TGIF, Agents of Impact!
Revaluing stakeholders. Stakeholders are reimagining capitalism. Even more important than the decline of “shareholder primacy” is the rising appreciation of the value of workers, communities, customers and the environment. “Pay them more,” President Biden says he has told employers concerned about worker shortages. This week, we traced the arc from stakeholder capitalism to worker power to racial justice (see No. 1, below). We’ll trace the same arc on Tuesday’s Agents of Impact Call, part of our Capitalism Reimagined series with Omidyar Network (RSVP here). There’s a growing market for stakeholder value. At least a dozen publicly-listed companies and funds are structured as public benefit corporations to enshrine the interests of stakeholders into their charters. Twilio and Asana will be the first companies to list on the Long Term Stock Exchange, which could become a beacon for stakeholder capitalism.
Their proximity to urgent challenges makes stakeholders the source of solutions in a reimagined capitalism. Policies that center Blackness uplift all struggling people, just as curb cuts designed for wheelchairs are a boon for strollers, roller bags and bicycles. Five of the six winners of the Goldman Environmental Prize, known as the Green Nobel, are women (see Agents of Impact). Five are based outside the U.S. All are activists. The stakeholder economy is elevating financial tools and practices to mitigate risks and optimize for impact across all investments. Structured exits and revenue-based finance offer flexible alternatives to equity and debt that may be appropriate for a more diverse set of entrepreneurs (No. 4). Securitization of cash flows in education, energy and transportation can help finance projects to meet the Sustainable Development Goals (No. 5). With stakeholders at the center, investors will be defined by their values, rather than only by their assets (No. 6). That’s capitalism reimagined – in real time. – Dennis Price
🎧 Impact Briefing. On this week’s podcast, ImpactAlpha’s David Bank joins host Brian Walsh to reimagine capitalism. We also hear from Rev. Dr. William Barber II, PolicyLink’s Mahlet Getachew and Omidyar Network’s Chris Jurgens to preview next week’s Agents of Impact Call. Plus, the headlines. Tune in, share, and follow us on Apple, Spotify or wherever you listen.
🗣 The Call. Join hundreds of other Agents of Impact on Call No. 29: “Capitalism Reimagined: Rewriting rules and designing policy for the stakeholder economy,” Tuesday June 29 at 10am PT / 1pm ET. RSVP today.
🙌 Build your team with ImpactAlpha. Hundreds of enterprises, funds and institutions are sharing The Brief, posts, podcasts and Calls to showcase their leadership inside and outside their firms. Drop us a note (or reply to this email) to get started on ImpactAlpha for Teams.
The Week’s Agents of Impact
Green Nobel winners. Environmental activism is social activism. Gloria Majiga-Kamoto became the face of the crusade to ban single-use plastics in Malawi. Why? The trash was choking livestock and hurting farmers. Liz Chicaje Churay became a champion of forest preservation in Peru: logging and mining were hurting the livelihoods and desecrating the ancestral lands of her own indigenous Bora people. Sharon Lavigne became an environmental justice advocate to protest a plastics manufacturing plant in St. James Parish, La., her town in the polluted and predominantly Black stretch of the Mississippi River known as “cancer alley.” The women’s path to environmental advocacy started with people and communities. Along with Vietnam’s Thai Van Nguyen, Japan’s Kimoko Hirata and Bosnia’s Maida Bilal, they were awarded the Goldman Environmental Prize, known as the “Green Nobel,” in recognition of their grassroots activism. “I’ve always had a problem with being labeled as an environmentalist,” Majiga-Kamoto told Quartz. “It’s really about people and understanding what people need.”
For 32 years, the Goldman prizes have honored “individuals for sustained and significant efforts to protect and enhance the natural environment, often at great personal risk.” For many, seemingly personal risks were acts of self- and community preservation. Said Chicaje, “We live off the forest. It’s our wealth. If it wasn’t for the forests, we wouldn’t have the food and pure air that we breathe.” Marginalized communities most affected by poor infrastructure, pollution from heavy industry, and weak policy and regulation are most likely to identify opportunities to restore community wellbeing and resources while generating income and wealth. Evette Ellis and Kameale Terry of ChargerHelp in South L.A. are expanding electric vehicle infrastructure while making “EV service technician” a middle-class job accessible to high school graduates. Manka Angwafo of Grassland Cameroon is providing smallholder farmers with access to financing while helping them boost their climate resilience. Dawn Sherman of Native American Natural Foods is helping nurture tribal lands, restore Native livelihoods and improve food security. “People need to appreciate that their voice is the only one that matters,” said Malawi’s Majiga-Kamoto. “What’s missing for us to make the change that we need is just to recognize the power we have.” – Jessica Pothering
The Week’s Big 6
1. Reimagining capitalism for worker power and multi-racial prosperity. Stakeholder capitalism means a rebalancing of power between shareholders and the economy’s other stakeholders, including workers, communities, customers – and the planet. We rounded up early signals of the power shift:
- The public market for public benefit corporations. In the last 18 months, at least a dozen public-benefit corporations have gone public. The January conversion of life-sciences cloud-computing company Veeva Systems, with the support of 99% of shareholders, signaled public-markets investors won’t run away from companies that write the interests of “stakeholders” into their corporate charters. Read more.
