TGIF, Agents of Impact!
Impact on. Say it again: We’re all impact investors now. Positive social and environmental impact is the essential driver of global growth and local prosperity. Capitalism itself needs the reset, the reimagining, the reinvention that impact investing represents. That’s part of the narrative that ImpactAlpha helped craft at this week’s GSG Global Impact Summit (see No. 1, below). Case in point: Swiss banking giant UBS made sustainable investing the preferred solution across its entire $2.6 trillion wealth management business (No. 7). The U.S. Department of Labor didn’t appear to get the memo (No. 3), but even the Trump-appointed Commodities Futures Trading Commission is going all-in on climate action (No. 2). The challenge now is to go deeper, bigger and faster, with edtech innovation for social equity (No. 4); with catalytic lending for farmer livelihoods (No. 6); with trade financing for emerging market businesses (No. 5), and with so many other impact solutions that are ready to scale. It’s time for investors to bend the curve on impact, says SJF Venture’s Dave Kirkpatrick, this week’s Agent of Impact. That impact investing can achieve competitive returns is well known. The new narrative we must yet prove out: the arrival of the just and inclusive future we all are invested in. It’s game, er, impact on.
– David Bank
Impact Briefing. On this week’s podcast, Monique Aiken and Melissa Bradley talk about engaging entrepreneurs and investors in policy and politics – and how to #EmancipateTheVote. Dave Kirkpatrick, this week Agent of Impact, pushes investors to go beyond impact alpha. Plus, the headlines. Tune in, share, and follow us on Apple, Spotify or wherever you get your podcasts.
The Week’s Big 8
1. Impact investing’s confident and compelling new narrative. The COVID crisis has confirmed there is no business as usual. Rather than going “risk off,” forward-thinking investors are going “impact on.” At the GSG Global Impact Summit this week, ChangeNOW’s Rose-May Lucotte, Impact Investing Australia’s Kadi Morrison, Omidyar Network’s Chris Jurgens and other Agents of Impact offered up compelling new narratives for impact investing. Impact on.
- Catch up. See GSG keynotes by Ford Foundation’s Darren Walker and the IMF’s Kristalina Georgieva and catch highlights of Day 1 and Day 2.
2. One U.S. regulator calls for a price on carbon… The commissioners of the Commodities Futures Trade Commission were appointed by President Trump, who is no champion of climate action. In a surprising report, the commission warned that climate change poses serious risks to the U.S. financial system and argued for “an economy-wide price on carbon.” The CFTC also affirmed the role of environmental, social and governance, or ESG, investing in fiduciary accounts. Makes sense.
3. …While another tries to chill ESG investing. A month after investors overwhelmingly opposed a Department of Labor proposal to restrict ESG in retirement plans, the DOL proposed a second rule that would stymie ESG investing and proxy voting. Fight back.
- And now this. It seems one of the chief economists at the U.S. Securities and Exchange Commission knew proposed restrictions on shareholder resolutions would cut more deeply than the agency said publicly last year (see, “The SEC’s job is protect investors. Its proposal to weaken shareholder rights does the opposite”). The economist’s estimate that the rule would block three-quarters of all investors from filing shareholder resolutions surfaced seven months after the close of public comments. A group of investors is asking the SEC to re-open the comment period in light of the new disclosure.
4. Centering racial and social equity in education. The COVID disruption is exacerbating educational achievement gaps among low-income and underserved students in the U.S. and worldwide. Omidyar Network spin-out Imaginable Futures and design firm IDEO are challenging educational innovators to reinvent elementary and secondary schools around equity and justice. Crack the books.
5. Boosting ‘systemic liquidity’ through trade finance. Old-fashioned trade finance and other forms of invoice or inventory-based financing can provide vital capital that businesses in emerging markets need to soldier on and restart from COVID shutdowns. “We have yet to see impact investors active in this market,” CDC Group’s Yasemin Saltuk Lamy and Diana Kolar write. “Their arrival will be innovative in itself.” Learn more.
6. Smart subsidies for Africa farmers. The mismatch between risk and returns in agribusiness lending in Africa keeps critical capital from flowing to small and mid-sized businesses. Aceli Africa is looking to turn tens of millions of dollars in donor capital into hundreds of millions of farmer lending with a first-loss cushion to mitigate risks, and compensation for origination costs to boost returns for lenders. Catalytic capital.
