The Week in impact investing: Investment-ready

The team at

ImpactAlpha

🎉 TGIF, Agents of Impact! We’re taking a brief break for the U.S. holiday. We’ll be back in your inbox on Tuesday, July 6. 

Investment ready. Migration. Justice. Climate change. Africa. Workers. Where conventional investors see risk, Agents of Impact often see opportunity for long-term impact and growth. Week in and week out, ImpactAlpha talks to investors and intermediaries making deals work in sectors or geographies other investors are missing. Some Agents of Impact are using lenses – gender, refugee, disability – to spot overlooked opportunities (see Nos. 1 and 7, below). Others are deploying catalytic tools such as first-loss capital, guarantees and low-interest loans to close deals (No. 5). Still others are leveraging community ties, data and technology, and old-fashioned persistence to bank and invest in historically excluded individuals, businesses and regions. Economic and climate dislocations are pushing asset owners, corporations and policymakers to confront risks in new ways (No. 4) and acknowledge that workers are their most valuable assets (see Agent of Impact). You all have been building the blueprints for decades. – Dennis Price

🎧 Impact Briefing. On this week’s podcast, host Monique Aiken talks with PolicyLink’s Michael McAfee about “the curb-cut effect,” closing the racial wealth gap, and other takeaways from Agents of Impact Call No. 29: Capitalism Reimagined. Plus, the headlines. Tune in, share, and follow us on Apple, Spotify or wherever you listen.

🙌 Build your team with ImpactAlpha. A warm welcome to new enterprise subscribers Big Path Capital, Global Affairs Canada, Siemens Foundation, Bestseller Foundation and FHI 360. Drop us a note (or reply to this email) to find some alpha with ImpactAlpha for Teams.

The Week’s Agent of Impact

Leo Strine, former chief justice of Delaware. Leo Strine was effectively the chief justice of U.S. corporations. As the top judge on the Delaware Supreme Court and, before that, chancellor of the Delaware Court of Chancery, Strine for a decade was perhaps the most influential judge in the state where more than two-thirds of Fortune 500 companies are incorporated. Since Strine, now 57 years old, retired from the bench in 2019, he has been a man on a mission to redress the imbalance of power between capital, in the form of institutional investors, and workers, whose share of profits and productivity gains has been severely eroded over the past four decades. But Strine rejects the notion that he left the bench to be freer to advocate for what he calls “fair and sustainable capitalism.” He was plenty outspoken on the bench and has been writing articles about the shared interests of management and labor in corporate governance reform at least since Joe Biden ran for president – in 2007. “It took a long time to get folks to listen,” he told ImpactAlpha.

Giving recent rhetoric around “corporate purpose” and “stakeholder capitalism” real meaning, Strine says, requires the restoration of workers’ share of economic growth and productivity increases to the levels that prevailed before about 1980, when the election of Ronald Reagan and the doctrine of “shareholder primacy” presaged a dramatic power shift (see, “Turning the renewed power of workers into a lasting pillar of stakeholder capitalism”). Fifty years ago, workers got a bigger share of profits; CEOs were paid less. Responsibility for the power imbalance, he says, falls largely on institutional investors. Strine’s practical reforms to boost worker power include expanding the mandate of board compensation committees to include equitable compensation schemes across enterprises; workforce committees to elevate worker voices even at non-union companies; controls on corporate political spending; and the adoption of public-benefit corporate structures that enshrine a positive duty to workers, communities, the environment and other stakeholders in corporate charters (see, “A stock market test for stakeholder capitalism as public benefit corporations go public”). The current trend toward management of ESG performance should be expanded to “EESG,” Strine says, to emphasize the importance of employees along with environmental, social and governance factors. “Unless we have an economy that treats workers fairly, it’s not going to help the investor class either.” – David Bank

The Week’s Big 9

1. Migration solutions in Central America. The crises fueling migration are not new – but the U.S. response represents a marked shift from the past four years. The Biden administration’s multi-billion-dollar plan to address root causes of migration in Central America is tapping impact investors like Root Capital to support farmers and small businesses. “Being able to build, bottom-up, with businesses that are embedded with and proximate to frontline communities is absolutely critical.” says Root’s Willy Foote. More.

