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The Week in impact investing: Breathe



TGIF, Agents of Impact! 

Take a deep breath. For most of this week, the word was “emergency.” Here in the San Francisco Bay Area, the air quality index hovered around 200, on the cusp of “unhealthy” and “very unhealthy,” while in parts of Oregon and Washington, it topped 400 – “hazardous.” Thousands are still displaced. Hurricane Sally, soon to be followed by Teddy and perhaps also Wilfred, is driving more climate refugees from the Gulf Coast. COVID-19 continues to keep us apart. That an election could be stolen by fraud or force went from conspiracy theory to conventional wisdom. 

Then the smoke began to clear, perhaps temporarily. I got outside, and back on my bike. I know that “I can’t breathe” were some of the last words of George Floyd (and before him Eric Garner and many others). “Emergency” remains an accurate description of the situation we face. I’m grateful to be able to take a deep breath and carry on. 

– David Bank

Agents of Impact Call No. 23: Changing the racial justice algorithm. Investors need to build a broader toolbox for advancing racial justice. Join Illumen Capital’s Daryn Dodson, Mastercard’s Marla Blow, Beeck Center’s Erika Davies, Activest’s Ryan Bowers and other Agents of Impact in conversation with Transform Finance’s Andrea Armeni and ImpactAlpha’s Monique Aiken and David Bank to explore how investors are deploying new tools, better data and smart strategies to root out racism in their portfolios. RSVP today.

Impact Briefing. On this week’s podcast, host Brian Walsh welcomes roundtable regulars Imogen Rose-Smith and David Bank to make sense of the calls to reset and reimagine capitalism. And we hear some provocative clips from hedge fund manager turned impact investor Jeffrey Ubben, this week’s Agent of Impact. Plus, the headlines. Tune in, share, and follow us on Apple, Spotify or wherever you get your podcasts. 

The Week’s Big 6

1. Resetting capitalism. Milton Friedman’s essay that ushered in the era of “shareholder primacy” turned 50 this week. In the new era of “stakeholder capitalism,” investors and corporations “have learned a better and more holistic way to serve our shareholders for the long term,” Cornerstone Capital’s Erika Karp wrote this week in The New York Times. A new advocacy campaign, Imperative21, launched to champion an “economic system that is designed for interdependence, invests for justice, and accounts for all stakeholders.” Reset

2. Digging deeper for racial justice. Racial justice activism is spurring action from investors, too. But capital is entangled with racial injustice in ways that current investor responses still largely fail to address, argues Shante Little of Transform Finance. “We know that finance can do more,” she writes. Dig deep.

3. Getting the most out of Climate Week. The world is running 52 years behind on meeting the 2030 Sustainable Development Goals. The climate agenda has largely stalled. The COVID crisis presents a once-in-a-generation opportunity to fuse climate action and social justice with COVID recovery plans. Climate Week preview

  • Unprecedented. In its annual energy outlook, the British oil giant BP forecast an “entirely unprecedented” drop in demand for fossil fuels, which could fall to 20% of the global energy mix by 2050. COVID is a catalyst. Reality check.

4. Moving ESG from intentions to outcomes. Capital flows to ESG-themed investing is spurring a raft of new products, strategies and tools. “The era of transparency has begun,” declared Harvard Business School’s George Serafeim and Sir Ronald Cohen. More on why, and how

  • Hedging. Pushing ESG investing beyond equities into interest rates, commodities and currency trading can help mitigate systemic risks, writes Welton Investment Partners’ Basil Williams.

5. COVID lessons from Southeast Asia. Social enterprises in Indonesia, Vietnam, the Philippines and elsewhere are shifting from COVID crisis management to “the new normal.” Investors able to offer patient, low-interest terms could unlock the “optimism and opportunity” of Southeast Asia’s social entrepreneurship ecosystem, write USAID RISE’s Kevin Robbins and Mike Monteleone.

  • COVID Alliance rallies support for frontline enterprises. The World Economic Forum is organizing investors, government organizations, intermediaries and networks to commit capital and resources to social enterprises as demand for their services surges. Pitch in.

