The Brief’s Big 9: The right tools to bridge capital gaps, investing from foundation endowments, China’s sponge cities, Dealflow roundup



Welcome to the weekend, ImpactAlpha readers!

Impact finance is breaking out all over. But there are limits to how many places ImpactAlpha can be. We were sorry to miss the Sustainable Energy for All forum in Lisbon last week, which zeroed in on Sustainable Development Goal No. 7: Access to affordable, reliable, sustainable and modern energy (for all, of course). “Valley of death too long between most businesses in this space and complex, carbon-credit-backed, innovative finance,” tweeted SEFA’s CEO Rachel Kyte, a former World Banker. Delegates, she said, reported “fatigue with different multi/bilateral partners offering solutions, with different theories of change, sometimes coordinated, sometimes not. 20th century solutions for 21st century energy systems.” Check out Kyte’s whole thread, and let us know how you’re driving sustainable energy for all on ImpactAlpha’s subscriber-only Slack channel.

The Brief’s Big 9

1. The Impact Alpha: Finding the right tools for the job of bridging capital gaps. Flexible and patient capital is often what’s needed to build markets failed by traditional institutions. Foundation “program-related investments” are one structure for such capital, but they’re a klugey hack, David Bank writes in this week’s column. In a world awash in money, such high-risk or low-return — or both — investments represent a tiny fraction of a tiny fraction. It’s time for a much broader range of investors to step up to build — and fund — the right tools for the big jobs ahead. Read David’s column.

2. ‘E’ is for endowment. Mission investors head to Chicago for the biennial Mission Investors Exchange conference next week “The imperative and the urgency for foundations to align more assets to mission couldn’t be greater right now,” MIE’s Matt Onek said in a Q&A with ImpactAlpha. “Foundations are increasingly re-envisioning how to deploy all their assets — including their endowments — for greater impact.” Place, race and impact will top the agenda; debates over the most effective strategies are far from settled.

3. Opportunity Collaboration tries to get ahead of its #MeToo moment. Could this be a model for crisis-management? At its Florida gathering this week, the resort-style anti-poverty conference reinforced its zero-tolerance policy toward sexual harassment by exiling its founder. A highly produced three-minute video, sessions throughout the conference and a note to delegates reinforced the message: “Our founder overstepped some boundaries and he is no longer with us,” Rockwood Leadership Institute’s Akaya Winwood, a conference partner, said in the video. “We hold him as accountable to what we believe in as we hold everyone in our community.” The industry’s reckoning isn’t over.

4. China’s $300 billion investment in green infrastructure for ‘sponge cities.’ When heavy rains hit China’s urban areas, narrow streets flood and polluted runoff damages natural resources and drinking water reserves. China’s plan: create 30 “sponge cities” and retrofit 80% of urban areas with green stormwater infrastructure by 2030. Urban areas around the world are using open space, permeable pavement and green roofs to manage stormwater and pollution. China’s $300 billion sponge city plan.

5. Deals of the week. Drink from the firehose every morning in our Dealflow newsletter, or check the stream on ImpactAlpha.com. The deals are flowing:

6. Sizing the market for Christian impact investing. The Franciscan Sisters of Mary in St. Louis, the Church Pension Fund and others are investing tens of millions of dollars seeking Christian impact. A new report estimates the size of Christian socially responsible investment at $260 billion, or 3% of all socially responsible invested assets, and “Kingdom impact investing” at $3-4 billion. Investors can take their “measurable ‘Christian’ return” in many forms, the report says, “from overt evangelism to the faith convictions of a company owner.” Study up on Christian impact.

7. “Localization” strategies driving impact investing globally. In Japan, impact investors are backing disaster relief. Europeans and Canadians are investing in “the solidarity economy.” Different national and cultural contexts are driving policy recommendations among 17 national advisory boards of the Global Steering Group for Impact Investing, report David Wood and Katie Grace Deane of Harvard’s Initiative for Responsible Investment. Think local, act global. 

8. Making customers believe banking can be better. Scandals, high fees and corporate greed over customer needs. That’s what U.S. consumers expect from their banks. The Hewlett Foundation is looking for examples of sustainable retail finance. People want a better way to bank, but few have heard of a sustainable bank and even fewer have switched their accounts. Now, sustainability-focused banks are pulling out the stops to attract customers. Some of the efforts.

9. Unlocking the value of refugee talent. It’s not easy to find work when you’ve lost your home and many of your rights. The U.N. has a 10-point plan to capture the considerable talent of refugees for economic development. Companies, too, are looking to capitalize on refugee skills. Public and private players step up.

— May 11, 2018

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