The Brief’s Big 10: Impact roadmaps, B Corp benefits, Opportunity Zone challenges, sustainable seafood, decarceration startups, green bonds
March 23, 2018
Greetings, ImpactAlpha readers!
We hope your impact investments provided a non-correlated refuge from the volatility of the stock markets this week. The Brief is taking a spring break next week. We hope you’ll miss us! We’ll be back, better than ever, on April 2. As always, thank you for your support and have a great week.
#Featured: The Brief’s Big 10
1. The GIIN lays out a practical roadmap for impact investing… A five- to seven-year plan from the Global Impact Investing Network defines success as much more than a growing pot of investment capital for solutions to social and environmental challenges. The “Roadmap for the Future of Impact Investing” sets its mark on a transformation of the global financial system itself. The vision is bold, but the action plan is surprisingly practical.
- How real is the revolution? Gillian Marcelle, executive director of the University of the Virgin Islands Research and Technology Park, called out a gap in the roadmap around diversity in the financial sector. “Do portfolio managers and the ecosystem builders in the impact world truly believe that they can tackle the Sustainable Development Goals on a global scale, and have any success, if the composition, culture and perspectives of those who sit at the table do not change?” Marcelle asked ImpactAlpha. The GIIN responded: “A sustainable financial marketis not possible without meaningful shifts in power dynamics — specifically the representation of women and other historically underrepresented groups in high-level positions within the investing industry.”
- How Omidyar Network will advance the roadmap. Chris Jurgens and Robynn Steffen weigh in on how philanthropic investors can move the needle. Omidyar itself will help mobilize early-stage risk capital for emerging market entrepreneurs, including with a new Collaborative for Frontier Finance in partnership with the Dutch Good Growth Fund, World Bank infoDev, and the Global Development Incubator.
2. …As European institutional investors in Europe charted a course toward SDG investing. Dutch and Nordic pension fund managers are leaders among the supertankers of global finance that are aligning themselves with the 2030 goals. In a keynote at this week’s 4th Impact Summit Europe in The Hague, Gerald Cartigny of the Dutch fund manager MN (which manages assets of €114 billion, or $140 billion) laid out a plan to mobilize $60 trillion by 2030. “MN is a universal owner and benefits from a sustainable and stable socio-economic environment,” he said. “I believe there is no excuse left not to contribute to the Sustainable Development Goals as an institutional investor.” From The Hague, it was on to Brussels for the European Union’s “high-level expert group” on sustainable finance. The view from Europe.
3. Companies weigh the value of a B Corp certification. More than 2,400 companies have been certified as “B Corps,” giving them a handy way to demonstrate their adherence to social and environmental performance and accountability standards. Do investors care? In a Patagonia (of course!) store in SoHo, more than 100 people nibbled food from (B Corp-certified) Ox Verte for the launch of the Yale School of Management’s report, “Just Good Business.” The takeaways: B Corporations provide investors access to non-financial data, benchmarking against best practices, performance measurement over time and enhanced ability to attract talent and customers. B Corp certification is “a risk mitigator and an opportunity identifier.”
4. US states identified Opportunity Zones. What now? States this week designated low-income neighborhoods eligible for investments that let investors defer or reduce capital gains taxes, under a provision of last year’s Tax Cuts and Jobs Act. Now comes the challenge of ensuring local residents aren’t displaced by gentrification. Kresge Foundation’s Rip Rapson and LISC’s Maurice Jones argue for community plans that support jobs, entrepreneurship, education, health and safety, in the same place at the same time. Each investment reinforces the others.
- Join: Transform Finance will host Fran Seegull and John Cochrane of the US Impact Investing Alliance, for a webinar to discuss how impact investors can shape the tax law opportunity, Thursday, March 29 (1:00 pm EDT).
- Meet the architects. John Lettieri and Steve Glickman of the Economic Innovation Group are New Revivalists. Turning capital gains into community investments.
