The Week in Impact Investing: Deliver

TGIF, Agents of Impact! Take a moment to thank a vet on this Veterans Day. 

🗣 Unfinished business. We launched The Brief the day after former President Donald Trump’s inauguration in 2017. The MAGA frontman, we wrote, is “like the dog that caught the fire truck.” Trump rode in on a wave of populist anger and talked a good game on infrastructure spending, inner-city revitalization and good jobs. “Bring it on,” we said. Trump failed to deliver. For all his talk of forgotten men and women, his policies mostly aligned with the GOP’s tax-cut, anti-worker agenda that largely served the already powerful. This year, Republicans tried to channel legitimate working- and middle-class discontent with corporate power and economic insecurity into cultural grievances, “ginning up outrage over ‘woke’ sensitivity trainings in the workplace, for instance,” Sohrab Ahmari writes in his perceptive op-ed in The New York Times. “In doing so, these faux populists can remain indifferent to issues like wages and workplace power, healthcare and the depredations of speculative finance.” A more effective way to check corporate power, he says, “would actually be to empower workers.” 

That sets up a challenge for Agents of Impact: Deliver the goods. Market shapers like Lourdes Germán are looking at “bond banks” and other instruments to steer the $4 trillion municipal bond market toward racial equity, reports Andrea Riquier. Inclusive fintechs in emerging markets are leveraging data to help small businesses weather the economic downturn, as Jessica Pothering reports. Agents of Impact inside COP27 moved discussions of “loss and damages” to pledges, as Amy Cortese and Akintunde Babatunde, who is at the summit in Egypt, report. Investors like Mercy Corps Ventures are determined to make Web3 and blockchain technologies work for the climate-vulnerable, as the firm’s Scott Onder writes for ImpactAlpha. Rather than pit public against private, Agents of Impact like Gillian Marcelle are bringing them together to attract climate-transition capital to the Bahamas and other island nations. U.S. climate envoy John Kerry is getting creative with philanthropic partners to mobilize private investment for climate funds.

The absence of a “red wave” in this week’s U.S. elections won’t end the coordinated attacks on “woke capitalism” and ESG investing (though GOP senators may not get the hearings they want on ESG “collusion,” as Amy reports). “The best counter argument is facts and science,” Ceres’ Steven Rothstein says on this week’s Impact Briefing podcast. “Investors are saying, and they’ve been saying for decades, that climate is a growing risk.” Indeed, Democrats suffered no electoral penalty for passing a giant climate legislation rooted in economic revival. “People love to view the process with skepticism, and time and time and time again, Joe Biden has delivered,” White House climate advisor Ali Zaidi told Bloomberg Green. The lesson of this week, for investors as well as politicians: Be on the side that delivers – for climate, for communities, for workers. – Dennis Price

🎧 Impact Briefing. Ceres’ Steven Rothstein joins host Brian Walsh to chart the road ahead after this week’s midterm election in the U.S. and the start of the COP27 global climate summit in Egypt. Plus, the headlines.

• Listen to this week’s episode, and follow all of ImpactAlpha’s podcasts on Apple, Spotify or wherever you listen.

👋 Next week’s Call: Optimizing muni bonds for racial justice. Municipal bonds, “the original impact investment,” are getting a racial-equity makeover. Join Marjorie Henning, NYC’s deputy comptroller for public finance, Public Finance Initiative’s Lourdes Germán, Rob Fernandez of Breckinridge Capital Advisors, and Kimberlee Cornett of the Robert Wood Johnson Foundation to learn about new frameworks, tools and data-enabling progress, Wednesday, Nov. 16 at 10am PT / 1pm ET / 6pm London. RSVP today.

The Week’s Chart

Avoiding a global climate + debt crisis. Two out of every three low-income countries have been pushed to the brink of debt distress by overlapping economic and climate crises. Their ability to service their debt is being crippled by rising interest rates. The compounding pressures show up in low-income countries’ credit ratings, which have fallen steeply since the start of the pandemic. Climate threats are one of the factors assessed by credit agencies – an unfortunate irony for countries that have contributed least to climate change and are among the hardest hit by natural disasters. 

Barbados’ Mia Mottley helped propel the issues of climate, debt and compensation for damages to the top of the agenda at the COP27 climate summit underway in Egypt (see, Agent of Impact). Commitments for so-called “loss and damages” are trickling in. The millions of dollars pledged so far by wealthy countries won’t move the needle when billions, if not trillions, are needed. Getting there “requires reform of the international financial architecture,” the Independent High-Level Expert Group on Climate Finance reports, echoing Mottley. “Provision must be made for global solidarity to share the costs of climate-related disasters when they strike small countries that are especially vulnerable.” – Jessica Pothering

The Week’s Dealflow

Deal spotlight: Oversubscribed impact funds. In a challenging year for raising capital, impact-focused funds are bucking the trend. Climate funds from large private equity firms like Brookfield and Lightrock have been oversubscribed. San Diego-based HCAP Partners in September raised $353 million for a good jobs fund. HCAP said the fund exceeded its initial fundraising target by over 40%. Women-led Urban Innovation in August raised $121 million for a smart-cities fund. The San Francisco-based fund manager, which initially set out to raise $80 million, created a $20 million Opportunity co-fund to meet demand from investors.

