The Brief | August 16, 2024

The Week in impact investing: Fight for freedom

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TGIF, Agents of Impact! 

⚡Plugged In: Disrupting for good at Citi Impact Fund. ImpactAlpha contributing editor Sherrell Dorsey hosts Meredith Shields, head of the $500 million Citi Impact Fund, on LinkedIn Live. They’ll discuss Shields’s system-change framework for impact investing, and the proof of concept, traction and scalability she looks for in assessing teams tackling major societal challenges. As head of Sorenson Impact Foundation’s early stage investments, Shields backed companies supporting education, healthcare, workforce development and financial inclusion for underserved communities. Join the conversation, Wednesday, Aug. 21, at 8am PT / 11am ET / 4pm London. RSVP now.

In today’s Brief:

  • Freedom to invest
  • The Call: New regulatory landscape
  • HBO’s sleek, sexy and skeptical take on impact investing
  • Boston Celtics’ Jaylen Brown’s XChange

The Week in Impact Investing: Fight for Freedom

🗣 Mind your business. “Freedom, freedom, where are you?” It’s a good bet that Beyoncé’s anthem will be on the playlist at the Democratic National Convention in Chicago next week (ImpactAlpha contributing editor Sherrell Dorsey will be there. Will you?). The mantle of freedom has been taken up by investors as well. An increasingly vocal constituency of pension funds, state and local treasurers, and investment advisors is fighting back (and winning, as in federal court in Missouri this week) against the heavy hand of politicians legislating and litigating against consideration of environmental, social and governance, or ESG, factors in investments, and against the redress of racial harms in grants, loans and business support. “These attacks are reducing your freedom as investors,” says Adasina Social Capital’s Rachel Robasciotti, a founder of Freedom Economy, a trade association with legal resources for investors standing up not only for their rights, but their obligations to clients and beneficiaries. As legal safeguards are eroded, Robasciotti wrote in a guest post this week, it’s up to investors to hold corporations accountable (see The Call recap, below). 

Impact investors, at least some of them, are moving to hold themselves accountable, including by setting impact targets, as BlueMark’s Tristan Hackett explains in a Q&A this week. Such scrutiny can sometimes be uncomfortable, as the energy impact investors in the Global Impact Investing Network’s new impact performance benchmark may agree. As the GIIN’s Dean Hand wrote in a guest post, even the median investment in the benchmark sample represents an increase in greenhouse gas emissions, not the sharp reductions required to limit global warming. That may provide fodder for the deep skepticism with which sustainable investing is treated in the new season of HBO’s hit show, “Industry,” as ImpactAlpha’s Isaac Silk reports. “It’s like utopian opiate for morons who believe in a better world, whatever that means,” says a financial career-climbing character on the show (hear Isaac and some clips on this week’s podcast).

Just as shortfalls present room for improvement, gaps represent opportunities. Dennis Price surveyed the rising cohort of diverse founders who are turning crypto from speculative gamble to inclusive opportunity through distributed autonomous investment organizations, digital token raises and other blockchain-based tools that together make up Web3. Joey Barrick of the impact investment manager SJF Ventures took on the continuing underinvestment in climate adaptation and resilience by mapping the market of tech startups in fire tech, insurance tech, water tech, analytics and infrastructure. And ImpactAlpha’s Lynnley Browning reported on what could be the next big wave of impact capital: the trillions in bank deposits held by non-accredited investors who remain locked out of most impact investments. Everyday retail investors also need freedom – to not only believe in, but to invest in, the better world already under construction. – David Bank 

Sponsored by SOCAP Global

Don’t miss impact investing’s flagship conference. Each year, SOCAP convenes the largest community in impact, drawing more than 2,500 people across sectors and geographies. They gather in San Francisco to look beyond their immediate spheres of influence and contribute to collective action, democratic dialogue and policy progress to catalyze impactful, scalable change.