5. “Govtech” helps public agencies raise their game. The growing startup segment aims to improve government transparency and efficiency with tech tools. SJF Ventures invested $7.5 million in SeamlessDocs, which helps agencies automate paper processes. “The primary interface between people and the government is forms. Paperwork. It plays a big role in how people form their opinions about the government,” SJF’s Dan Geballe told ImpactAlpha. Geballe says there’s significant impact potential in helping the government become more efficient. “The public sector provides a lot of services that the private sector will never provide.” Govtech is a thing.
6. Helping wild fisheries recover could feed a half-billion people. Managing wild fisheries sustainably can mean bigger, not smaller, catches of tasty seafood. That creates an opportunity for long-term investors willing to invest through the transition period required for depleted fisheries to recover. Three fund managers — Encourage Capital, Rare and Althelia Ecosphere — along with the Environmental Defense Fund, are pushing new “Principles for Investment in Sustainable Wild-Caught Fisheries” to accelerate private investment in the restoration of global fisheries, a $200 billion ticket. Closing the gap.
7. “De-carceration” promises billions in saving by keeping people out of jail before trial. “Every year, $9 billion dollars are wasted incarcerating people who’ve not been convicted of a crime,” Shawn Carter (better known as Jay-Z), hip-hop star and serial-entrepreneur, wrote last year on Father’s Day. This week, Carter’s Roc Nation joined First Round Capital, Kapor Capital, and 8VC in backing Y-Combinator startup Promise. The Oakland-based venture works with defendants to be sure they appear at court dates, undergo drug testing and treatments, get to classes and meet other obligations. Reducing time spent in the system lowers costs for towns and counties. Startups like Pigeonly (also backed by Kapor) and Edovo are taking on inefficiencies in family connectivity and education for incarcerated individuals. Watch this trend.
8. Omidyar Network spins out its emerging tech portfolio as Spero Ventures. The deconstruction of Omidyar Network, begun under former managing partner Matt Bannick, is accelerating under new leader Mike Kubzansky. What was known internally as Emerging Tech will become a standalone $100 million fund to make investments in health, wellness, food, the future of work and human relationships and connection in the US. Shripriya Mahesh will continue to lead the Spero team and eBay founder Pierre Omidyar remains the sole investor. The fund will absorb investments in 13 ventures from Omidyar Network’s portfolio, including inclusive recruiting platform Jopwell and food supply-chain tracking startup SafeTraces. Meanwhile, Omidyar invested in ZineOne, an Indian startup in India helping financial institutions and retailers “give more power to consumers, so consumers can make better decisions,” says Omidyar Network’s Smita Aggarwal. Keep up with ON.
9. Led by green bonds…Moody’s forecasts green bond issues could hit $250 billion this year, up from $155 billion in 2017. At this week’s Climate Bonds Initiative conference in London, Christiana Figueres, who led negotiations for the Paris climate accord, said the annual figure needs to reach $1 trillion by 2020 to meet carbon-reduction goals. A new Green Bond Pledge is meant to encourage countries, states and cities to make all infrastructure bonds green. Going further, “Sustainable Land Bonds,” proposed by The Nature Conservancy and the Climate Bonds Initiative, aim to make low-carbon land-use pay for itself. The fixed-rate bonds would include “results-based payments agreements” that would let countries reduce or eliminate their interest payments if they meet emission-reduction targets. Learn more.
10. …Innovative finance is becoming…just finance (podcast). A raft of innovative social-impact and environmental financing vehicles are finding ways to “internalize positive externalities.” Too wonky for you? Just call it “impact alpha.” On the latest Returns on Investment podcast, ImpactAlpha’s designated blue-sky optimist, David Bank, argues that the best of the new models are starting to attract real dollars. The roundtable’s resident curmudgeon, Imogen Rose-Smith, is skeptical that many of the impact investment pilots can graduate from the kiddie table and join the adults in the “real world” of finance. What’s your take? Have a listen.
Onward! Please send news and comments to TheBrief@impactalpha.com.
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