The Brief | April 12, 2024

The Week in impact investing: Chaos theory

ImpactAlpha
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ImpactAlpha

TGIF, Agents of Impact! 

  • Double dose of podcast 
  • Turner MIINT’s impact MBA winners 
  • Turnkey building decarbonization

🗣 Three body problem. In the video game at the core of the sci-fi novel by Liu Cixin (as well as the Netflix series), civilizations in the trisolarian system are repeatedly destroyed in chaotic eras, to be rehydrated during stable eras. The interplay of private, public and impact capital can seem similarly volatile. Cities that were divided by interstate highways and other infrastructure projects of an earlier era are now reconnecting communities with bridges, buses and bike lanes, as Andrea Riquier reports. Puerto Rico, battered by hurricanes, earthquakes and financial crises, is turning recovery into revival, Dennis Price reports from the NEXA: Jobs Summit in San Juan (he’ll have a roundup next week). Impact investors can help unlock federal funding and bring in commercial capital for social infrastructure and economic mobility, writes Platform for Social Impact’s Ramphis Castro. Complex stacks of capital also are needed for The Great Deployment of green infrastructure. Matt Posner and James McIntyre envision the bundling of loans from community lenders for state green banks to take to the muni market.

What could be more unstable than insurance companies facing unprecedented climate risks are themselves fueling such risks with their own investments, as Andrea lays out. And what’s left when even the theory of change from transparency to accountability to corporate action seems archaic and broken, as NYU’s Alison Taylor lamented in our podcast interview? 

In the 3 Body Problem video game, civilizations were repeatedly wiped out. The players move to the next level (spoiler alert) when they realize the goal is not to predict the next stable era but to solve for the people’s well-being. Our ongoing series by ReFED’s Alejandro Enamorado is surfacing opportunities across the investment spectrum to reduce the obscene level of food waste. Paddy Carter reports on how British International Investment and others are finding ways to close the financing gap for small- and medium-sized enterprises, the foundation of job growth and livelihoods in emerging economies. And fund managers like Apis & Heritage and Common Trust are creating new financing structures to encourage more business owners to exit to employee ownership. We may not be in a stable era, but Agents of Impact are taking us to the next level. – David Bank 

The Week’s Podcasts

🎧 This Week in Impact. Host Brian Walsh takes up ImpactAlpha’s top stories with editor David Bank. Up this week: federal funds to reconnect communities divided by federal highways, the impact investing opportunity in Puerto Rico, and the ways that investors can help business owners exit to their employees.

  • Agents of Impact. And check out David’s interview with Alison Taylor from earlier this week. (Feel free to leave us a rating and review!)

The Week’s Agents of Impact

Impact MBAs: Raising up the next impact leaders (video). The winner of a contest to sharpen the impact lens of students through deal sourcing and diligence was a team from London Business School, which proposed a wind turbine recycling company for investment. The company will get $50,000 towards an early stage venture round pending further diligence by ImpactAssets. “Before going through the Turner MIINT program, I wasn’t really considering a career in impact investment,” London Business School’s Shavir Pooniwala (MBA ‘25) told ImpactAlpha. “I think now after going through the whole experience, it’s definitely something that I want to pursue.” 

Business schools in the US and abroad are sharpening their curriculums and MBA programs to include courses on sustainability, inclusion and impact investing. The next-generation of aspiring agents of impact are responding. “We’ve come to recognize that the importance of impact investing and ESG are topics that resonate with the next generation of emerging leaders,” said Brian Trelstad of Bridges Impact Foundation, which co-created the Turner MIINT program with the Wharton Social Impact Initiative. “It’s only by evaluating a company with the risk of putting capital in that company can you really understand what it’s like to be an impact investor.” 

Turner MIINT last weekend convened more than 100 out of roughly 400 students from 44 schools, such as Harvard Business School, Kellogg School of Management, London Business School and Saïd Business School at University of Oxford. Students pitched to a lineup of investor judges including De-Carceration Fund’s Chris Bentley, Caroline Shenoy of One Acre Fund, and TIIP’s Monique Aiken. The two runner ups of the deals competition secured $25,000 respectively for their companies. Turner MIINT is backed by Bobby Turner of Turner Impact Capital, alongside his wife Lauren Turner. The program is led by Adwoa Asare (listen, “Training the next generation of impact investors”).

