TGIF, Agents of Impact!
Toppled icons. Along with historical statues, this week saw the toppling of other archaic icons of an order in decline. Investors and activists took sledgehammers to two fossil fuel pipelines, as Dominion Energy and Duke Energy walked away from the Atlantic Coast Pipeline and a federal judge ordered the emptying of the $3.7 billion Dakota Access Pipeline, a rare shutdown of an operating pipeline (see No. 5, below). Carbon-intensive installations are toppling worldwide. Spain last month shut down half of its remaining coal-fired power plants; Recent solar projects in Australia, China, the UAE and elsewhere have achieved a levelized cost below $30 per megawatt hour (down from more than $300 a decade ago), meaning building new solar capacity is cheaper than operating many existing coal and gas plants. Toppled!
Toppling as well are conceptual structures from another era that no longer serve the social good. Even before the COVID crisis, the false idol of ‘shareholder primacy’ was being pulled from its pedestal. Rising in place is a stakeholder economy that creates value for employees, suppliers, consumers and communities as well as investors. But relics of the old order stubbornly persist. Take the canard that the stock market casino represents investment in the real economy (No. 7). Or that the fiduciary duty of pension fund managers excludes consideration of environmental, social and governance factors, as the U.S. Department of Labor’s proposed guidance suggests (No. 2). And while we’re toppling racist monuments, let’s uproot assumptions, biases and practices that have distorted finance and investing, including impact investing itself. See below for some Agents of Impact who have worked for years to topple such inequity.
– David Bank, editor
The Week’s Impact Briefing (podcast)
Impact Briefing. Our weekly podcast is back. Monique Aiken engages David Bank about toppling structures and systems, and introduces a few of the leaders dismantling racism in finance and investing, this week’s Agents of Impact. Plus, the headlines. Tune in, share, and follow us on Apple, Spotify or wherever you get your podcasts.
The Week’s Big 7
1. The pandemic’s generational opportunity. The COVID disruption has awakened an understanding of inequality, injustice and an economy living beyond its means and resources, says Anthony Woolf of Generation, the $20 billion investment firm co-founded by Al Gore and David Blood. The firm released its data-rich annual report on the sustainability revolution. “2020, in hindsight, will be seen as this chance to rethink, reset and redesign how we do things,” Woolf told ImpactAlpha. Dig in.
2. Tipping public policy for public good. New definitions of fiduciary duty. Standards for quality jobs. More capital to low-income communities. “Government and investors need each other to get to the scale we need,” said U.S. Impact Investing Alliance’s Fran Seegull in announcing the first grants from the Tipping Point Fund on Impact Investing. Winning wonks include B Labs, Opportunity Finance Network and Pacific Community Ventures. Take a dip.
3. Designing incentives for impact. Impact incentives can be baked into deals through terms for the release of tranches of capital, the vesting of ownership shares or the buyback of equity from investors by founders and employers. The carried interest of fund managers can be linked to impact achievements. In her third guest post on ImpactAlpha, Aunnie Power gathered up a dozen examples of impact-linked incentives in term sheets and financing structures. Grab the carrot.
4. COVID relief for Africa’s essential businesses. As the epicenter of the COVID-19 shifts to emerging markets, “There is a real concern that tens of millions of people will be pushed into poverty, wiping out the progress made in the last 30 years toward the U.N.’s first Sustainable Development Goal of ‘No Poverty,’” writes Vital Capital’s Nimrod Gerber in a guest post on ImpactAlpha. The firm launched a $10 million debt facility for businesses providing essential services through the crisis. Wade in.
- The Collaborative for Frontier Finance, with Sonen Capital, Dalberg, Fondo de Fondos and the Visa Foundation, are surveying capital managers operating in Latin America about the impact of the COVID-19 pandemic on their portfolios of small and growing businesses. Be counted.
5. Pipeline portent. In the span of 24 hours, the Dakota Access Pipeline was shut down by a federal judge, the Keystone XL oil pipeline was delayed, and the two major utilities developing the Atlantic Coast Pipeline called it quits. “Building more gas infrastructure now without a clear justification is a recipe for stranded assets,” said As You Sow’s Lila Holzman. Write-downs ahead.
6. Impact investors go ‘risk-off’ in the face of COVID. One in five impact investors are cutting back commitments. The pullback is hurting fundraising, even for fund managers with tranches of junior debt and first-loss protections, according to the latest brief from the Global Impact Investing Network’s Response, Recovery, and Resilience Investment Coalition. More.
