TGIF, Agents of Impact!
🗣 Optimization engines. Algorithms already determine whether you get a loan, how much you pay for health insurance, and how fast your customer-service calls get answered, if ever. With artificial intelligence infiltrating nearly everything (as of this week, it seems), it’s not too early to think about the rules, the data and the assumptions behind what tech publisher and investor Tim O’Reilly calls “the master algorithm.” I listened again to our podcast interview to prep for a webinar this week on AI and impact investing. “We are building a vast algorithmic system that rules our society,” O’Reilly told me (five years ago!). If the emerging super-brain ingests shareholder primacy, short-term thinking, racial bias and all the rest, its decision-engine will grind tirelessly to amplify such relics. One can imagine GPT-4, for example, advising Federal Reserve Chair Jerome Powell that the only way to tame inflation is to undercut the power of labor, which had finally been enjoying higher wages and real income gains after decades of stagnation, as Atlas Impact’s Robert Brown dissects on this week’s Impact Briefing podcast.
Agents of Impact are programming a different algorithm. Southern Reconstruction Fund’s Napoleon Wallace poses an algorithmic question when he asks the crowd to help identify the right metrics to judge the effectiveness of investment strategies for racial wealth-building and racial equity (nominate your own favorite metric and help sort the field on next week’s Call). Roodgally Senatus explores PolicyLink’s new blueprint for racial equity investors, which frames 10 outcomes toward which the new algorithm could optimize. New research on human capital could help reshape accounting algorithms to treat workers as assets, not liabilities. Other Agents are optimizing on water supplies, working forests, tree-planting and climate solutions in emerging markets.
Our third roundup of impact reports, this month from managers like Founders First and Mercy Corps Ventures, keyed in on the metrics, such as quality jobs and rising small-business revenues, to which they have hitched their investment strategies (send us yours). BlueMark’s Sarah Gelfand answers frequently asked questions about what should go into such reports. This spring’s spate of shareholder resolutions on climate action, reproductive rights and corporate political influence have become proxies in the broader battle over ESG investing, as Amy Cortese reports. Hundreds of companies and investors are mobilizing to protect “the freedom to invest responsibly” (see Agent of Impact, below). The contest to define the master algorithm is well underway. – David Bank
- Metrics madness. Don’t miss the fun finale on Agents of Impact Call No. 50, Wednesday, March 29, at 10am PT / 1pm ET / 6pm London. RSVP now.
The Week’s Impact Briefing
🎧On this week’s podcast. Host Monique Aiken has the headlines and Atlas Impact Partners’ Robert Brown and ImpactAlpha contributing editor Imogen Rose-Smith join David Bank to parse how bank failures and interest rate hikes have changed the dynamics of impact investing – perhaps forever. “There were a lot of great ideas that were lousy businesses, which got funded over the last 10 years in an exceptionally accommodative interest rate environment,” Brown says. “That’s over.”
- Listen to this week’s episode, and follow all of ImpactAlpha’s podcasts on Apple, Spotify or wherever you listen.
The Week’s Agent of Impact
Mindy Lubber, Ceres: Making the business case for responsible investing. Hundreds of companies and investors this week urged policymakers to protect their “freedom to invest responsibly,” marking a new level of mobilization to reclaim the narrative from an anti-ESG campaign that refuses to go away. A key orchestrator of the effort was Mindy Lubber, who has, for two decades at the helm of the nonprofit Ceres, worked the levers of power in corporate offices, investor boardrooms and on Capitol Hill in support of climate goals. She helped marshal business buy-in for the 2015 Paris climate accord and the more recent U.S. Inflation Reduction Act. This week, her organization is convening 500 business and government leaders in New York. “A freedom to invest,” she says, “is very definitely a core part of the American way.”
Earlier in her career, Lubber founded Green Century Capital Management, headed the Massachusetts Public Interest Research Group, and had a stint in the Environmental Protection Agency in the Clinton era. At Ceres, she has grown a scrappy band of investors and environmentalists into a network that includes 220 institutional investors managing more than $60 trillion in assets. The nonprofit was launched in 1989 in the wake of the Exxon Valdez spill. It has helped spawn initiatives including the Global Reporting Initiative, the Net Zero Asset Owners Alliance, and Climate Action 100+ (the latter initiative earned Lubber a threatening note from conservatives on the House Judiciary Committee). “Representing communities and integrating justice, environmental and social issues into our capital markets has become part of the norm,” Lubber says. “I don’t think that’s going to change just because politicians want to debate it.”