  • Join ImpactAlpha at SOCAP. Attendees, including the team at ImpactAlpha, recognize that isolated solutions cannot address systemic challenges. The theme of SOCAP24 reflects the commitment of the impact investing community to “Going deeper: Catalyzing systems change.”
  • Learn more and join us at SOCAP24 in San Francisco, Oct. 28–30.

The Week’s Podcasts

🎧 This Week in Impact. Host Brian Walsh takes up ImpactAlpha’s top stories with editor David Bank, who tees up some choice quotes from this week’s Agents of Impact Call on the legal landscape for impact investors after recent US Supreme Court decisions undermining “the administrative state.” Then, why some impact investors are still dragging their feet when it comes to setting targets for their impact and holding themselves accountable. Bonus: Producer Isaac Silk joins the conversation to recap the new impact investing storyline on HBO’s show “Industry,” and tee up the question of whether the season will cast impact as greenwashing, fad… or fraud.

🏛️ Capitol Gains: Navigating the dynamics between state and local governments. The preemption of local laws by state governments can be particularly detrimental to, say, blue cities in red states. Take Jackson, Miss., where state interference has hindered the city’s ability to address a severe water crisis, despite the availability of federal funds. Brookings Institution senior fellow Amy Liu joins Matt Posner and James McIntyre to discuss preemption, navigating state politics, the rural and urban divide, and more on Capitol Gains, part of the ImpactAlpha Podcast Network.

The Week’s Call

Investors fight for ‘freedom to invest’ after Supreme Court rulings (video). Investors will confront a dramatically changed legal and policy environment no matter the outcome of the upcoming US presidential election. The effects of this summer’s Supreme Court decisions gutting the “administrative state” are playing out in legal challenges to rules on climate action, labor rights and corporate accountability. Investors are gearing up to fight back. “These attacks are reducing your freedom as investors, as owners of these businesses, to exercise your full oversight, and it’s reducing your ability to outsource any of that to the government,” Adasina Social Capital’s Rachel Robasciotti said on this week’s ImpactAlpha Agents of Impact Call. “They’re leaving that responsibility squarely in our laps.” Robasciotti co-founded Freedom Economy as a 501(c)(6) business association to provide legal protections to justice, sustainability and impact investors. “We need to continue coming together and collectively, publicly, taking stances so that we continue to have the enormous gains that brought about this legal onslaught of attacks.” Better Markets’ Dennis Kelleher, B Lab’s Jorge Fontanez and The Shareholder Commons’ Rick Alexander and Fran Seegull of the US Impact Investing Alliance also joined The Call, “Mapping an impact investing path through the new legal landscape.”

  • Capital is power. The mosaic of decisions by the Supreme Court “mark a dramatic and historic power grab by the Supreme Court,” said Kelleher, who is out this week with a detailed analysis of Loper Bright, Jarkesy and Corner Post, the trio of recent Supreme Court decisions that undermine rules and regulations that protect everyday Americans. Investors, he said, are uniquely positioned to push back. “Capital is power,” said Kelleher. “Leveraging that power, and strategically deploying that power, can counterbalance the power that’s being exerted against you in other places.”
  • Freedom to invest. New York City Comptroller Brad Lander, CalSTRS’s Kirsty Jenkinson and Delaware State Treasurer Colleen Davis are among hundreds of investors and business leaders, state financial officers, labor unions, and faith leaders to sign onto “Freedom to Invest,” a campaign to make the case to policymakers across parties that the economy is stronger if businesses and investors can make their own investment decisions. “The concepts of fiduciary duty and duty of care are absolutely relevant at this moment,” said B Lab’s Fontanez. B Lab is helping B Corps engage state officials on the uplift from best-practices such as living wages and quality jobs, and the economic downdraft from bills banning ESG investing. Every investor “can be an impact investor by making sure that the companies in their portfolios are paying a living wage, and that they adhere to a science-based target that prevents deforestation and excess carbon emissions,” said Alexander, whose organization Shareholder Commons highlights such portfolio-level risks. 
  • Crossroads and crosshairs. Impact investing “is at a crossroads, and in the crosshairs,” said Seegull (disclosure: The US Impact Investing Alliance sponsors ImpactAlpha’s Policy Corner). “There’s no way we would be in the crosshairs if we weren’t making real progress.” Broader impact transparency “will lead to an era of impact accountability,” she added. “And impact accountability, we hope, leads to more equitable economic, racial and gender outcomes.”