7. Traders vs. investors. A New York Times article detailed ‘investor worries’ about a Joe Biden win (slower arms sales, higher corporate taxes, regulation of fossil fuels). ImpactAlpha’s David Bank was prompted to pen a letter to the editor. As COVID and the racial justice movement inspire a broad reimagination of capitalism, he writes, “such a cramped view of investment should be retired by reporters just as it is being retired by, uh, investors.” The letter.
The Week’s Agents of Impact
Agents of Impact toppling systemic racism in finance. The movement for racial justice in the criminal justice system has cast a spotlight as well on systemic and anti-Black racism in finance. Long before the protests, ImpactAlpha has featured Agents of Impact and New Revivalists doing the work of changing assumptions, practices and power structures within finance and investing. They are dismantling age-old excuses, biases and malpractices, including within impact investing itself, that lead to inefficient allocation of capital, underfunded founders of color and unrealized solutions to community needs. “This moment doesn’t doesn’t create an opportunity,” said Illumen Capital’s Daryn Dodson, who is helping fund managers mitigate their implicit biases. “It reveals an opportunity that was always there.” Other Agents:
- Capital Impact Partners’ Ellis Carr is demonstrating affordable housing, schools, healthcare and grocery stores that serve low-income communities are not as risky as often perceived by outside capital.
- Brian Dixon and Kapor Capital are outperforming venture capital by betting on the “lived experience” of underrepresented founders to close opportunity gaps for communities of color.
- Impact America Fund’s Kesha Cash is on the hunt for companies capturing billion-dollar markets by better serving America’s overlooked communities.
- 1863 Venture’s Melissa Bradley and CapEQ’s Tynesia Boyea-Robinson are wrapping support around Black and Brown-owned businesses to create jobs and wealth.
- Arlan Hamilton of Backstage Capital is redefining who writes the checks in venture capital – and who receives them.
- And Common Future’s Rodney Foxworth is speaking truth to power and positioning community leaders to help investors deploy their capital for impact. – Dennis Price
The Week’s Dealflow
Fund news. Victress Capital closes $21.7 million fund to back female founders… Marshall Wace to launch $1 billion ESG hedge fund… AfricInvest raises $202 million for pan-African private equity fund… Developing World Markets closes $90 million for debt financing in frontier markets… Catholic Investment Services takes $24 million slug of Hamilton Lane’s first impact fund.
Frontier finance. Proximity Finance secures $14 million for loans to Myanmar’s farmers… TPG’s Rise Fund backs Frontier Finance to reach India’s last-mile customers… Enygma Ventures invests $1 million in Lupiya to expand access to capital in Zambia.
Renewables. Sunrun’s purchase of Vivint Solar would create a $9 billion solar powerhouse… SOLshare raises $1.1 million for off-grid solar in Bangladesh.
Returns on inclusion. Australia’s $40 million gender lens fund of funds targets small businesses in Southeast Asia and the Pacific.
“Alt”-tech. Beyond Leather closes €1.1 million for apple-based “leather.”
The Week’s Talent
Hiro Mizuno, ex- of Japan’s Government Pension Investment Fund, joins Danone’s independent mission committee… La June Montgomery Tabron of the W.K. Kellogg Foundation has been awarded the University of Oxford’s ‘Bynum Tudor’ Fellowship at Kellogg College.
The Week’s Jobs
ICA Fund Good Jobs is recruiting a managing director of investments in Oakland… The Wildlife Conservation Society is hiring an executive director of conservation technology in New York… Ceres has openings for a vice president, programs, and for managers of its food and forests, oil and gas, and water programs in Boston… Impact investing platform Yova seeks a head of investing in Berlin… EarthShare is looking for a vice president of impact near Washington, D.C., Los Angeles, San Francisco, New York City, or Chicago… The Elmina B. Sewall Foundation seeks a finance and community investment partner in Freeport, Maine… Deloitte Italy is recruiting a sustainability analyst in Rome…
Kiva is hiring a vice president of strategic partnerships in Portland, San Francisco or Washington DC… Ares seeks a vice president of ESG in Los Angeles… CDC Group is recruiting an investment manager of catalyst strategies in London… CNote is hiring a vice president of sales in Oakland… Earnest Capital is recruiting a part-time head of finance and operations…
Align Impact is looking for a data analyst in New York or Santa Monica… Transform Finance seeks a program coordinator for its capital strategies program… Luminate is looking for a regional partner support consultant in Latin America… Engie Impact seeks a director of sustainability solutions, APAC in Singapore… The Electric Power Research Institute is looking for a manager of its EPRI Innovation Hub.