- Enshrining the renewed power of workers. Workers have some leverage, and none too soon. The erosion in the economic fortunes of lower- and middle-income earners puts investors at risk as well. Inclusive prosperity depends on enhancing the power of workers to secure an increased share of corporate profits. Among the ideas in play: treat workers as assets not liabilities, add them to boards, and mandate equitable compensation. Go deeper.
- From pledges to policies that center Blackness. Investments in Black Americans have benefits that cascade out, “improving the lives of all struggling people as well as regional economies and the nation as a whole,” says PolicyLink. Among policies we’re watching: building an inclusive green economy, supporting small businesses and entrepreneurs, and repairing Black farms. Get the full list.
- Help reimagine capitalism. Join PolicyLink’s Michael McAfee and Mahlet Getachew, former Delaware Chief Justice Leo Strine Jr., U.S. Impact Investing Alliance’s Fran Seegull, Andres Vinelli of the Center for American Progress and hundreds of other Agents of Impact at “Rewriting rules and designing policy for the stakeholder economy,” Tuesday, June 29 at 10am PT / 1pm ET / 6pm London. RSVP today.
2. Inside Rockefeller’s $20 billion plan for distributed energy. With an initial commitment of $1 billion, the Rockefeller and IKEA foundations aim to catalyze $20 billion by 2030 for off-grid energy development in energy-poor communities. The U.S. International Development Finance Corp. and International Finance Corp. have each pledged $2 billion. “It takes a significant commitment to unlock these markets at a rapid pace and at sufficient scale,” Rockefeller’s Stefanie Fairholme told ImpactAlpha. Check it out.
3. Buzzword bingo. Many companies have a genuine, evidenced commitment to sustainability targets. “Others are less sincere, flooding their communications with keywords,” Patrick Wood Uribe writes in a guest post on ImpactAlpha. Needed: a way to objectively measure and compare environmental, social and governance performance and materiality risk. Onward.
- Universal ESG disclosures. Europe’s Sustainability Reporting Directive, or SRD, paves the way for universal disclosures for ESG-based investing. The directive is expected to come into force in 2024, but “companies would do well to shore up their climate programs now,” Persefoni AI’s Tim Mohin writes. More.
4. Founder-friendly exits. Impact investors lean heavily on traditional equity and debt financing, even though such capital isn’t a good fit for 99% of impact ventures, writes Aunnie Patton Power. Structured exits like revenue-based finance mix the best parts of equity (flexibility and patience) with the best parts of debt (self-liquidation and cost) without pressuring founders to achieve exponential growth or sell early to satisfy investors. Dive in.
5. Securitization for sustainable development. Energy, infrastructure and other activities related to the Sustainable Development Goals have cash flows that lend themselves to securitization. “Future flow securitizations” that create bonds that appeal to institutional investors could accelerate the financing needed to meet the SDGs across Africa, say Alison Harwood and John Schellhase of the Milken Institute. Keep digging.
6. It’s what activist investors do, not what they hold. Engine No. 1 is leveraging its ExxonMobil victory to launch the Transform 500 ETF, which began trading on Wednesday under the ticker VOTE. Engine No. 1’s Michael O’Leary told ImpactAlpha, “We want to be impact investors defined not by what we hold, but by what we do as active owners.” Read on.
The Week’s Dealflow
Returns on inclusion. Backstage Capital portfolio companies raise follow-on investments… Fifth Third Bank invests $2.5 million in Detroit’s First Independence Bank… Finantier secures seed funding to provide financial services for un- and under-banked customers in Indonesia… Google for Startups launches second $5 million Black Founders Fund.