Short Signals

🤖 AI opportunities in emerging markets. AI applications are helping to optimize traffic flow in Rio de Janeiro, detect locust outbreaks in Africa and improve women’s health outcomes across emerging markets. Google.org compiled “AI sprinters” such as upskilling workers and enabling policy to help governments and international organizations ensure AI drives inclusive economic growth. (Google.org)

🙏 Unlocking impact capital in the UK. Big Issue’s John Bird and Nick Temple of Social Investment Business are among more than three-dozen UK-based Agents of Impact that penned a letter calling for the next government to adopt a four-part policy plank to catalyze £50 billion in private investment for social priorities. (Financial Times)

🌱 Climate litigation history. The European Court of Human Rights ruled this week that failure to address climate change threatens human rights. The binding ruling requires Switzerland and perhaps other European nations to better address their climate goals. (Reuters)

🍦 Sweet-tooth supply shake up. First chocolate. Now vanilla. Essential inputs for ice cream, candy and other sweets are facing climate-related supply chain disruptions. This year’s vanilla harvest could fall 1,000 tons after  a cyclone hit Madagascar’s key vanilla-growing region. (Bloomberg)

🛢 Net-zero reductions. A study from the European Central Bank, MIT, and Columbia Business School finds that while signing on to the Net-Zero Banking Alliance could boost a bank’s ESG rating, the voluntary climate commitment has done little to reduce financed emissions. (New York Times)

The Week’s Dealflow

Deal spotlight: Private sector sees opportunity in federal ‘green bank’ fund. The $20 billion Greenhouse Gas Reduction Fund is intended to bring in at least seven times as much in private capital for green projects in US communities. Private players are on the case. This week, a group of tech companies and green banks launched a turnkey program to help cities and counties more rapidly decarbonize their building stock, particularly small commercial real estate such as multifamily apartments, grocery stores, and places of worship that are often overlooked by decarbonization programs. The “Building Decarbonization In-A-Box” program was developed with a grant from the Rockefeller Brothers Fund; Elemental Excelerator is supporting its launch in nine initial municipalities. “The goal is to test, pilot and showcase a model structure that could be funded under the Greenhouse Gas Reduction Fund,” Nate Kinsey of UtilityAPI, one of the companies involved in the initiative, told ImpactAlpha. 

  • Force multipliers. The building decarbonization program is the latest sign of a mass mobilization to leverage the federal climate funding for an equitable energy transition. This week, community solar provider Nexamp raised $520 million in fresh capital in a deal it said was buoyed by the once-in-a-generation federal largesse. Also this week, the Coalition for Green Capital, a GGRF awardee, along with PRE Collective and Quantified Ventures, announced $1.3 million in grants and technical assistance to six local green banks to build a pipeline of clean water infrastructure projects in disadvantaged communities. San Francisco-based CNote last week debuted an offering that enables investors to park their cash in mission-driven and minority depository institutions doing green lending. “Climate Cash becomes a force multiplier for GGRF,” CNote’s Cat Berman told ImpactAlpha.
  • The Great Deployment. Want more? ImpactAlpha has proposed a SOCAP Open panel exploring how places are leveraging the historic federal climate funds to benefit underserved communities, featuring Calvert Impact and Climate United’s Beth Bafford, Solar Energy Loan Fund’s Duanne Andrade, and Growth Opps’ Micheal Jeans. Vote for us here! And don’t forget “Equity: Napoleon Wallace and the reconstruction of Black wealth,” with Napoleon Wallace and Dorian Burton of Southern Reconstruction Fund and ImpactAlpha’s David Bank; and Dennis Price’s fireside chat with ReFED’s Alexandria Coari. Voting ends on Sunday, so don’t dally! 

The Week’s Talent and Jobs

💼 See and share more than a dozen new impact jobs posted this week on ImpactAlpha’s Career Hub and view hundreds of more jobs in impact investing and sustainable finance. Have a job listing to post? Submit it here.

Heading for Change namesSana Kapadia, formerly with 2X Global, as chief catalyst. Samantha Anderson will step away as the organization’s “change weaver” (disclosure: Heading for Change sponsors ImpactAlpha’s Climate + Gender coverage)Dana Bezerrahas transitioned from the founding CEO of Greater Share to an advisor… Jethro Townsendjoins Nia Impact Capital as partner and portfolio manager as part of Nia’s acquisition of Addend Capital Management… Frazer Lanieris promoted to director of environmental and social risk management at Citi… Adam Wagner, a former consultant with Deloitte, joins Ownership Works as a senior associate… David Burlison, director of marketing at Levitated Metals, joins Sortera Technologies as commercialization director.

That’s a wrap. Have a wonderful weekend.

– April 12, 2024