2. Consolidation continues. For many firms, “buy” is the answer to “buy or build?” The growing client demand for values-aligned investing is spurring impact investment firms to team up and legacy wealth managers to add ESG and impact expertise via acquisitions.

  • J.P. Morgan acquires robo-investing platform OpenInvest to help customize their clients’ ESG portfolios. “Our mission was to mainstream ESG,” OpenInvest’s Josh Levin told ImpactAlpha. “It doesn’t get more mainstream than this.”
  • Connected Asset Management acquires Bethnal Green Ventures, an early-stage investor in tech ventures tackling challenges in health, education, and sustainability. London-based Connected manages assets for Smart Pension, which invests on behalf of U.K. pension funds.
  • Munich-based Golding Capital Partners acquired boutique impact fund manager Sonanz earlier this year. Pathstone acquired Cornerstone Capital. Deetken Impact acquired Adobe Capital in Mexico.

3. The Reconstruction: Closing racial wealth gaps in Atlanta (podcast). The Atlanta Wealth Building Initiative is redefining wealth for Black Atlantans to include power and agency. Wealth is “ultimately about the ability to make choices and craft a future for yourself and your family,” Latresa McLawhorn Ryan said on the latest episode of The Reconstruction podcast. Read on and listen in.

4. Banking for impact. A consortium including UBS, ABN AMRO and Harvard University aims to deploy by next year a framework to quantify, value, attribute and aggregate banks’ material impacts “to make the vision of an impact economy, promoted by financial institutions, a reality.” Dive in.

5. Fiduciary duty to Africa. Investments in African infrastructure and private equity have the potential to deliver outsized returns. Perceived risks can make investors wary. Joseph Boateng of Casey Family Programs has helped push Casey’s allocation to Africa to 5% of its $2.8 billion endowment, compared to less than 1% for most U.S. asset owners. Without considering Africa as an investment destination, he asks, “can they truly consider themselves fiduciaries?” Onward.

6. Equitable access to relief funds. The American Rescue Plan Act of 2021 channels nearly $20 billion in economic relief to small, mostly rural towns. New guidance from the U.S. Treasury Department will help towns get the funds from states more quickly, rather than through reimbursements (see, “Creative financing to unlock COVID aid in Alabama”). Alabama’s HOPE Credit Union and Black Belt Community Foundation pressed for the change. Go deeper.

7. COVID long-haulers and disability justice. Ibrahim Rashid, a public policy student at the University of Chicago, is among the thousands of Americans newly disabled by the COVID pandemic. His call to action: “The impact investing community must organize to build an economy that centers disability justice and support COVID long haulers.” Check out his story.

8. Voting rights for small shareholders. Individual investors who own nearly 40% of publicly-listed companies have given up voting control through indirect share ownership via mutual funds and ETFs. New approaches that let individual investors weigh in may serve as a model for mutual funds and ETFs looking to make accountability a selling point, writes Henry Shilling of Sustainable Research & Analysis. Dig in.

9. Lisette Cooper walks the talk. The founder of Athena Capital Advisors, with her friend Linda Wisnewski, has mobilized women investors, asset managers and academics to engage company shareholders on gender issues. So far they’ve engaged 25 companies and spurred action at Verizon and Facebook. “Our thinking was to unite women around gender empowerment through all forms of capital,” Cooper writes in the latest edition of Walking the Talk. Keep reading.

The Week’s Dealflow

Clean energy. Victory Hill Capital Advisers commits to investing in Brazil’s community solar installations alongside Energea Global… Brazilian solar financing company Solfácil raises $30 million from QED and Valor Capital to build out services for farmers… Breakthrough Energy Ventures, Prelude Ventures and Capricorn’s Technology Impact Fund invest in hydrogen-fuel producer Electric Hydrogen.

Education and skills. Madagascar’s Sayna secures investment to offer digital skills-training in francophone Africa… Achieve Partners raises $180 million to boost apprenticeships and job placements… KKR’s Global Impact Fund acquires a majority stake in Education Perfect… Localized secures $2.2 million to help graduates from emerging market universities land jobs with international employers.