- Keep reading, “Mindy Lubber, Ceres: Making the business case for responsible investing,” by Amy Cortese on ImpactAlpha and share the story on Instagram.
- Dig deeper. The letter signed by hundreds of businesses and investors this week insists ESG “is not political or ideological,” but “represents good corporate governance, prudent risk management, and smart investment practice.” Signing on were Franklin Templeton, Generation Investment Management, the New York State Common Retirement Fund and Trillium Investment. Missing: major banks and asset managers, including BlackRock, Vanguard and State Street, which have dialed back their public support for sustainable investing in the face of conservative attacks (see, “In Larry Fink’s letter to investors, ESG is the business imperative that dare not speak its name”).
The Week’s Dealflow
Dealflow spotlight: Catalyzing capital for Africa’s water and sanitation infrastructure. Providing access to clean water and sanitation has long been a public-sector responsibility. But lower-income countries struggle to fund and implement critical water and sanitation infrastructure. More than two billion people worldwide still lack access to sanitation services; nearly a billion lack clean drinking water. This week, Belgium-based Incofin rolled out its Water Access Acceleration Fund with €36 million ($38.4 million) in blended financing from development finance institutions, banks, nonprofits and other organizations “to prove that the drinking water sector is investment-ready, even when targeting low-income people,” said Incofin’s Dina Pons. The fund includes a first-loss layer staked by USAID.
- Climate smart. British International Investment and water infrastructure investor Metito Utilities launched Africa Water Infrastructure Development to build and finance climate-smart water and wastewater treatment plants. “Such projects are particularly capital intensive,” said Metito’s Rami Ghandour. Its first investment is a drinking water plant in Rwanda that has also secured backing from the African Development Bank.
- Water finance shortfall. The two funds launched ahead of World Water Day this week. The U.N. hosted its first water conference in 50 years to set a global water agenda patterned on the global climate agenda (see, “Putting a ‘price on water’ and other opportunities to address the H2O crisis“). A survey by UN Water of 121 countries found that more than $63 billion is needed annually to meet water, sanitation and hygiene, or WASH, needs. Three out of four countries, mostly in Africa, lack sufficient capital to fund WASH infrastructure and other projects.
- Flow of projects. Despite the challenges, governments and international development agencies are rolling out projects across the continent. South Africa is planning new water reservoirs to shore up supply around Pretoria and Johannesburg, where many residents’ taps have run dry. USAID is committing $100 million to improve sanitation services in Kenya. Japan is investing in irrigation in Egypt’s drought-hit Nile Delta and new drinking water systems in Mozambique. The European Investment Bank is providing €14 million ($15 million) for drinking water in São Tomé and Príncipe.
- Dive in.
Agrifood investing. California-based Andes clinched $30 million to make soil treatments that help farmland absorb more carbon… Eco.business Fund staked $10 million to Absa Bank to boost agribusinesses’ climate resilience in Kenya… Pepsico committed $216 million to three organizations fostering regenerative agriculture in the U.S.
Clean energy. Avaana Capital backed Aerem to convert India’s small businesses to solar power… Inspired Evolution reached a first close of $199.4 million for its third energy transition fund… Nuru raised $1.5 million to build solar-hybrid minigrids in in the Democratic Republic of the Congo… Piclo raised £8.3 million to add clean energy sources to electricity grids.
Climate finance. British International Investment committed €20 million to Meridiam’s Urban Resilience Fund to invest in climate-resilient urban infrastructure in Africa… Investments in Closed Loop Partners’ and Brookfield’s recycling company, Circular Services, approached $1 billion with new commitments… SWEN Capital Partners closed its Blue Ocean Fund at €170 million.
Financial inclusion. Credable raised $2.5 million to accelerate embedded finance in emerging markets… Quona Capital reupped its investment in Indonesian vehicle financing startup Broom… Nigeria’s OnePipe raised $4.8 million in debt financing to provide back-end tech to institutions delivering financial services to small businesses… Brazilian fintech venture Barte raised $3 million to help small businesses manage payments and access capital… Nigerian online bank FairMoney acquired PayForce, which provides payment services to small businesses.
