The Brief | February 3, 2023

The Week in Impact Investing: Dilemmas

ImpactAlpha
The team at

ImpactAlpha

TGIF, Agents of Impact! 

🗣Leaders and laggards. In his business-school classic, “The Innovator’s Dilemma,” the late Clay Christensen explains how successful companies fail by doing what appear to be all the right things – even when they arguably know better. Now comes Bernard Looney, CEO of the oil giant BP, who three years ago jumped out ahead of most of the oil industry with his commitments to renewable energy and carbon reductions. The Wall Street Journal reports that Looney is dialing back those commitments and de-emphasizing ESG goals to convince shareholders that BP is maximizing profits in its legacy oil and gas operations. Similarly, the big banks in the Glasgow Financial Alliance for Net Zero have reverted to form, pouring hundreds of billions of dollars into oil and gas expansion and pressing GFANZ to ditch its call to phase out fossil fuels to keep the banks from quitting.

Such short-term strategies put banks and oil companies on the wrong side of the S-curves and tipping points in the low-carbon transition, as Amy Cortese reports. Solar, wind and batteries are disruptive, in the Christensen sense, in large part because of their low margins and falling costs. The racial and social justice reckoning of recent years doesn’t match tech patterns quite as neatly, but has similarly required investors and enterprises, as well as cities, to get out of their comfort zones. As Axios reports, companies like Dell, Merck and Ford slammed police brutality after the 2020 murder of George Floyd; all three declined comment after the fatal police beating of Tyre Nichols. Like earlier incidents, the brutality in Memphis exposed legacy risks that have been hiding in plain sight, as Ryan Bowers explains in my piece on Activest’s new fixed-income racial equity strategy (and on our Agents of Impact Call this week – catch the video replay, below). The new models may take time to prove out. It would be easier if leadership was quickly rewarded in the marketplace; the real tests come when it isn’t. – David Bank

🗞️ Also on ImpactAlpha:

  • How Europe is recalibrating tech one ESG step at a time, by VentureESG’s Johannes Lenhard and Hannah Leach 
  • Four principles to help catalytic investors optimize allocations and scale impact, by FMO’s Ward Nusselder
  • What 672 private debt and equity funds show about impact investing in emerging markets, by Dennis Price
  • Is ESG an emergency from which the public needs protection? by Manifest Social’s Ryon Harms 

The Week’s Impact Briefing

🎧 On this week’s podcast: ImpactAlpha’s David Bank joins host Monique Aiken to share takeaways from this week’s Agents of Impact Call on how investors are working to advance racial justice through the municipal bond market. Plus, the headlines. 

The Week’s Call

The Week’s Agent of Impact

Andrew Crosson, Invest Appalachia: Catalytic capital for community impact. Andrew Crosson was a decade deep community economic development work in central Appalachia when he got the call three years ago to lead Invest Appalachia, a nonprofit community impact fund, as founding CEO. He understood nonprofits and philanthropy and Appalachia’s challenges. “What I brought was a vision and an understanding of the ways this fund needed to function if it was going to benefit the region,” says Crosson. “I didn’t know a lot about finance.” Invest Appalachia is taking a catalytic and community-based approach to advance economic inclusion, health equity, climate resilience, and place-based impact in a region that has suffered decades of disinvestment and extraction. The fund closed $19 million of a targeted $40 million raise, and has built an additional $2.7 million catalytic capital pool for provide loan-guarantees, technical assistance and grants to crowd in investors. 

Crosson was raised “in relative poverty” on a small farm in the mountains of western North Carolina – a public school kid “who got free lunch through school and went to college on financial aid and scholarships,” he tells ImpactAlpha. After graduating from the University of North Carolina, Chapel Hill, he earned a master’s degree in sociology with a focus on rural development from the University of Granada in Spain. In 2012, Crosson joined Rural Support Partners, a Central Appalachian consulting firm that works with rural leaders, nonprofits and other partners to develop local food systems, clean energy projects and other high-impact initiatives. At Invest Appalachia, Crosson is exploring projects focused on substance abuse recovery and workforce development in Kentucky, and town revitalization in West Virginia that will house solar and zero-waste social enterprises. He has formed a community advisory council to guide the fund’s priorities. “The approach has been looking at those projects starting with the potential solution,” he says, “and then figuring out what kind of financing they’ll need to get to the finish line.”