Circular economy. ABN AMRO launches a €425 million Sustainable Impact Fund… Circulate Capital raises $14 million for recycling and waste reduction… Rheaply raises $2.2 million to help organizations track and manage assets to maximize their reuse.
Clean energy. The U.N. Capital Development Fund and Bamboo Capital’s BUILD Fund invests $500,000 in Kenyan solar energy products distributor Mwezi… The Green for Growth Fund invests €3.5 million in Thor Impex for a 36-megawatt wind farm in North Macedonia… AMEA Power scores debt financing for a 50-megawatt solar power plant in Togo.
Health and wellbeing. Generation invests in AlayaCare to streamline home healthcare… Gates Foundation-backed Global Health Investment Fund exits medical device company Alydia… Carbyne raises $20 million to improve emergency response for callers, first responders, nurses and hospitals.
Fund news. Berkeley Energy raises €130 million for second Africa Renewable Energy Fund… S2G Ventures backs five blue economy startups… Chanel anchors Landscape Resilience Fund’s targeted $100 million fund for sustainable agriculture and forestry.
Impact tech. Kenyan agtech venture Apollo Agriculture secures $1 million from Bamboo Capital’s Agri-Business Capital Fund… Nairobi-based MarketForce acquires Digiduka, a fintech that helps Africa’s informal retailers digitize their operations… Adidas is among the backers of Finnish sustainable textile company Spinnova.
Low-carbon transition. J.P. Morgan Asset Management acquires Campbell Global to secure forest-carbon credits… Buffalo Sewer Authority issues a $54 million environmental impact bond for stormwater management… Spring Lane Capital invests $20 million in ‘EVs as a service’ company 7 Generation Capital in Canada.
Education and skills. Ed Partners Africa secures 205 million Kenyan shillings to provide access to credit for Kenya’s affordable private schools… Apna, an upskilling platform for blue-collar workers in India, scores $70 million to expand its mobile app.
The Week’s Talent
Warren Buffet resigns as a trustee of the Bill and Melinda Gates Foundation, but not before bestowing a $3.2 billion parting gift… U.S. Representative John Curtis (R-Utah) is leading a new congressional Conservative Climate Caucus… Laurie Spengler of Courageous Capital and non-executive director of CDC Group joins Lendable’s board of directors. Lendable also designates Chris Wehbe as CEO and Daniel Goldfarb as executive chair… World Education Services names Smitha Das, ex- of Social Finance, as impact investing principal for its Mariam Assefa Fund… Doug Walker joins Better Markets’ as communications director.
Diane-Laure Arjaliès of the Ivey Business School at Western University in Canada wins the How We Teach This award from the Impact & Sustainable Finance Faculty Consortium and the Financial Times. Other winners: Bhakti Mirchandani (Columbia), Alex Edmans (author), Shawn Cole and Vikram Gandhi (Harvard), Alnoor Ebrahim (Tufts), Andrea Armeni (NYU), John Tobin de la Puente (Cornell), Marjolijn Dijksterhuis (Amsterdam Business School) and Deborah Burand and Scott Taitel (NYU)… Melanie Rose Rodgers, ex- of Safe Access Colorado, will lead the Cannabis Impact Fund in Denver.
The Week’s Jobs
Nuveen, the investment management arm of TIAA, has an opening for a private equity associate of impact investing in New York… Phenix Capital seeks an investment consultant in Amsterdam… PGGM is looking for a sustainability and ESG expert in Utrecht, Netherlands… PwC is hiring an ESG strategy consultant in Johannesburg… Sustainalytics is hiring an ESG research associate in Mumbai.
The IFC is recruiting an investment officer for its financial institutions group in Lagos… Also in Lagos, Acumen is looking for a West Africa director… Social impact finance company Arth seeks a program and partnerships manager in Delhi… JPMorgan Chase is looking for a head of sustainable investing for its International Private Bank in London… LEAP | Pecaut Centre for Social Impact seeks a director of finance and operations in Toronto… Microsoft is hiring a carbon removal program manager in Redmond, Wash.
Octopus Renewables is recruiting an associate/senior investment associate in London… MaRS is looking for a manager of social finance at its MaRS Discovery District innovation hub in Toronto… Net Impact has openings for an associate director of growth and an associate director of community… M&G seeks an ESG community manager in Scotland… ISF Advisors is hiring a project manager, an investment analyst and a strategic analyst.
That’s a wrap. Have a wonderful weekend.
– June 25, 2021