Health and wellbeing. Vaccine alliance GAVI commits $60 million to RBC Global Asset Management’s Impact Bond fund… Niramai scores funding from CDC Group for COVID-screening technology… Nigeria’s MDaaS Global closes $2.3 million in early funding to expand accessible and affordable health diagnostic services… Khushi Health and StaTwig secure funding from The Trinity Challenge to prepare for future pandemics.

Impact tech. Aavishkaar Capital re-ups its investment in Indian logistics venture GoBOLT… Aquagenuity closes $1.7 million seed round to prevent water-related crises… Glasgow-based sustainable protein maker ENOUGH scores €42 million… Woman-led FutureProof scores $3 million for its property-level climate risk assessment platform… Fintech MFast raises $1.5 million to connect Vietnam’s un- and underbanked with financial services and insurance.

Low-carbon transition. Citi Impact Fund leads a $35 million Series C round for recycling company Recycle Track Systems… ZeroAvia raises $13 million to build hydrogen-electric powertrains for a 50+ seat zero-carbon aircraft… Turntide secures $225 million to make electrical motors more efficient… Electra Vehicles raises $3.6 million to improve battery performance in electric vehicles.

Gender-lens investing. ANDE’s Advancing Women’s Empowerment Fund awards $450,000 to three organizations in Africa… The Gates Foundation announces a $2.1 billion commitment to women’s economic advancement… Incofin extends a $2 million loan to Bina Artha to make microloans to Indonesia’s female entrepreneurs.

Inclusive communities. Community Capital Management’s Community Impact Bond Fund reaches $3 billion in assets under management… Workforce housing in Indianapolis demonstrates Opportunity Zone impact… Enterprise Community Partners closes $229 million affordable and workforce housing equity fund.

Conservation finance. Land Accelerator provides a worm’s eye view of Peru’s conservation entrepreneurs… Mirova, Blue Finance and Belize’s Ministry of Blue Economy secure a $1.2 million blended-finance facility to protect marine life in Belize.

The Week’s Talent

JUST Capital adds six new board directors, including Jim Bildner of Draper Richards Kaplan Foundation, Roosevelt Giles of Atlanta Life Financial Group, Amy Liu of the Brookings Institution’s Metropolitan Policy Program, Annette Nazareth of Davis Polk & Wardwell, John Rogers Jr. of Ariel Investments, and Mark Weinberger, ex- of EY… Ecofin names Jenn Pryce of Calvert Impact Capital, Michaela Edwards of Capricorn Investments, Rehana Nathoo of Spectrum Impact, Ron Cordes of Cordes Foundation, and Brad Hilsabeck of TortoiseEcofin to its advisory board… Dutch development bank FMO hires Michael Jongeneel, ex- of Bain & Company, as chief executive officer. 

Jehan Velji, ex- of Blue Meridian, is named director of Hewlett Foundation’s Effective Philanthropy Group… Antony Bugg-Levine joins the Federal Reserve Bank of New York as a visiting scholar (see, “Agents of Impact: Antony Bugg-Levine and Jed Emerson”)Alexis Goldstein, ex- of Americans for Financial Reform, is named financial policy director at Open Markets Institute, while Deepak Gupta of Gupta Wessler joins the institute’s board… Prosperity Now’s Gary Cunningham joins the board of Community Reinvestment Fund.

The Week’s Jobs

LeapFrog Investments is hiring a manager of strategic planning in Sydney… Mission Driven Finance is recruiting for its community finance fellowship in San Diego… Big Path Capital seeks an associate position in investment banking… Open Society Foundations is looking for an associate investment principal of impact investing in London… BlackRock is hiring a sustainable investing business manager in New York.

CNote is hiring an operations and finance manager in Oakland… MaRS Discovery District is looking for a manager of impact measurement and management in Toronto… JPMorgan Chase seeks an associate for its sustainability and ESG strategies growth equity fund in New York… Domini Impact Investments has openings for a senior research associate and a senior marketing and shareholder communications associate in New York.

Pacific Community Ventures is hiring a lending portfolio director, a marketing associate and a people and culture manager in Oakland… Impact Frontiers seeks an investor engagement manager in Boston… Also in Boston, Fidelity Foundations is hiring a senior evaluation and impact officer… Impact Capital Managers is recruiting an analyst in New York… Opportunity Alabama is looking for a manager of grant writing.

That’s a wrap. Have a wonderful weekend. 

– July 2, 2021