7. UBS makes sustainable investment the ‘preferred solution.’ The Swiss bank says 100% sustainable portfolios “can deliver similar or potentially higher returns” compared to traditional investment portfolios and will recommend sustainable investments to all clients of its $2.6 trillion global wealth management business. Check it out.
8. #EmancipateTheVote. The initiative from Monique Aiken, an ImpactAlpha contributing editor, and Anjali Deshmukh aims to combat voter suppression with art and creativity, connecting voters to joy, deeper personal purpose and each other. Join the movement.
The Week’s Agent of Impact
Dave Kirkpatrick, SJF Ventures. The co-founder and managing director of SJF Ventures still had half of the firm’s $125 million fourth fund to invest when COVID shutdowns shut down business as usual. Kirkpatrick and SJF’s team drew on two decades of relationships to identify companies offering solutions to people working remotely, shopping more consciously for food, seeking gainful employment, and looking for alternatives in education and healthcare. SJF’s investment this week in solar software company Terabase was the firm’s fourth since the onset of the pandemic. Others include food logistics company Perishable Shipping Solutions, pasture-raised chicken company Cooks Ventures, and online learning platform Springboard. In July, SJF’s portfolio company Vital Farms IPO’d on the Nasdaq, becoming one of the first public benefit corporations and B Corps to go public. “We know that impact and financial returns can be aligned and accelerate one another mutually,” Kirkpatrick tells ImpactAlpha.
Kirkpatrick, who has raised four funds totaling $260 million, is a founder of the Impact Capital Managers network, which champions an “impact alpha” thesis of high returns and high impact (see, “‘Impact alpha’ fund managers seek co-investors to scale impact investing“). The network’s 52 members manage more than $11 billion in assets. Kirkpatrick’s pursuit of best-in-class founders in high-impact sectors has led SJF to deals in Austin, St. Louis, Richmond, Youngstown, Ohio, and other startup cities between the U.S. coasts. “The rest of the country probably doesn’t expect they’re going to get equity capital, so they figure out other ways to build reasonable businesses,” he says. Kirkpatrick says investors now need to go deeper to “bend the curve” on impact. That will involve investors engaging policy, boosting diversity and building new skillsets. “If we could have gotten 5x financial and 5x impact, how can we get 10x impact with 5x financial?” he asks. “It’s going beyond the core impact alpha thesis.”
The Week’s Dealflow
Low-carbon future. Daimler joins Europe’s green bond parade… Credit Suisse rolls out sustainable oceans equity fund… Solar developer Lightsource closes $20 million for California project… SJF Ventures backs Terabase Energy’s $6 million raise.
Returns on inclusion. Kellogg Foundation backs Valor Ventures to boost ‘inclusion premium’… RSF Social Finance backs loans for Native-owned agriculture businesses… BIMA raises $30 million to offer low-cost microinsurance.
Impact IPO. TPG’s ‘special purpose acquisition company’ takes aim at sustainable business.
The Week’s Talent
Climate Leadership Council’s Ted Halstead, a long-time carbon tax advocate, died in a hiking accident last week. Greg Bertelsen is acting CEO… Echoing Green’s Cheryl Dorsey joins the board of directors at Skoll Foundation… Katherine Jollon Colsher, previously with Goldman Sachs, joins Girls Who Invest as CEO… Roksana Ciurysek-Gedir, ex- of Bank Pekao, will chair White Oak Global Advisors’ new impact advisory board.
Beeck Center’s Jennifer Collins joins LISC as head of enterprise operations… CareAcademy’s Helen Adeosun was named to Fortune’s 40 Under 40 List… Kesha Cash, Cheryl Dorsey, Arlan Hamilton, Mitch and Freada Kapor, Jacqueline Novogratz, Nancy Pfund, Liesel Pritzker Simmons and Jim Sorenson are among Forbes’ Impact 50.
The Week’s Jobs
Global Impact Investing Network seeks a director of finance and operations in New York… The Washington Area Community Investment Fund is looking for a development manager in Washington, D.C… Tideline has an opening for an impact investing analyst in New York, San Francisco or London.
Draper Richards Kaplan is recruiting a chief financial officer in the San Francisco/Menlo Park or Boston area… The Plug is looking for a director of research… Kapor Center is hiring a public relations director in Oakland… UNDP seeks an investment specialist in Cotonou, Benin… Skoll Foundation is looking for an analyst of portfolio and investments in Palo Alto, Calif.
Thank you for reading.
–Sept. 11, 2020