Fund news. A new fund for the digital and creative industries in Nigeria secured $618 million… Robeco raised €130 million to offer private debt to help small and mid-sized companies in northern Europe bolster sustainability initiatives.
Impact tech. Maqsad secured $4.9 million to expand access to affordable online education for students in Pakistan… Netherlands-based AG5 secured €6 million to help manufacturing companies upskill frontline workers… Verod-Kepple Africa Partners secured $43 million to invest in tech businesses in Africa.
Investing in health. India’s Gynoveda scored $10 million to provide online consultations to women about menstrual cycle-related health issues.
Returns on inclusion. Wheel the World secured $6 million to make travel more accessible to people with disabilities.
The Week’s Talent
James Andrus, ex- of the California Public Employees’ Retirement System, joined Franklin Templeton in the new role of sustainability global markets vice president… Claudia Levan, former principal at General Atlantic, joined Lightspeed Venture Partners as fundraising vice president… Josepha Montana, ex- of Turenne Capital, joined Partech as chief sustainability officer, a new role.
Mafalda Duarte will leave Climate Investment Funds to join the Green Climate Fund as executive director, replacing Yannick Glemarec, who is stepping down next month… Gabe Kleinman, ex- of Obvious Ventures, joined Emerson Collective as venture capital operating partner… Gustavo Bernal Torres, ex- of Invartis Consulting, joined BMO Global Asset management as ESG integration manager and vice president.
Former Georgia state representative Stacey Abrams joined climate tech nonprofit Rewiring America as senior counsel… Former Los Angeles Mayor Eric Garcetti was named U.S. ambassador to India as the country takes on a pivotal role in climate efforts… Aegon Asset Management promoted Anne Scott to global climate solutions lead, a new role.
Harold Pettigrew Jr., ex- of the Washington Area Community Investment Fund, will become president and CEO of Opportunity Finance Network… Catherine Dun Rappaport, ex- of BlueHub Capital, joined Social Finance as vice president of impact advisory. Stephen Vicinelli, ex- of TIFF Investment Management, joins Social Finance as vice president of impact investments.
The Week’s Jobs
In New York, 60 Decibels is on the hunt for a sales associate, Nonprofit Finance Fund is recruiting a business development manager, New York Life Investments is hiring an impact investing analyst and senior associate, the New York State Insurance Fund is hiring a senior ESG and sustainability lead, and Open Society Foundations seeks a climate justice associate director.
The U.S. International Development Finance Corp. is recruiting an impact management and monitoring specialist for climate projects… Enterprise Community Partners is on the hunt for an investment communications manager. In San Francisco, JPMorgan Chase’s robo-advisor OpenInvest seeks a wealth management vice president for ESG data partnerships, and Community Investment Management has an opening for an investment analyst.
UBS is looking for a climate and sustainability strategist in Zurich… IMPACT Partners has an opening for an analyst in Barcelona… Also in Barcelona, Investing for Good seeks an innovative finance lead… Varrlyn seeks an investment manager for an agrifood fund in Amsterdam… Symbiotics is looking for a Switzerland-based business process and data specialist and a senior institutional marketing analyst… Allianz Global Investors is looking for a sustainable and impact investing business manager in Frankfurt… KOIS is on the hunt to fill several open positions in Brussels and Mumbai.
Other international locations
Rally Assets is hiring a head of impact management and other roles in Toronto… LGT Venture Philanthropy is looking for an impact fellow in data science, ESG or client relations management in Sao Paulo… Finance in Motion is looking for a fund management analyst in Bogota… The Impact Facility seeks a mining investment officer in Tanzania.
Northern Arc Capital is recruiting a senior associate for offshore debt capital markets in Mumbai… Breakthrough Victoria is hiring a portfolio construction director in Melbourne… Sustainable Finance Initiative is recruiting an impact investing project coordinator in Hong Kong… Tsao Family Office is looking for an ESG and impact investment analyst in Singapore.
South Pole is on the hunt for a sustainable finance managing consultant… Upaya Social Ventures seeks a communications intern… CNote has an opening for a vice president of legal… Common Trust is hiring a sales marketing manager.
That’s a wrap. Have a wonderful weekend.
– March 24, 2023