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The Week in impact investing: Pressure



TGIF, Agents of Impact!

Thanks to the hundreds of Agents of Impact who joined The Call yesterday to talk about how to ‘10x’ community capital for a more inclusive recovery (see No. 3, below). We’ll post a writeup and replay next week. First, we’re taking a Brief break for Monday’s U.S. holiday. We’ll be back in your inbox Tuesday, May 26. Happy social distancing to all.

– David Bank, editor

Impact Briefing. Stakeholders gonna stake. On ImpactAlpha’s weekly podcast, Brian Walsh talks with David Bank and Amy Cortese about the new claims on corporate cash reserves to fuel the recovery. And they go inside this week’s annual general meetings and the shareholder pressure tactics of As You Sow’s Andrew Behar and Danielle Fugere, this week’s Agents of Impact. Listen to this week’s Impact Briefing, share it with your networks, and follow us on AppleSpotify or wherever you get your podcasts.

The Week’s Big 7

1. Stakeholders stake claims on corporate cash. The more than $4 trillion in cash on corporate balance sheets is good for more than just stock buybacks and dividends for shareholders. With employees, suppliers, communities and customers facing unprecedented hardships and financing challenges, corporations’ other stakeholders are dialing up pressure on boards and managers to invest in human capital, worker health and safety and other drivers of long-term value creation. Buy back this.

2. Flood of climate-risk warnings. Corporate shareholders have been sounding the alarm as global warming increases the frequency of severe weather events. One risk they’ve flagged: Chemical facilities that are located in flood-prone areas could release toxins. That scenario unfolded this week as record rains inundated a Dow plant in Midland, Mich.; Dow dismissed a shareholder resolution on the issue last year. “This should be a warning sign,” says As You Sow’s Lila Holzman. Tune in.

  • 50/50. Shareholders representing half the votes at JPMorgan Chase’s annual meeting this week supported a resolution asking the bank how it will reduce the climate impact of its lending. The bank is the world’s biggest financier of fossil fuels. An effort to oust former Exxon CEO Lee Raymond from JPMorgan’s board failed. The backstory.

3. Scaling up community capital. Community development financial institutions are “having a moment” as a financial lifeline for small businesses and nonprofits in low-income, rural and minority communities. New financial structures, like Community Reinvestment Fund and Calvert Impact Capital’s “Community Recovery Vehicle” could relieve the stress on CDFIs’ balance sheets and give their lending a boost. Find out how.

4. Bain Capital’s double impact. Bain Capital’s $390 million impact fund recently invested in two sectors proving pandemic resistant: health services and edtech. At the same time, one of its portfolio companies—restaurant chain Sustainable Restaurant Group—filed for bankruptcy. The split-screen at Bain Capital reflects the dual realities of impact investing in the time of coronavirus. Here’s more.

5. U.S. development finance turns inward. The U.S. International Development Finance Corp. (formerly OPIC), typically provides loans to companies in developing countries. In an executive order, President Trump tasked the DFC with setting up domestic investment capabilities to finance production of products deemed critical to the pandemic response, including vaccines and vaccine materials. Mission drift?

6. Shifting mindsets from crisis to growth. How will COVID change consumer spending priorities? How can human capital be used effectively amid new work paradigms? “Evolving, adapting and even establishing market leadership requires shifting the timeframe to the medium-term,” write Jyotsna Krishnan and Vipul Rawal of Elevar Equity in a guest post. Consider this.

7. Pivoting around COVID in emerging markets. Flower growers in Kenya are growing basic foods. Textile manufacturers are making personal protective equipment. In a guest post on ImpactAlpha, USAID INVEST’s Kristin Kelly Jangraw and Emily Langhorne talk with advisors about how to help enterprises and entrepreneurs in emerging markets survive and rebuild from the pandemic. Dig in.

  • Financing needs. COVID is crushing small and growing businesses in emerging markets, putting up to 40% of companies at risk of failure. Grants, speed, pricing, grace periods and flexible repayments are all critically needed, according to ANDE and Dalberg. Pitch in.

