks or lower returns to crowd in additional capital. What unlocking finance looks like.

6. The opportunity – and peril – in Opportunity Zones. A new tax break is “the single biggest tax incentive to invest in low-income communities across America that we’ve seen in 100 years,” said the Rockefeller Foundation’s Rajiv Shah at Mission Investors Exchange. Foundations and impact investors have to move fast to ensure the impact of Opportunity Zones is positive. Here’s what’s up.

7. Closing the private-equity gap between impact intentions and allocations. There’s a 47 percentage point gap between private-equity limited partners who claim to consider impact in investment decisions and those who have allocated capital to impact investing. At this week’s global private equity conference, Carlyle Group’s David Rubenstein and the World Bank’s Jim Kim agreed private equity needs to get better at integrating impact into evaluations of risk and reward. More from D.C.

  • Follow-up: Caprock Group’s Matthew Weatherley-White named a related gap, “between stated impact investor intention and actual commitments.”

8. Micro-borrowers have a better survival rate than the average business.That’s one of the takeaways from a long-term study of U.S. microfinance. Also: Access to credit helps small firms grow and micro-loan borrowers create better jobs. Accion and Opportunity Fund tracked the impact of micro-loans to 350 borrowers over three years. Check it out.

9. Justin Trudeau on SOLVE’ing global challenges. At the MIT Solve conference in Cambridge, Massachusetts, the Canadian prime minister riffed on effective leadership, gender equity and learning that Santa isn’t real. ImpactAlpha’s Jessica Pothering filed these dispatches.

  • On Canada’s indigenous communities: “The people who have lived on this land for millennia have figured out how to be long-term responsible, sustainable, open to diversity—all of those things that we’re struggling with now. Many of them had solutions millennia ago that we tried to erase and now need to be valuing and drawing back and celebrating.”
  • On investing in Canadians: “We have been doubling down on education, doubling down on skills training… We have put in, deliberately, significant supports for people going back to school, even if they have a family, even if they have a job, to try and make sure that people are getting the tools that they need—programming, technical training and skills development—so that they can get those new jobs.”
  • More from SOLVE.

— May 18, 2018

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