The Brief | May 17, 2024

The Week in impact investing: Fundamental change

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TGIF, Agents of Impact! 

  • Mandate for systems change
  • Going down-market to boost livelihoods and access to services
  • Institutional investors see green in private markets

🗣 Popular mandate. Impact investing has always represented more than just a series of socially positive transactions or an attractive approach to wealth and asset management. For more than a decade, Agents of Impact have pursued “systems change,” “economic transformation” and “capitalism reimagined.” Now comes The New York Times’ poll that caused a stir with its snapshot of this year’s US election. Deep in the crosstabs was an even more provocative data point. “Nearly 70% of voters say that the country’s political and economic systems need major changes – or even to be torn down entirely,” the Times reported. Support for major change or something more radical reached solid majorities across party, race and age, and spiked even higher for young, Black, Hispanic and working-class voters. Leave aside, for now, who it is that voters think can deliver such changes. When it comes to systemic transformation, it’s game on.

Many of the elements would seem to be in place for a narrative around which to build a constituency for authentic change. Operation Hope’s John Hope Bryant made the case for the “big tent economy,” Dennis Price reported, in order to rebut attacks on diversity, equity and inclusion (and to forestall, as Bryant put it, “authoritarian government or some form of chaos”). Dennis also found that managers like HCAP Partners and even units of BlackRock are pursuing the next frontier of private equity value-creation: better jobs for frontline workers. Jessica Pothering detailed ways to account for the value of the women’s unpaid care work and to finance women’s resilience in the face of climate change. Global investors like International Finance Corp., British International Investment and FMO have assembled a guide to investing in better livelihoods for low-income people (we’ll explore such strategies in next week’s Agents of Impact Call – RSVP now). Digging deeper into polling data, Change Research suggests that many voters struggling to make ends meet perceive the economy to be rigged for corporations and the ultra-wealthy. They’re not wrong. At gatherings, like this fall’s SOCAP conference, impact investors like to talk about “catalyzing systems change.” Agents of Impact able to actually do so may finally be able to claim the elusive popular mandate we have long imagined ourselves to have. – David Bank

Other must-reads this week on ImpactAlpha: 

👋 Join next week’s Call: A guide to investing in livelihoods and access for emerging market households. When there’s pressure to go up-market, how can investors help businesses go down-market? Elevar Equity’s Amie Patel, Citi Social Finance’s Borja Garcia Fernandez, IFC’s Wagner Albuquerque de Almeida, BII’s Martina Castro, and FMO’s Juan Jose Dada will share growth stories of companies creating value by expanding access to essential goods and services for emerging consumers, Wednesday, May 22 at 8am PT / 11am ET / 4pm London. RSVP today

The Week’s Podcasts

🎧 This Week in Impact. Host Brian Walsh takes up ImpactAlpha’s top stories with editor David Bank. Up this week: Biden’s new Chinese tariffs and how they impact global supply chains critical for the green transition; the Global Fund for Coral Reefs’ efforts to invest in the blue economy; and the value of the “invisible” work women do to build resilient economies and fight climate change.

  • Listen to the new episode of This Week in Impact. Get the podcast in your feed by subscribing on Apple or Spotify.
  • Plugged In. Stonly Blue of the climate-focused VC firm Third Sphere joined ImpactAlpha contributing editor Sherrell Dorsey LinkedIn Live to talk deal pipeline, hardware valuations, and the outlook for climate tech investing. Watch now.

The Week’s Deal Spotlight

Institutional investors seek bigger stakes in climate assets in private markets. The California Public Employees Retirement System, or CalPERS, will allocate more than $25 billion over six years to green assets in private markets. It’s one of the biggest chunks of institutional capital to be earmarked for private markets and signals growing investor demand for big-dollar energy transition bets outside of public markets. Private equity firms have amassed multi-billion dollar funds to capitalize on the once-in-a generation restructuring of global economies. Their fundraising has been buoyed by pension funds, sovereign wealth funds and other institutional investors with big checkbooks and long-term perspectives. CalPERS, the largest US public pension plan with $483 billion in assets, will hunt down climate mandates in private equity, real estate and infrastructure in Europe and Asia. “The opportunity set in emerging markets will be huge,” CalPERS’ Peter Cashion told the FT.

  • Private party. Other large US public pensions, under pressure to divest from fossil fuels and other harmful sectors, also are restructuring their portfolios to favor greener funds. The New York State Common Retirement Fund, the third-largest US public pension plan with roughly $260 billion in assets, plans to double its investment in green assets by 2035. California’s other huge public pension plan, the $332 billion CalSTRS, is an investor in Generate Capital’s $1.5 billion sustainable infrastructure fund, which closed in late January. The energy transition, says CalSTRS’ Christopher Ailman, “is a massive wave coming.”
  • Oil money.  Petro-states in the Middle East and elsewhere are fueling a large roster of renewable energy and green infrastructure projects around the world. This week, Hassana, the $320 billion Saudi pension fund, committed $1.5 billion to a pair of climate and energy transition funds managed by TPG Rise Climate, including its new Transition Infrastructure Fund. “Large and sophisticated investors like Hassana are essential to meeting the growing capital needs of the new climate economy,” said TPG’s Jim Coulter. The United Arab Emirates has poured some of its $30 billion Alterra fund into energy transition funds managed by BlackRock, Brookfield and TPG.
  • Infrastructure Week. The upgrading of global infrastructure for a low-carbon future creates opportunities in everything from renewable energy generation, distribution and storage, to waste management, recycling and biofuels. The tailwinds: major policy support in the US, EU and other regions. Private investment in green infrastructure and energy totaled $1.1 trillion over the past five years, according to BCG. Limited partners plan to boost such investments by more than $600 billion through 2027.
  • Go with the dealflow. Share this post and check out the full roundup of ImpactAlpha’s deal reporting this week.

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.

Melinda French Gates stepped down from the Bill and Melinda Gates Foundation with $12.5 billion to commit to women and girls; the health-focused Gates Foundation, as it will be known, will be chaired solely by Bill GatesGeorge Ashton, previously with LISC Strategic Investments, was appointed CEO of Candide Group… IMPACT Community Capital appointed Luke Rottmann, formerly with White Oak Partners, as managing director of investor relations and capital markets.

Octopus Investments named Alex Godfrey, ex- of Savills, to lead its new natural capital strategy… Franklin Mora has left Open Road Alliance for a new opportunity…. Brandon Boros, previously with Align Impact, joined Kapor Capital as venture partner… Mattie Bekink, formerly with the Economist Intelligence Unit, joined Ford Foundation as regional director for China, succeeding Elizabeth Knup… New Hampshire Community Loan Fund promoted Sarah Marchant to chief operating officer… Capria Ventures promoted Mobola Da-Silva to partner.

Elle Carne, previously with Women in Bio, joined the Employee Ownership Expansion Network as director of operations… Publicis Groupe named Nannette Lafond-Dufour, previously with McCann Worldgroup, as chief impact officer… Donna Daniels, previously with the Heron Foundation, was named CEO of Possibility Labs… Abhay Pande, previously with Citigroup, joined Pollination Group as a senior advisor. 

That’s a wrap. Have a wonderful weekend. 

– May 17, 2024