• New funds. This week, Washington, D.C.-based impact fund manager Quona Capital raised $332 million for its third financial inclusion fund. The fund, which exceeded its $250 million target, will back ventures expanding access to financial services in emerging markets. Separately, Colorado-based VoLo Earth raised $90 million for its debut early-stage climate tech fund. The firm says demand from investors, including Credit Suisse’s Climate Innovation Fund, enabled it to blow past its initial $50 million target.
  
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Financial inclusion. Acrecent raised $34.8 million from impact investors to lend to Puerto Rico’s small businesses… Brazil’s Franq raised $12 million to democratize access to financial services for small businesses and consumers in Latin America… Egyptian fintech venture Money Fellows raised $31 million to digitize traditional savings circles… The U.N.’s International Fund for Agricultural Development provided a $2 million loan to Futuro Mcb to finance women-led rural enterprises in Mozambique.

Low-carbon transition. Audette secured $9.5 million in a seed round to decarbonize real estate… Carbon Re scored £4.2 million to help companies in energy-intensive industries reduce their carbon footprints… Asian Development Bank’s blended-finance vehicle, the Climate Innovation and Development Fund, invested in GreenCell in India and Vinfast in Vietnam to expand electric bus fleets in emerging markets… French battery startup Verkor raised €250 million from investors to finance a battery megafactory.  

Regeneration. Bezos Earth Fund committed $50 million to a blended-finance fund for locally-led environmental restoration in Africa… Essex Pension Fund made a £100 million to develop commercial timberland plantations and restore natural forests… Radical Ventures planted $9 million in seed funding for ranch management. 

Returns on inclusion. A fund from Community Preservation Corp. and TruFund Financial Services backed Black-led Infinite Horizons to finance affordable housing development… Amazon committed $53 million to support female climate tech founders… WorkTorch, a Black women-owned recruiting and retention platform for service industry employees, scored $2.2 million in seed financing.

Clean energy. Carlyle Group invested $350 million to acquire a majority stake in Aspen Power Partners… SolarSquare snagged $12.2 million to accelerate rooftop residential solar in India… Havfram secured $250 million from Sandbrook Capital to finance offshore wind projects.

Impact measurement. Impact ratings agency Impak acquired London-based fintech data firm Exerica to boost its impact assessment capacity… Sustainability data provider Util raised $6 million.

Investing in health. CureBay raised $6.1 million in Series A funding led by Elevar Equity to enable access to telemedicine in India’s rural areas.

Waste to value. Climate funds deployed capital to waste tech.

The Week’s Talent

Daniel Hanna, ex- of Standard Chartered, joins Barclays’ corporate and investment bank division in London as global head of sustainable finance… Lori Butler, ex- of Carrier Corp., joins Clayton, Dubilier & Rice as director of environmental stewardship… Georgia Levenson Keohane, ex- of New York City Impact Partnership, will join the Soros Economic Development Fund as CEO.

Olga Breyburg, ex- of Personal Capital, joins Candide Group as a portfolio operations manager. James Pippim, ex- of Skoll Foundation, joins the firm’s climate justice fund… Willem Schramade, ex- of NN Investment Partners, joins Schroders as head of sustainability client advisory… Nakul Zaveri, ex- of Relativity Investment Management and Global Environment Fund, joins LeapFrog Investments to co-lead a new climate investment strategy.

Ed Shelton, ex- of RWE Renewables, joins Low Carbon as managing director for investments in North America… Yi Jean Chow, ex- of Future Energy Ventures, joins Clean Energy Ventures as an investment principal. Victoria Martins, ex- of Project Bread, also joins Clean Energy Ventures… Avery Bang, ex- of Bridges to Prosperity, joins Mulago Foundation as senior principal.

The Week’s Jobs

Kiva seeks a remote vice president of business development… ECMC Group’s education impact fund is recruiting a remote impact investment associate in Minnesota… Tides is recruiting a remote chief financial officer… Founders First Capital Partners seeks a remote director of business development.

Equality Fund seeks a remote vice president for its investment program in Ottawa… Harvard Business School’s International Foundation for Valuing Impacts is hiring a chief research officer and a director of market development… Toniic is looking for a relationship manager for the Americas.

In New York

GIIN is hiring a director for its investors’ council and leadership initiatives… Rockefeller Capital Management is looking for an investment client portfolio manager… Closed Loop Partners is hiring a program manager of strategy and engagement… Echoing Green is looking for a director.

Other locations

Harvard Business School is looking for an impact and sustainability associate in Boston… Contentful seeks a director of community impact in Denver… The Robert Wood Johnson Foundation seeks a chief investment officer, an assistant vice president for policy, and a senior program officer for equity and social justice partnerships… The Global Development Incubator is recruiting a senior associate in Mumbai.

Netflix is looking for an ESG director in Los Angeles… Breakthrough Energy seeks a manager of technical review and selection in Seattle… Azolla Ventures is recruiting a principal in San Francisco and an investment analyst in Cambridge, Mass… Align Impact is hiring a catalytic capital investment analyst to start in February… Accion is looking for an undergraduate legal intern. 

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That’s a wrap. Have a wonderful weekend.

– Nov. 11, 2022