The Brief | January 27, 2023

The Week in Impact Investing: Integrity

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TGIF, Agents of Impact! 

🗣 Good faith. Microfinance. Opportunity zones. Carbon markets. Debt-for-nature swaps. Before most of the public even understands them, innovative mechanisms for mobilizing capital for positive impact have been dressed down for shortfalls, scams, loopholes and unintended consequences. Scrutiny is essential to accountability and improvement. But some criticism has its own hidden agenda and, likely, intended consequence: maintenance of the status quo, where shortfalls, scams, etc. are better known as business as usual. It is Agents of Impact who have worked to erect guardrails, measure impact, mandate disclosure, redress grievances and yes, correct mistakes. 

This week, as Jessica Pothering reported, nonprofit Publish What You Fund launched a DFI Transparency Index to press development finance institutions to disclose their investments and their impact (see Jessica’s profile of Publish What You Fund’s Gary Forster, below, and get her take on this week’s Impact Briefing podcast.) Amy Cortese wrote about efforts to raise the quality of credits in the voluntary carbon markets to make them a more effective tool for decarbonization and conservation. In a Q&A with Andrea Riquier, Justice Capital’s Eric Glass called out the disparities and disinvestment that pervade the municipal bond market. 

To counter the critics, double down on impact. “Where do we go from here?” Fran Seegull of the U.S. Impact Investing Alliance asks in her preview of the coming year’s policy battles. “The answer, I believe, is to drive toward more and deeper impact, taking care that the field scales with impact integrity.” Integrity is essential to the transformation of finance. Afterall, there’s no “impact alpha” without authentic impact. – David Bank

🗞️ Also on ImpactAlpha:

  • Manifest Social’s Ryon Harms on the tack to the center on ESG by some Republican governors.
  • Ideas for getting more international money flowing in local currency from Osaruyi Orobosa-Ogbeide of Africa Finance Corp.
  • Milken Institute’s Alison Harwood with IFC-Milken Institute scholars Rizwan Haroon and Mohammad Rakibur Rahman on securitizing taxes and fees to finance climate adaptation.

👋 Join Agents of Impact Call No. 48: Greater Share’s Dana Bezerra will drop in to next week’s ImpactAlpha call to explore “Investable opportunities in high-impact municipal finance,” with Ryan Bowers of Activest, Diane Manuel of Adasina Social Capital, Eric Glass of Justice Capital and other Agents of Impact, Wednesday, Feb. 1 at 10am PT, 1pm ET / 6pm London. RSVP today.

The Week’s Impact Briefing

🎧 On this week’s podcast: Development finance institutions are essential to the mobilization of capital to slow climate change and to meet the Sustainable Development Goals. So why do these quasi-public institutions share so little data about their activities? ImpactAlpha’s Jessica Pothering breaks it down for host Brian Walsh. Plus, the headlines.

The Week’s Agent of Impact

🔍 Gary Forster, Publish What You Fund: Holding development finance institutions accountable for impact. Gary Forster left his job in logistics at Procter & Gamble to volunteer in Zambia, inspired by the 2005 Make Poverty History campaign to pressure the U.K. government to prioritize global poverty alleviation. Over the next decade, he took on humanitarian assignments in more than 25 countries. Much of the work – like taxi ambulances in Nigeria and bicycle ambulances in Zambia – was health-focused (and involved a fair bit of logistics). “I’ve seen these projects and these investments from the recipient-country perspective and have seen first-hand the impact that this kind of support can have on people’s lives,” Forster tells ImpactAlpha. His field experience helps him stay connected to the overarching purpose of aid and development finance in the work he does now as CEO of Publish What You Fund, a nonprofit organization that calls itself “the global campaign for aid and development transparency.” 

Publish What You Fund this week launched the first-ever DFI Transparency Index, which ranks 27 development finance institutions and multilateral development banks on their disclosure of data on capital mobilization and impact (watch the launch video). With development banks getting more money and power in the name of big agendas like the U.N. Sustainable Development Goals and the Paris climate agreement, the public should raise its expectations, Forster says. “DFIs need to demonstrate their value if they want to play a bigger role.” 

At first glance, the index is a scathing rebuke of DFI transparency. But it’s complicated. “The more time I’ve spent working on DFIs, the more aware I’ve become of just how impossible their task is,” he says. “They are trying to put billions of dollars into markets without squeezing out other sources of funding. They are trying to take risk, but not lose money. They are trying to use capital to address rather than exacerbate inequality. They have to be countercyclical. If they get it wrong, they’re destroying markets rather than building them and communities get hurt.” The new DFI Transparency Index is the result of years of work with civil society organizations, think tanks and DFIs themselves on what investment data should be available to the public, Forster says. “Ultimately we have a duty to ensure that money spent in the name of the world’s poorest is spent well.”

The Week’s Dealflow

💸 Deal spotlight: Black-worker ownership. With more than half of business owners in the U.S. over 55 years old, there’s a “silver tsunami” of businesses for sale. Most of them don’t have a succession plan. An increasingly viable option: Transfer ownership to employees. Bethesda, Md.-based Apis & Heritage Capital Partners this week closed a $58.1 million fund to help small and mid-sized businesses with large workforces of color transition to employee ownership (see, “Black and brown employee ownership for the post-COVID economy“). Nearly 20 million Black workers make up roughly 12% of the American workforce. Black business ownership can help bridge the racial wealth gap and advance economic mobility. Black Americans aged 62 to 70 have a median net worth of $46,200 compared to $331,700 for white Americans, says the Center for Global Policy Solutions. Apis & Heritage says worker-owners in its portfolio can accrue $70,000 to $120,000 in retirement savings.

