🗣 Arrows in the quiver. Florida Gov. Ron Desantis made time during his spotty campaign rollout to take a shot at a favorite bogeyman: ESG investing. “We will not be a free society if major financial institutions can do through the economy what people could not achieve through the ballot box,” Desantis told Elon Musk in their Twitter Space. Well-funded attacks on ESG, and a broader pushback on climate action are not going away, with more than 100 anti-ESG bills and seven resolutions in 37 states already this year. “Policy and sustainable investing have become deeply intertwined,” Lisa Woll, the outgoing head of US SIF, tells ImpactAlpha’s Amy Cortese in her exit interview. “We have to stay focused, we have to stay defended on this.”
Agents of Impact are adding public policy to their own toolkits. The Employee Equity Investment Act, a bipartisan effort billed as pro-economy and pro-national security, will help more owners of maturing small businesses exit to employees rather than private equity firms, competitors or foreign corporations (Ownership America’s Jack Moriarty explains all of on this week’s Impact Briefing podcast). Common Trust and Clegg Auto are showcasing the promise of “purpose trusts” in sharing ownership benefits with employees. Ford Foundation and other asset owners want to see more fund managers add worker ownership to their “quality jobs” strategies, as David Bank reports. The American Sustainable Business Network and Social Economy Europe are hailing a “transformative” UN framework with more comprehensive metrics for enterprise contributions to worker benefits, power and ownership, as Ilcheong Yi of UNRISD and Michael Peck of 1worker1vote write on ImpactAlpha.
Just Economy’s Deb Nelson and Tina Beck share success characteristics of the 156 financial activists they’ve supported over the last six years. Among them: the ability to bring multiple forms of financial and social capital to support social entrepreneurs and community wealth-building. Central Appalachia is digging deep into its solutions toolkit to unlock the region’s potential as a climate haven, reports Roodgally Senatus. Gender equality may be the key to unlock the other sustainable development goals as well, as journalist Esha Chhabra details in ImpactAlpha’s excerpt from her new book. What’s in your toolkit? – Dennis Price
The Week’s Podcast
🎧 Impact Briefing. Jack Moriarty of Ownership America chats with ImpactAlpha’s David Bank about employee ownership and new legislation to help investors back companies that are turning workers into owners. Host Brian Walsh has the headlines.
- Listen to this week’s episode, and follow all of ImpactAlpha’s podcasts on Apple, Spotify or wherever you listen.
The Week’s Agent of Impact
Jessica Espinoza, 2X Global: Proving gender as a value-driver. A decade ago, investors pushed back against the loan products Jessica Espinoza was designing for female business owners as an executive at ProCredit Bank Nicaragua. Their argument: “There just wasn’t a market opportunity,” Espinoza tells ImpactAlpha. This week, the 2X Challenge of development finance institutions and multilateral banks worldwide announced that it has helped mobilize over $27 billion in public and private capital for the express purpose of serving women and advancing women’s business leadership in emerging markets. “We see a lot more interest from private sector and institutional investors,” says Espinoza, who leads the challenge as CEO of 2X Global, formed by last year’s merger of 2X Collaborative and GenderSmart. “It’s exciting to see the momentum.”
Commitments to gender-lens investing are barely a sliver of the more than $6 trillion controlled by development finance institutions and multilateral banks worldwide. Along with venture capital’s neglect of women-led startups and asset owners’ abysmal allocations to female asset managers, that means too few dollars (or euros, pesos, shillings and rupees) flowing to women. Espinoza’s journey to gender-lens investing started in microfinance, which promised to uplift poor women. “But women were seen as beneficiaries. They weren’t consulted on their needs,” Espinoza says. “Loan officers weren’t women, leadership and the people who designed the loan products weren’t women. It always felt like a double standard: wanting to see women grow larger companies but keeping them at this micro level.”
At DEG, the German development bank, she tackled investor-side barriers to women’s financial inclusion. In 2018, Espinoza represented DEG at the launch of the 2X Challenge at the G7 summit. The effort exceeded its two-year goal of mobilizing $3 billion from DFI member institutions; members invested nearly $7 billion and catalyzed more than $4 billion more from other public and private investors. This week, 2X Global announced an additional $16 billion has been committed to gender-lens investing since 2021. That $27 billion total represents a remarkable collective effort, says Espinoza. “We didn’t set any individual targets,” she says. “The collective commitment was in the spirit of having a joint challenge, and leaning in and learning together.” For the next phase, 2X Global is developing a 2X certification, which will require third-party data validation on companies, funds and portfolios. “What for me is really important is how to embed gender across the investment and business cycle with intentionality,” Espinoza says, “and making and proving gender as a driver of value.”
- Keep reading, “Jessica Espinoza, 2X Global: Proving gender as a value-driver,” by Jessica Pothering on ImpactAlpha.