The Week’s Agents of Impact

Andrew Behar and Danielle Fugere, As You Sow. Climate risk. Worker safety. Executive pay. The stalwart shareholder advocacy group has a resolution for that. Corporations holding annual general meetings this month are familiar with two particularly attentive shareholders: Andrew Behar and Danielle Fugere of As You Sow. Along with groups like CERES and the Interfaith Center for Corporate Responsibility, the Berkeley, Calif.-based nonprofit has taken the lead in engaging corporations on issues from carbon footprints to workforce treatment. When engagement fails, resolutions often follow. The non-binding shareholder requests “are about bringing new ideas to the public forum,” says Behar. Even a low vote can seed change. The prescience of the approach came into focus this week as floodwaters overtook a Dow chemical facility in Midland, Mich., threatening to unleash toxic chemicals. Dow executives had shrugged off a resolution on the issue filed last year by As You Sow.

The group scored at least a symbolic victory this week when holders of half of JPMorgan Chase’s shares voted in favor of As You Sow’s proposal asking the world’s largest financier of fossil fuels to address the climate impact of its lending activities. Shareholders sent the message “that it is past time for Chase to catch up with its peers, implement a strategy to decarbonize and de-risk its lending portfolio,” said Fugere, As You Sow’s president and chief counsel. Behar, who started a fuel-cell venture before becoming the group’s CEO in 2010, took on the “cognitive dissonance” between BlackRock’s public embrace of stakeholder capitalism and its votes “for nearly every egregious CEO pay package, and against nearly every climate resolution.” Over three decades, the group has notched dozens of wins, getting Revlon to remove toxins from its nailpolish, cajoling McDonald’s and Target to ban foam packaging, and persuading Disney to stop showing images of smoking in youth-rated films. In this shareholder meeting season, As You Sow is just getting started. Next up: A face off with Exxon and Chevron– Amy Cortese

The Week’s Dealflow

COVID response. UNICEF’s guarantees would speed PPE procurement in low-income countries… Peer-to-peer relief lending platform CoVida20 launches COVID financing for Brazil’s small businesses… REDF and Open Road Alliance commit $1 million for U.S. COVID bridge financing.

Frontier finance. Tomato Jos raises €3.9 million to bolster the food value chain in Nigeria… Microfinance holding company Gojo raises $22 million in equity… ABN Amro and Symbiotics launch a mutual fund to drive emerging markets small business finance.

Impact tech. InspiraFarms raises Series B round for off-grid food refrigeration… Clean Crop Technologies secures $2.5 million for electricity-based crop treatment… Insure-tech startup Omocom raises €3.7 million to encourage the sharing economy.

Returns on inclusion. Olamina Fund deploys $14.5 million to Black, Native and rural lenders… Resilia secures $8 million to help nonprofits manage their operations… Emerson Collective backs Syndio’s pay-gap transparency software.

Wealth management. Goldman Sachs to acquire online wealth management platform Folio… Wire Group raises €25 million for Netherlands-based impact fund of funds.

Low-carbon economy. Inclusive Prosperity Capital raises $25 million for clean energy deployment.

The Week’s Talent

Palatine Private Equity names Tristan Craddock as partner for its impact fund… Deutsche Bank AG appoints Kamran Khan as its first Asia Pacific head of environmental, social and corporate governance… Lucas Turner-Owens will transition from his role managing the Boston Ujima Fund to pursue a Master’s degree… JumpScale welcomes Alexis Bunten, Cassandra Ferrera, Jordan Luftig, Nikki Silvestri and Heather Lord as senior advisors… Citi launched a sustainable finance group to work across its global banking, capital markets and advisory groups.

The Week’s Jobs

Ecotrust is looking for a chief impact officer in Portland, Ore… Positive Money is hiring three non-executive directors to its board… Acumen seeks an instructional design senior associate in New York… Mennonite Economic Development Associates is recruiting for three senior project managers in Waterloo, Ontario… Capria is hiring an investment director… Upstart Co-Lab is looking for a program assistant in New York.

Kiva is hiring a strategic partnerships manager in San Francisco, Portland or New York… Ethic is looking for a finance lead in New York… APG seeks a senior portfolio manager in Amsterdam… JumpScale has an opening for a part-time operations and marketing coordinator in Oakland, New York or Pittsburgh… The Environmental Integrity Project is recruiting law clerks to support its environmental protection work.

Thank you for reading. 

–May 22, 2020

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