  • Employee ownership deals. Apis & Heritage’s employee-led buyout model is helping retiring business owners transfer ownership to employees at fair market prices. The Black-led firm has helped two firms, Denver-based Apex Plumbing and El Paso, Tex.-based Accent Landscaping Contractors, transfer 100% ownership to employees.  The companies employ a total of 150 workers.

Financial inclusion. Indonesia’s Imajin secured seed funding to connect and finance small, local manufacturers that contract with large companies… The European Bank for Reconstruction and Development loaned €25 million to Morocco’s Banque Centrale Populaire to provide green-project loans to small businesses… Twinco Capital snagged $12 million in equity and debt funding, led by Quona Capital, to provide supply chain financing to small businesses in emerging markets… Fintech venture Zenfi raised $8.5 million to provide low-cost personal finance services to Mexican consumers.

Climate and clean tech. Bangalore-based Log9 Materials raised $40 million in Series B funding for its line of lithium-ion batteries… Outrider raised $73 million in a Series C funding round to make autonomous electric trucks for distribution yards… Vermont-based Wasted raised $7.5 million for portable eco-toilets that convert waste into fertilizer… Scythe Robotics raised $42 million for ‘pay-as-you-mow’ landscaping equipment… BioElements secured $30 million for bioplastics in Latin America. 

Energy transition. Stockholm-based SunRoof secured €13.5 million to build solar roofs in the U.S. and Europe… The state of Hawaii is putting up a $100 million climate fund to draw in federal and private investment in the state’s clean energy capacity… Vietnam’s Gai Lai Electricity issued a $9 million green bond to develop renewable energy projects… Tado raised €43 million for energy-efficient thermostats. 

Agrifood investing. Bamboo Capital’s ‘Build Fund’ backed Green Mountain Arabica Coffee in Rwanda… BlueOrchard invested $5.3 million in Brazilian insurer Newe for climate resilience… Australia’s Rumin8 scored A$25 million to make animal supplements that reduce methane emissions from livestock… India’s Ecozen raised $25 million, giving early investors a partial exit.

Investing in health. Oya Femtech Apparel scored $1.3 million in pre-seed financing to make performance wear for women’s health and comfort… Breathe Well-being raised 500 million rupees for diabetes care and prevention… Bridges Fund Management is developing a chain of short-stay healthcare facilities called Renaiss Health.

Sustainable investing. Acceso Impact Fund raised $4.5 million for impact businesses in Central America and the Caribbean… Generate Capital raised $880 million to capitalize the green infrastructure boom… Portuguese fintech startup Goparity snagged €2 million to connect investors to social and environmental impact projects.  

The Week’s Talent

Christine Chow, ex- of HSBC Asset Management, joined Credit Suisse Asset Management as managing director and head of active ownership… Carbon America named Cruz Gamboa, ex- of General Electric, chief commercial and financial officer, and Craig Spreadbury, ex- of Four Corners Petroleum, as chief operating officer… Sarah Gordon, founding CEO of the U.K.’s Impact Investing Institute, will step down to join the London School of Economics as a visiting professor.

Eliane Ubalijoro, ex- of Sustainability in the Digital Age, will become, in May, the first African female CEO of the Center for International Forestry Research and World Agroforestry…  Kelly McCarthy, former chief impact officer of the Global Impact Investing Network, joined Vistria Group as head of impact.

The Week’s Jobs

New York jobs

The Clean Fight is looking for a program associate in New York… Green City Force is hiring a chief development officer in New York… The New York State Energy Research and Development Authority, or NYSERDA, seeks a CEO and chief of staff to the president in New York… Georgeson has an opening for an ESG advisory director in New York.

Other East Coast jobs

Climate Nexus is looking for an executive director in New York or Washington, D.C…Social Finance has an opening for a director of healthcare impact investments in Boston… The Alliance for Health Equity is recruiting a CEO in Philadelphia… Calvert Impact is hiring an associate general counsel in the Washington, D.C. area. 

West Coast jobs

The San Francisco Foundation has an opening for an associate initiative officer… Uber is hiring a sustainability product marketing manager in San Francisco… Kapor Capital seeks a portfolio services director in Oakland… Re-volv seeks a development director in San Francisco… Antora Energy is recruiting a communications and policy manager in Sunnyvale, Calif.

Other locations

The Center for Sustainable Finance and Private Wealth North America is looking for a remote managing director… 2X Global is recruiting a remote global associate… Galvanize Climate Solutions seeks a vice president of impact measurement in San Francisco or New York… The Great Lakes Protection Fund is hiring a knowledge management fellow in Evanston, Ill. 

Chemonics International has an opening for a remote director of climate finance learning and impact… Accion seeks a remote director of public relations… The Segal Family Foundation is recruiting a remote partnerships director… The W.K. Kellogg Foundation is looking for a mission driven investments analyst… Omidyar Network is looking for a strategic communications senior manager. 

That’s a wrap. Have a wonderful weekend. 

– Jan 27, 2022