The Week’s Dealflow
Deal spotlight: Carbon removal. After soaring in 2021, voluntary carbon credit markets slumped last year amid reports and investigations that took aim at the quality and integrity of projects underlying the credits (see, “Voluntary carbon markets face a reckoning over credit quality and environmental impact”). This week, JPMorgan signed purchase agreements worth over $200 million for carbon removal, which is based on more robust processes and fetches higher prices. The bank agreed to a $20 million, nine-year deal with Switzerland’s direct-air capture pioneer, Climeworks, for 25,000 metric tons of carbon removal credits. Charm Industrial agreed to remove and store 28,500 metric tons in five years. Other agreements with CO280 Solutions and Frontier will bring total carbon removal to 800,000 metric tons. “These agreements will meaningfully contribute to moving carbon removal forward as a solution to a wider range of buyers, including our clients,” said JPMorgan’s Heather Zichal.
- Market correction. JPMorgan sees increasing demand in the voluntary carbon markets as well and is building tools to facilitate such trades. In a new whitepaper, the bank calls for “building alignment around robust principles and enhancing accountability and transparency to increase confidence and mitigate risk, which will strengthen the utility of the market for all participants.”
- Share this post.
Clean and climate tech. ConnectDER raised $27 million for its renewable energy “collar adapters” for electricity meters… Hybrico raised $2 million to shift cell tower operators to green energy… Collaborative Fund committed $15 million to ignite sustainable materials development at Harvard… Lowercarbon Capital and MCJ Collective backed Quilt’s heat pump designs… Nigeria’s Figorr raised $1.5 million to expand cold-chain storage for agriculture and healthcare in Nigeria… CTVC secured $1.8 million to ramp up climate-tech data insights.
Fund news. Harrison Street is reportedly launching an energy transition fund with a $750 million target… Norway’s Cubera invested in four private equity funds with its first impact fund of funds… Syridex Bio scored $5 million from New Jersey to back local health businesses… The Ford Foundation invested in mutual fund Ariel Fund.
Impact management. Montreal-based Novisto scored $20 million to help companies operating in the US and Europe improve their ESG data collection and reporting… StepChange, in India, secured $4 million to help large companies and financial institutions benchmark ESG performance and manage climate risks… Tipping Point Fund backed field-building efforts of GIIN, The ImPact and ShareAction… California-based Pledge clinched $10 million to help logistics companies understand and mitigate carbon emissions.
Inclusive economy. Austin-based Acadeum raised $11.9 million in a Series B round to help underserved students chart a more direct and affordable path through college… Funders commit $10 million to combat California’s housing crisis with community ownership.
Small businesses. Sabi in Nigeria raised a $38 million Series B round to help informal vendors with logistics and business digitalization… Era92 Fund secured $425,000 to provide financial services to micro and small businesses in Uganda… Digital logistics company Agraga raised to make it easier for India’s small businesses to manage cross-border supply chains.
The Week’s Talent
Goldman Sachs promoted John Goldstein to global head of sustainability and impact solutions for its asset and wealth management business. Kara Succoso Mangone became head of the investment bank’s sustainable finance group… Jeff Jordan stepped down as general partner of a16z after 12 years.
Swati Chandra, ex- of Ruffalo Noel Levitz, joined Opportunity Finance Network as a senior credit analyst… Oliver Withers, ex- of Credit Suisse, joined Standard Chartered Bank as its first head of biodiversity… Samantha Davidson, ex- of Mercer, will replace Noel O’Neill as Cambridge Associates’ president and head of global investing in July.
The Week’s Jobs
💼 Share the week’s impact jobs. Want to post a job in The Brief? Drop us a note.
The Global Impact Investing Network is looking for an impact measurement and management engagement director… Environmental Defense Fund seeks a senior foundations officer… Citi Impact Fund has an opening for an operations and risk vice president… Echoing Green is hiring a capital manager.
SJF Ventures is looking for a director of impact… Impact Capital Managers is hiring an impact management and research manager… Domini Impact Investments is looking for a senior marketing and communications associate… Remarkable Ventures is looking for a climate senior investment associate.
Other East Coast locations
Arctaris Impact Investors is on the hunt for a compliance manager and legal affairs associate in Wellesley, Mass… VCC Social Enterprises is hiring a loan administrator and an information security manager in Richmond, Va… Social Finance has an opening for a controller in Boston.
CDC Small Business Finance seeks a senior business advisor in San Francisco… Also in San Francisco, South Pole is on the hunt for a sustainable finance managing consultant… Santa Barbara Foundation is recruiting a senior investment officer.
Legal & General seeks a climate strategy analyst in London… TPG’s renewable energy group Matrix Renewables is recruiting a development associate and a financing associate in Madrid… IDH has an opening for an agriculture investments knowledge manager in the Netherlands… Blue Like an Orange is looking for a sustainability analyst in Paris.
Other global locations
The Nature Conservancy is recruiting a conservation deputy director in South Africa… ResponsAbility seeks a debt analyst in Lima, Peru… Temasek is on the hunt for a climate solutions assistant vice president in Singapore… Wavemaker Impact is looking for entrepreneurs interested in launching climate tech unicorns in the Philippines… Acumen is recruiting a London-based investment director focused on off-grid solar in Africa.
That’s a wrap. Have a wonderful weekend.
– May 26, 2023