The Week’s Agent of Impact

Jaylen Brown, Boston Celtics: Putting superstar power behind inclusive wealth. The finals MVP of the NBA champion Boston Celtics, Jaylen Brown, has long been vocal about racial injustice. When he signed his five-year, $304 million contract extension with the Celtics last year – at the time, the NBA’s largest supermax deal ever – he vowed to turn his wealth and influence toward bridging racial wealth gaps. “I want to launch a project to bring Black Wall Street here to Boston,” Brown told reporters, and “attack the wealth disparity here.” Last week, the 27-year-old guard and forward launched The XChange in Oakland, Calif., with Hall of Famer Jason Kidd, head coach of the Dallas Mavericks. Kidd is from Oakland; Brown calls the California city his “second home” from his time at UC Berkeley. They are recruiting other professional athletes, philanthropists and other business leaders to realize their ambition: to help bridge the US racial wealth gap by generating $5 billion in net wealth for historically marginalized communities. 

The XChange’s place-based approach also is focused on Boston, which has one of the largest racial wealth gaps in the country. “The racial wealth gap is not limited to Boston. It’s a national issue, affecting Oakland and cities throughout the country,” says Kidd. The disparity between the median wealth of white and Black US families is over $240,000, according to Federal Reserve data. Oakland XChange, led by Kidd, will partner with Oakstop, a social enterprise focused on shared real estate ownership and impact investing strategies, as well as business education and technology and cultural competency. 

Brown’s Boston XChange has set up an accelerator and incubator program for creative entrepreneurs in partnership with the JLH Social Impact Fund. The impact fund was created by Brown’s Celtics teammate Jrue Holiday and his wife, former US women’s soccer player Lauren Holiday. It will provide up to $100,000 in grant funding and other business resources to underinvested creative business owners. Through his 7uice foundation, Brown supports the Bridge Program, which works with the Community Biotechnology Initiative at the MIT Media Lab to provide science and technology education for Black and Brown students from under-resourced Boston communities. “True systemic change,” Brown says, “requires collaboration, shared vision and collective impact.”

Put Agents of Impact on the stage at SXSW. Voting ends this Sunday, Aug. 18, for panels and workshops in Austin next March. A few that caught our eye:

The Week’s Dealflow

Pakka of India raised $29.4 million to develop its compostable packaging facility… Intramotev scored $14.4 million for battery-electric autonomous railcars… Mexican fintech startup Stori raised $212 million in debt and equity… Open Access Energy landed early equity to connect green power to South Africa’s grid… Carbon recycler LanzaTech Global secured a $40 million convertible note.

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.

Tanya Jain, previously with the Health Finance Institute, joined Impact Charitable as a senior investment analyst… Amazonia Impact Ventures’ Pajani Singah was selected as a SOCAP fellow… Illumen Capital promoted Octavio Sandoval to principal… Blue Earth Capital welcomed Daniel Tjemkes, previously a portfolio manager at Partners Group, as head of portfolio management advice… Sorenson Impact Institute named interim head Katie Macc as CEO… Katharine Hersh, former partner at Builders Fund, joined Acelero Learning as chief financial officer.

Beatriz Oliveira, previously with Abbott Products Operations, joined Blue Earth Capital as a finance analyst… The Rockefeller Foundation named Mark Wattley, previously with Cooler Screens, as senior vice president and chief people officer… Amalgamated tapped Nicole Steele and Emily Robichaux from ​​the US Department of Energy as climate partnerships directors… VC Include added Erika Seth Davies of Rhia Ventures and Milken Institute’s Troy Duffie to its advisory board.

That’s a wrap. Have a wonderful weekend. 

– Aug. 16, 2024