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Featured: The Impact Alpha
Global agents of impact bet on 21st-century regeneration, with or without Washington. The world is moving ahead to a low-carbon future. And clean energy is only the most mature of the sustainable and inclusive investment sectors that are decoupling from American government policy. Leading corporations, investors and entrepreneurs, including Americans, are distancing themselves from a closed, cramped view of the world and lining up behind a global growth agenda.
To be sure, investors certainly like policy tailwinds more than headwinds. It was only 2015 that U.S. officials helped lead other countries into the Paris climate agreement, as well as the United Nations’ Sustainable Development Goals. But if the U.S. administration insists on missing the bus of history, a growing corps of Agents of Impact are intent on climbing on board nonetheless.
Read, “Global agents of impact bet on 21st-century regeneration, with or without Washington,” by David Bank on ImpactAlpha.
Catch up on the week: “Agents of Impact speak out: ‘Why I am a globalist’” and “America 2030: Inclusive, sustainable global growth is the deal of the century.”
Dealflow: Follow the Money
Nesta’s Arts Impact Fund invests in six more U.K. art enterprises. The £7 million ($9.2 million) fund lends to social enterprises in the U.K.’s arts and culture sector. “Issues ranging from youth mental health to loneliness and lack of community cohesion, are addressed via the power of arts and culture to encourage empathy and belonging,” says Nesta’s Fran Sanderson. The fund, now fully committed, has provided working capital, cashflow and other loans to 22 organizations. Read on.
Chrysalis raises funding to expand reach to underserved Indian students. Low-cost private schools serve tens of millions of Indian students, but have mixed performance records. The Chennai-based edtech company, which has developed curriculum called ThinkRoom, works with more than 500 schools in 11 states. Impact investors Menterra Venture Advisors and the Artha Initiative will help the 17-year old company with new research and development. More.
Aclima raises $24 million to map air quality, globally. San Francisco-based Aclima deploys a network of sensors to measure and map air quality. Social Capital led Aclima’s $24 million Series A funding round and was joined by the Schmidt Family Foundation, Emerson Collective, Radicle Impact, Kapor Capital and others. Dig in.
Signals: Ahead of the Curve
Going ‘beyond ESG’ to deepen understanding of investment risk. How susceptible is a company to climate regulations? How endemic is bribery in the sector? How will sentiment shift as consumers learn the impact of a company’s product? Today, some $10 trillion in assets are screened for their performance on environmental, social and governance, or ESG, factors. But even ESG doesn’t capture the full scope of risks facing companies today. In a white paper, Impax, the two-decade-old sustainable investment manager, tries to go “Beyond ESG,” to provide a visual map of company risks that show the relative importance of issues over time. “Portfolios that account for the risk of both sudden shocks and gradual value erosion tend to outperform, especially over longer time frames,” writes Impax’s Ian Simm. With $15.6 billion in assets, Impax has large holdings in water, food and agriculture, and environmental strategies.
- Systemic approach. Three concentric circles in the Impax framework put “company” risks at the center, “stakeholders” in the first ring and “wider landscape” in the outer ring. For each component, the asset manager identifies short and long-term risk factors, including, for example, impact of regulations to mitigate climate change, health impact of products, or reputational risk from supplier safety lapses.
- Limitations. The ESG framework conflates internal corporate issues (“G”) with just two external issues (“E” and “S”). “We may ask why just these three factors are focused on?” Impax asks. And how do they compare with other investment risks?
Agents of Impact: Follow the Talent
Capria’s Will Poole sat down with Chile’s President Sebastián Piñera to discuss how to promote impact investing at home and aboard… Caprock Group’ Matthew Weatherley-White’s TedX talk is back online and worth a watch… Acumen America is searching for early stage-ventures disrupting poverty in the U.S. (email Vineet Rajan at firstname.lastname@example.org)… TriLinc Global’s Gloria Nelund and Paul Sanford will lead a webinar on lending to small-to medium sized enterprises in emerging markets, today at 1pm ET.
— June 27, 2018.