The Week in Impact Investing: Shared Prosperity

The team at

ImpactAlpha

TGIF, Agents of Impact!

🗣 Great awakening. One of my all-time favorite books isThe Fourth Great Awakening by the Nobel Prize-winning economist Robert Fogel. It was published in 2000, and I’ve been waiting for his promised “postmodern egalitarianism” ever since. Fogel’s broad thesis is that the reaction to economic dislocation – divisive, xenophobic and often racist – is later superseded by a burst of social progress and civic renewal as the economy integrates the new factors of production. For two decades, as dislocations piled on top of each other and inequality skyrocketed, it was difficult to call the birth of the new era. But with inflation and unemployment down, real wages and share prices up, and interest rates set to fall, it’s possible to see the economy’s improbably soft landing as a new foundation. Empowered workers turn out to be good, not bad, for the economy. The exigency of the low-carbon transition looks set to power global growth for decades. Artificial intelligence, harnessed to the common good, promises exponential improvements in productivity. In these volatile and violent times, dare we hope that shared prosperity might soon beget common purpose and democratic awakening?

Bread crumbs of support for the thesis can be found in the $4 trillion muni bond market, where cities and other issuers that prioritize civic engagement and racial equity see lower risks and improved outcomes, as a range of experts shared on this week’s Agents of Impact Call (see below). Canada is enacting policies to encourage worker ownership as a path to broader-based wealth, as Roodgally Senatus reports. Regenerative agriculture fosters community as well as food security, as I learned at a gathering in Hawaii (see also Jessica Pothering’s explication of the UN’s 10-point plan for transforming food systems). Even the shuttering of Jeffrey Ubben’s $2.6 billion Inclusive Capital Partners may be a function of too little, rather than too much, faith in the sustainable future, as Imogen Rose-Smith suggests. Shefali Anand reports that investors in India are centering climate concerns, even if the government doesn’t. And Amy Cortese writes that the mixed bag of results at the COP28 climate summit in Dubai may eventually be seen as a step toward a post-fossil fuel world. Cherry-picking the evidence? Sure. But no more so than those who cling to doom and gloom even as the narrative is changing. – David Bank

Plugged In: Investing in an inclusive economy (live on LinkedIn). Lenore Champagne Beirne founded Bright Ventures to bring capital and coaching to inclusion-focused innovators. Bright Ventures Fund, launched in 2021, has backed a dozen diverse-led ventures in digital health, fintech and the future of work. Champagne Beirne joins Plugged In host Sherrell Dorsey on LinkedIn Live, Thursday, Dec. 21, at 9am PT / 12pm ET / 5pm London. RSVP today.

The Week’s Podcast and Call

🎧 Impact Briefing. Host Brian Walsh shares highlights from Agents of Impact Call No. 57, which featured investors, advisors and ratings representatives offering tips for finding hidden impact and overlooked risks in municipal bonds. Plus the headlines. 

📞 The arbitrage opportunity in high-impact municipal bonds (video). In the $4 trillion muni market, small movements in the pricing of bonds can mean millions of dollars to cities and other issuers. Rampant misperceptions and mispricing of demographic risks in the municipal bond markets mean investors can put capital into underinvested communities – and get paid for doing so. “The impact and the alpha together is a place that we can step into with good hearts,” Homero Radway of Activest shared on ImpactAlpha’s “Muni Impact” call this week. Radway says directing investment to majority Black cities or historically Black colleges and universities can over time lower the cost of capital. “How do we evaluate [these investments] with a clear lens to understanding the arbitrage opportunity in being more equitable, and having an impactful strategy?” he posited. HIP Investor’s Paul Herman, Kestrel’s Monica Reid, Matt Posner of Court Street Group, and Lincoln Institute’s RJ McGrail highlighted data that can guide muni investors to overlooked impact and hidden risks. 

The Week’s Dealflow

Deal spotlight: Battery innovation speeds the energy transition. Nearly 200 countries agreed at COP28 to triple global renewable energy by the end of the decade. “The next step is thinking about how we actually get these electrons delivered at the doorstep where they’re needed,” says Daan Walter of research firm RMI. “Batteries are a huge part of that story.” Whether to store energy from intermittent wind and solar, or to power electric vehicles, battery tech is on a tear. Entrepreneurs are pursuing new materials and chemical processes that pack a bigger punch and don’t rely on rare materials. Policymakers in the US and Europe are bent on creating domestic supply chains. More than a dozen “gigafactories” with collective capacity of more than 400 gigawatt-hours per year have been announced since the US Inflation Reduction Act was enacted in August 2022. 

  • Powering up. Investors are keyed in. EV battery maker AM Batteries raised $30 million this week from the venture arms of Toyota and Porsche. Ion Storage Systems scored $15 million for its solid-state lithium metal batteries. Italy’s Energy Dome pulled in $65 million in project finance from Breakthrough Energy Catalyst and the European Investment Bank for its first-of-a-kind CO2-based battery system. Fourth Power, a developer of utility-scale storage that uses graphite and tin, scored $19 million from DCVC, Breakthrough Energy Ventures and the Black Venture Capital Consortium. “We’re focused on building a world class demonstration, and showing the receipts,” Fourth Power’s Arvin Ganesan told ImpactAlpha.
  • Fossil phaseout. The battery craze represents “the fastest supply chain ramp up since World War II,” says RMI’s Walter. Negotiators at COP28 rejected calls for the “phaseout” of fossil fuels; RMI’s latest report says batteries and renewables may do the trick. Batteries for EVs and energy storage, the researchers conclude, are “set to enable the phaseout of half of global fossil fuel demand.”
  • More.