The Week’s Dealflow

Deal spotlight: Protecting individuals and businesses from data and identity theft. Cell phones and digitization have helped billions of individuals, micro-entrepreneurs and small businesses improve their livelihoods. They’ve also introduced new risks, particularly around personal data and privacy. Omidyar Network’s India group this week backed PrivaSapien, a Bangalore-based maker of software that helps companies conduct privacy risk assessments, anonymize user data, flag concerns, and stay on top of regulatory requirements. “These solutions make it easier for organizations to adopt privacy-preserving techniques and eventually help the end-customer build greater trust in online data-sharing systems,” Omidyar Network India wrote in a post about the deal

  • Responsible data use. Digital identity and privacy has been a core investment theme for Omidyar Network India for more than five years, as a swell of Indians secured digital identities through the Aadhar biometrics and national ID initiative. Much of its work has focused on policy and civil society initiatives. Omidyar helped fund the Digital Identity Research Initiative in 2017 to research impacts and develop policies for Aadhar. Last year it invested in the Data Governance Network, and helped stand up a tech policy fellowship program.
  • Cybersecurity for business. Also this week, tech venture Guardz secured $10 million to develop insurance to protect small businesses in the U.S. against data breaches and cyberattacks.
  • Investing in data privacy. Let us know how you’re thinking about impact investing and cybersecurity – and how other impact investors can engage.
  • Share this post. 

Affordable housing. Jonathan Rose Companies is eyeing $750 million for its sixth affordable housing fund… Enterprise Community Partners and the D.C. Green Bank invested $12.4 million to outfit four affordable housing buildings in Washington, D.C. with solar panels.

Climate finance. Portugal agreed to direct the roughly $150 million Cape Verde owes it in debt to a fund the island nation can use to invest in the clean energy transition and climate change mitigation and adaptation… Lowercarbon Capital and Collaborative Fund backed a $12 million equity round for Floodbase, which provides incident-based flood insurance… Obvious Ventures backed Senken to finance reforestation through ‘carbon forwards’. 

Climate tech. Al Gore’s Just Climate made its first three climate tech investments… Chile’s Lemu raised $8 million to build a network of individuals and organizations with imagery and data that can support ecological conservation efforts… Netherlands-based Naarden raised €4.1 million for its low-cost, low-temperature CO2 absorbing solvent.

Economic and financial inclusion. MNT-Halan raised $200 million to expand access to financial services in Egypt… Investors backed Nigeria’s TradeLenda and South Africa’s LulaLend, both fintech startups providing loans and supply-chain finance to small businesses… Fundación WWB Colombia acquired Bamboo Capital Partners’ and two other investors’ minority stakes in microfinance institution Banco W… The Philippines-based Mayani raised $1.7 million to connect local fisheries to buyers.   

Fund news. Africa-focused private equity firm Adenia Partners’ secured $300 million for its fifth fund… Shift4Good raised more than $115 million to invest in sustainable and green mobility in Europe and Asia… Venture capital firm Inclusion Japan and Ethiopia’s Kazana Fund are partnering to invest $100 million in early-stage Ethiopian startups.

Green building materials. Steel giant ArcelorMittal led green steel producer Boston Metal’s $120 million Series C equity round… LuxWall raised $33 million in Series A financing for its energy saving windows… Plantd raised $10 million to turn grass into a plywood-like alternative for home building… U.K.-based NeverWaste scored £1.5 million for its construction-grade paneling using recycled cardboard.. Austria-based housing developer Gropyus secured backing from German real estate company Vonovia to build sustainable, prefabricated housing complexes.

Investing in health. Serena Ventures, Emerson Collective and Metrodora backed Teal Health’s $8.8 million seed round in support of its at-home cervical cancer screening device… New York’s Pearl Health raised $75 million to help independent physicians switch from pay-per-service care to value-based care. 