6. Matthew Patsky walks the talk. In the latest edition of Walking the Talk, ImpactAlpha’s series with Confluence Philanthropy, Trillium Asset Management’s Matthew Patsky shares how he invests for environmental impact and social justice, especially race, gender and LGBTQI equality. Read on

The Week’s Agent of Impact

Jeffrey Ubben, Inclusive Capital. Oil giant BP this week called Peak Oil. Ubben, a veteran hedge fund manager, is calling Peak Finance. “Finance is, like, done,” he told the Financial Times back in June. Ubben was known as an activist investor at ValueAct, the $16 billion hedge fund he founded in 2000, pushing companies to make short-term decisions to increase profits, fire workers and buy back shares. He’s a different kind of activist at Inclusive Capital, which he launched in June with Lynn Forester de Rothschild of the Coalition for Inclusive Capitalism. They’re pushing companies in oil, gas and other sectors to transition, quickly, to socially beneficial business models. “We’re trying to change the system,” he says. Fixing or mitigating climate change is “the next huge break-out opportunity,” he said at this week’s Bloomberg Green Festival. Ubben began scooping up shares of BP as soon as CEO Bernard Looney staked out ambitious decarbonization goals. Inclusive has stakes in AES, the power company, and Nikola, the troubled electric truck maker (Ubben defends Nikola, but admits he pushed the company to go public too early).

That a manager like Ubben is running a “return-driven environmental and social activist firm” may help get institutional investors more comfortable with impact investing. But Ubben’s brash style may also make some of today’s environmental, social and governance, or ESG, investors less comfortable. “ESG does not create change,” he says, though he allows “it may make people feel good and may be a great way to grow your asset management business.” He calls getting big polluters to cut emissions a more direct path to climate change mitigation. “It requires an activist investor,” he says. If Ubben’s bet on impact investing reflects his clear-eyed assessment of where markets – and investors – are headed, some old-timers point out that he is a Johnny-come-lately. At 59 years old, he doesn’t disagree. “I’m on a crusade,” he says. “I’ve got five years to fix the harm I’ve done.” – Amy Cortese

The Week’s Dealflow

Agrifood investing. Food startups NotCo and Climax Foods raise financing for plant-based alternatives, while Baltimore’s produce delivery service Hungry Harvest picks up $13.7 million… Freshket raises $3 million to improve Thailand’s food chain… Dairy processor Tanga Fresh clinches fresh capital and support for smallholder farmers. 

Fund news. Japan’s Takenaka Corp. backs Urban Us sustainable cities fund… Closed Loop clinches $30 million from Nestlé to invest in sustainable packaging… VertueLab launches venture philanthropy fund to support early-stage climate tech… Endeavor Catalyst raises $134 million for global entrepreneurs.  

Sustainable debt. Mexico issues $890 million Sustainable Development Goals bond… Aligned closes $1 billion in sustainability-linked credit to green its data centers… Orange issues €500 million sustainability bond.  

Frontier finance. DFC originates $5 million loan to support Akola’s Ugandan workforce… Lumos clinches $35 million from DFC to expand energy access in Nigeria.   

Returns on inclusion. Southern Black Girls and Women’s Consortium secures $10 million… The U.S. Department of Commerce allocates $35 million to support entrepreneurship. 

Impact IPOs. Bridges Fund Management and AEA Investors to float $400 million ‘impact’ SPAC. 

The Week’s Talent

Lisa Hall, previously with the Beeck Center and Calvert Impact Capital, joins Apollo Global Management as chair of impact. The co-leads of Apollo Impact will be senior partner Marc Becker and Joanna Reiss, ex- of Cornell Capital… Roksana Ciurysek-Gedir, ex- of Bank Peako in Poland, will chair a new impact advisory board for White Oak Global Advisors… Jane Fraser was named first female CEO of Citigroup… Jonathan Tudor, ex- of Centrica, joins the Clean Growth Fund as an investment partner.

The Week’s Jobs

Heron Foundation is recruiting a director of integrated capitals and communities in New Haven, Conn… Beyond Capital Fund is looking for an investment fellow… Neuberger Berman is hiring an ESG and impact investing associate for private markets in New York… Kiva seeks a fund operations manager for the California Rebuilding Fund… Social Venture Circle seeks a manager of investor programming and services in Philadelphia or New York… Deloitte Italia is hiring a sustainability consultant in Milan.

Schroders is looking for a sustainable investment analyst in London… The Kellogg School of Management’s social impact team seeks a part-time communications and data assistant… REDF is recruiting a president in San Francisco… Walmart seeks a senior director of strategic Initiatives for ESG, trust and transparency in Bentonville, Ark… The U.N. Sustainable Development Solutions Network is hiring a director for SDSN TReNDS in New York… Luminate is looking for an Africa director to lead grant making, impact investing and advocacy in Kenya, South Africa and Nigeria.

Acumen America seeks a portfolio manager in San Francisco… East Bay Permanent Real Estate Cooperative is looking for an investment and fundraising director in Oakland… 57 Stars has an opening for an ESG and impact associate in Washington, D.C… Social Movement Technologies is recruiting a U.S. racial justice movement support coordinator and other roles in the U.S. and Africa… Bridges Impact Foundation is hiring a part-time fall associate for MIINT.

Thank you for reading.

–Sept. 18, 2020

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