Climate finance. EQT Infrastructure acquired a majority stake in waste management and sustainability services company Heritage Environmental Services… Mercy Corp Ventures backed Tappi to boost economic and climate resilience in Africa’s small businesses… New Mexico State Investment Council committed $10 million to a climate venture fund managed by Dangerous Ventures… Opportunity Finance Network committed $8.5 million to six community development financial institutions to support climate resilience.

Fund news. Bamboo Capital launched its BUILD investment fund and technical assistance facility to support small businesses in Zimbabwe… Sir Ronald Cohen’s Apax Partners closed a $900 million global impact fund… Omidyar Network India announced it will shut down.

Impact bonds. IIX scored $100 million for its sixth Women’s Livelihood Bond… San Diego County eyes $166 million for a green bond for public health facilities.

Inclusive economy. Accion Venture Lab invested in Indonesia’s Babados and Indonesia’s Showroom B2B… British insurance broker Thomas Carroll Group transitioned to an employee ownership trust… Comun, a New York-based neobank for immigrants from Latin America, snagged $4.5 million from investors… Investors backed Copia with fresh capital to right the ship… Valency International raised $15 to build food processing and manufacturing facilities in Nigeria. 

Low-carbon transition. India’s Ashv Finance scored $10 million from Encourage Capital for rooftop solar lending… Ara Partners locked in more than $3 billion for its third fund, focused on industrial decarbonization… Fashion Climate Fund secured $4 million for its fund to decarbonize the textile, apparel and footwear industries… Electric buses get funding in Africa and India… Monashees led a $30 million round for São Paulo-based Vammo, a manufacturer of electric motorcycles and batteries. 

Nature-based solutions. ADM Capital’s Asia Climate-Smart Landscape Fund secured commitments to invest in sustainable agriculture and agroforestry in Indonesia… Mirova invested $6.5 million in Colombia-based biodiversity credits developer Terrasos… Pachama secured $64 million to use satellite imaging and AI to monitor carbon stored in forests.

The Week’s Talent

Matthew Mendelsohn, who led the Canadian government’s impact and innovation unit, will become CEO of Social Capital Partners. Jon Shell chairs the board… Forest Investment Associates appointed Mike Cerchiaro as president and CEO, replacing Mark Walley. FIA also promoted Andrew Boutwell to head of investment management, and MaryKate Bullen to head of business development and sustainability… Katherine Morency, ex- of DiCicco, Gulman & Company, joined Social Finance as a corporate finance senior associate.

Stéphane Detobel and Francis Verpoucke, both ex- of TOBAM, joined Mirova US as executive VPs… William Sonneborn, an alum of International Finance Corp. and KKR, is named president of Generate Capital… Kiko Ventures added three members to its investment team: Arielle Schacter, ex- of Connecticut Innovations; Marius Evers, ex- of Trade Republic; and Paul Eisenberg, ex- of Planet A Ventures… Erick Berkerts will step down as CEO of Evergreen Climate Innovations at the end of this year. Michelle Carr, ex- of The Nature Conservancy, will replace Berkerts as CEO. 

Garrett Jaso, ex- of Global Impact Investing Network, joined Impact Capital Managers as senior manager of communications and policy… Sorenson Impact Institute named Peter Lupoff of Lupoff/Stevens Family Office as a member of its Global Impact Leaders network… Veris Wealth Partners appointed Elena Ladygina, ex- of Morgan Stanley, as senior advisor and head of its New York office…  Vernice Arahan, a former program officer at Inclusiv, joined ImpactAssets as a senior analyst… Betty Irene Moore, founder of the Gordon and Betty Moore Foundation, passed away this week at 95.

The Week’s Jobs

US-based jobs

In Washington, DC, Impact Justice seeks a director of finance, and International Finance Corporation is hiring an investment analyst for climate and sustainable finance… In New York, Credit Agricole has an opening for an energy and infrastructure finance associate; the Rockefeller Foundation is recruiting an innovative finance summer associate; and Equal Ventures is on the hunt for an associate… RMI is looking for a strategic planning and growth manager. 

In San Francisco, Clearway Energy Group is looking for a senior analyst of portfolio finance, and Acumen seeks a health associate… Opportunity International is looking for a Chicago-based capital solutions senior associate… Enfinity Global is hiring a renewables portfolio manager in Miami… Supply Change Capital is on the hunt for a senior associate to lead deal sourcing and diligence in Chicago or Los Angeles.

International locations

Nykredit has an opening for an ESG advisory analyst or associate in Copenhagen… The Impact Facility is recruiting a program executive director in London… ROM InWest is looking for an investment manager in the Netherlands… The European Network Against Racism Foundation is on the hunt for a Belgium-based manager for its Racial Economic and Justice Investment Fund.

Sustainable Finance Initiative seeks a communications volunteer in Hong Kong for its Impact Summit… IIX has an opening for an innovative finance analyst in Singapore… Oikocredit seeks an investment officer in Nigeria… I&P is looking for an investment officer in Senegal… The Nature Conservancy seeks an associate director of development for corporate philanthropy, based in Cape Town.

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That’s a wrap. Have a wonderful weekend. 

– Dec. 15, 2023