Returns on inclusion. Canada’s Raven Indigenous Capital Partners closed its investment fund for Indigenous-led businesses at C$100 million… ICA Growth Fund backed four Black and Latinx businesses with ‘impact notes’  

The Week’s Talent

Noel Kinder, chief sustainability officer at Nike; Stacy Kauk, head of sustainability at Shopify; Emma Stewart, chief sustainability officer at Netflix; Vanessa Miler-Fels, vice president of climate at Schneider Electric; and Nate Gorence, chief of staff at Impossible Foods, will join Collaborative’s sustainability board. 

CrossBoundary’s Habib El Magrissy joined the U.S. International Development Finance Corp. as an Africa investment advisor… Brenda Loya, ex- of Amalgamated Bank, joins BlueHub Capital as its first chief operating officer… Julie Gorte of Impax Asset Management and Neuberger Berman’s Daniel Hanson will join US SIF’s board of directors and its foundation board. 

ImpactAssets promoted Dana Cotter to managing director of impact and added Alice Lowenstein, ex- of Litman Gregory Asset Management, as chief operating officer. From the White House, Christian Peele joins ImpactAssets as chief of staff and head of strategic planning; Kavita Vijayan, ex- of Reinvestment Fund, becomes director of strategic marketing communications. 

BlackRock promoted Caroline Brady to director of impact management and research… British International Investment promotes Chris Chijiutomi to head its Africa operations… BlueHub Capital named Brenda Loya, ex- of Amalgamated Bank, as chief operating officer… Aaron Jackson, ex- of Detroit Neighborhood Entrepreneurs Project, joined Fair Food Network as program director of Michigan Good Food Fund.

The Week’s Jobs

New York and Washington

In New York: The Global Impact Investing Network has an opening for an event operations manager, Veris Wealth Partners is looking for a wealth manager and a senior wealth manager, Georgeson is recruiting an ESG advisory director, and Enterprise Community Partners is recruiting a chief executive officer. Galvanize Climate Solutions is recruiting an impact measurement vice president in New York or San Francisco. 

Quantified Ventures has an opening for a health and human services associate director and senior associate in the Washington, D.C. area… Also in Washington, the DFC is recruiting an international loan portfolio specialist and a development policy monitoring and clearance manager.  

West Coast

South Pole is looking for a managing consultant for sustainable finance in San Francisco… Also in San Francisco, New Forests seeks an associate director for timberland and forest carbon investments… Two Sigma Impact is looking for an investment associate in Portland… The Bill & Melinda Gates Foundation is looking for a program officer for digital learning research and development in Seattle.

International locations

JPMorgan Chase & Co. has openings for an executive director of sustainable investing policy and a regulatory implementation specialist in London… Also in London, the World Business Council for Sustainable Development seeks an energy and equity senior associate… Upaya is hiring a senior communications associate in India… Also in India, the Michael & Susan Dell Foundation seeks a program manager.

Other locations and remote jobs

The Community Foundation for Greater Atlanta is recruiting an affordable housing funds manager… Imaginable Futures is hiring a remote U.S. associate… In Chicago: The Thirty Percent Coalition seeks an executive director, Mars is recruiting an associate director for sustainable cocoa sourcing, and Morgan Lewis seeks an impact investing principal. 

Open Road Alliance seeks an investment officer… The Native American Food Sovereignty Alliance is hiring a remote director of communications… Laudato Si’ Movement seeks a remote director of operations… The Hive Fund for Climate and Gender Justice is looking for two senior program officers for climate and economic justice… The Climate Policy Initiative has an opening for a senior communications associate for content and editing. 

YLabs is recruiting a project lead for digital health, a senior associate and a senior researcher… GitLab Foundation is looking for a director of measurement, evaluation and impact analytics… Salesforce seeks a sustainability lead for its Salesforce Platform… Uber is recruiting an ESG program manager… Upstart Co-Lab seeks an impact investing coordinator for its inclusive creative economy strategy… Climate Ingenuity is recruiting a remote policy intern.

That’s a wrap. Have a wonderful weekend. 

– Feb 3, 2022