Greetings, Agents of Impact!
Featured: Institutional Impact
For ESG Month, let’s have an honest discussion about the limits of shareholder engagement. Move over infrastructure week. On Capitol Hill, it’s ESG month! Contributing editor Imogen Rose-Smith watched last week’s first round of ESG hearings before the House Financial Services committee, “so you didn’t have to,” as she says. Her takeaway: “Yes, let’s defend ESG. But let’s also acknowledge that ESG on its own is not going to change much. Pretending otherwise just kicks the can down the road. It’s time to start asking the hard questions and push for much much more.”
- Beyond engagement. The hearings, along with this year’s dispirited season of corporate annual meetings, raised an awkward question for shareholder activists: What if corporate engagement isn’t really very effective? Even successful resolutions that, say, ask companies to produce reports on their climate risks, are often pyrrhic victories at best, Rose-Smith says (see, “Political backlash and legal threats sap shareholder support for climate action and ESG”).
- Whither Exxon? The fuse on the ESG time bomb may have been lit by the 2021 proxy fight that put a slate of insurgent directors on ExxonMobil’s board. That a tiny hedge fund could use the language of ESG to take on a major oil company helped spark the ESG backlash, especially in Texas, Exxon’s home state. Two years later, “what has actually changed at Exxon?” Rose-Smith wonders. Exxon’s dividend is up, not down, as are capital spending, oil production and profits. “In terms of furthering the ESG agenda, shareholder activists’ biggest-ever victory was effectively a nothing-burger,” she says.
- Radical reset. “We can not and should not continue to live in a world where teachers can not afford houses or rent because their own pension plans have bought up all of the available housing stock,” Rose-Smith says, arguing for “a holistic notion of fiduciary duty,” that accounts for the entire impact of a portfolio or an investment. “We need a radical reset that pushes us beyond the relative comfort zone of corporate ESG.”
- Keep reading, “For ESG Month, let’s have an honest discussion about the limits of shareholder engagement,” by Imogen Rose-Smith on ImpactAlpha. Catch up on all of Imogen’s Institutional Impact columns.
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Dealflow: Carbon Markets
Isometric secures $25 million to register and verify carbon-removal offsets. Capturing carbon directly from the atmosphere will be necessary to reverse greenhouse gas emissions. With $25 million from Lowercarbon Capital and Plural, UK-based Isometric plans to launch a carbon registry and accompanying data platform for verified and long-duration carbon offsets. Carbon removal suppliers include San Francisco-based Charm Industrial, which last month inked offtake agreements for 140,000 tons of CO2 with JPMorgan Chase and the Frontier consortium of Stripe, Shopify, Alphabet, McKinsey and others. Isometric doesn’t sell or broker the sale of carbon credits but charges buyers a flat fee per offtake or purchase to cover the verification of carbon removals and the issuance of credits.
- Third-party reporting. Isometric aims to help solve the “two non-negotiable challenges” in coming decades, founder Eamon Jubbawy told ImpactAlpha: decarbonizing the economy and scaling carbon removal. The industry needs “an independent third party who can allow buyers to purchase carbon credits with confidence,” he said, “allowing them to scale the size of their purchases without worrying about bad science, fraud or double-counting.”
- Dive in.
VIA Fund makes four impact investments in Armenian entrepreneurs. Armenia, with fewer than three million people, punches above its weight in tech entrepreneurship and VC. But impact capital for the country’s roughly 150 social enterprises is scarce. VIA Fund, which has raised €560,000 ($630,000) for a planned €1.5 million fund, made its first four investments, totaling €85,000. The portfolio includes HDIF, a women-led artisan marketplace that supports women, refugees and people with disabilities. VIA Fund is managed by Impact Hub Yerevan in Armenia’s capital.
- First deals. ZarMan Toys makes non-toxic, environmentally-friendly educational games for young children and donates a portion of proceeds to early education for disadvantaged kids. TMM Soft offers workforce and skills training for autistic individuals. Aregak Bakery in Gyumri, Armenia’s second largest city, provides employment opportunities for youth and people with disabilities.
- Country funds. VIA Fund was launched through the European Venture Philanthropy Association’s “Collaborate for Impact” initiative, which is helping set up impact fund managers in Armenia, Ukraine, Moldova, Georgia and Azerbaijan. The initiative also supported the launch of Actio in Georgia and Social Venture Fund in Ukraine.
- Check it out.
Dealflow overflow. Other news crossing our desks:
- Copenhagen Infrastructure Partners raised $6 billion toward a targeted $13 billion renewable energy fund to support up to 20 gigawatts of clean energy capacity. (CIP)
- Quadria Capital backed Maxivision Eye Hospital to expand eye care services in India’s second- and third-tier cities. (YourStory)
- Herself Health, a Minnesota-based healthcare company for women over 65, raised $26 million in Series A financing, six months after closing its seed round. (Herself Health)
- Gurgaon-based Regrip secured early funding to make low-cost refurbished tires for India’s small utility vehicles. (Economic Times)
Six Short Signals: What We’re Reading
🎓 The case for investing in HBCUs. Historically Black Colleges and Universities play a pivotal role promoting social and economic mobility for Black Americans. Policymakers and the private sector can play a larger role in bridging funding gaps. (Goldman Sachs)
🏢 Muni impact in Motor City. Detroit marked the 10th anniversary of its historic bankruptcy by tapping the municipal bond market for $100 million of financing, most of which will go toward reviving blighted neighborhoods. (Bloomberg)
🔎 Sustainability transparency. Europe’s Sustainable Finance Disclosure Regulation requires asset managers marketing products in the EU to disclose information about their ESG considerations. Its effects on ESG investing will be far-reaching, writes AlTi’s Jed Emerson. (AlTi Global)
💎 Energy transition minerals. Surging demand for electric cars, energy storage systems and solar PV has led to a boom in demand for critical minerals, including lithium, cobalt and nickel. An array of new policy actions seeks to enhance the diversity and reliability of supplies. (International Energy Agency)
⚡ Biden’s hydrogen bombshell. European leaders are investing tens of billions of dollars to encourage production of hydrogen, a clean-burning fuel that will create jobs and fight climate change. The Inflation Reduction Act means many of those jobs will be going to the US instead. (Politico)
🔌 Modernizing the grid. In Texas, record heat means record demand for electricity. Consumption is set to increase by more than 30% in the next decade. New wind, solar, natural gas and energy storage needed to meet demand by 2040 would create 40,000 jobs and generate $19 billion in local taxes. (Advanced Energy United)
Agents of Impact: Follow the Talent
Congratulations to Zeal Capital Partners’ Nasir Qadree on tying the knot with Bill and Melinda Gates Foundation’s Chloe Louvouezo (see, “Agent of Impact”)… Freelance journalists Megan Greenwell, Robin Kaiser-Schatzlein and Hamilton Nolan are named “reporters in residence” at Omidyar Network… ImpactAssets seeks a remote director of investments and a senior analyst for impact… Climate+ is hiring a legal executive in Singapore… Alterna Impact is recruiting an impact business development fellow in Guatemala City.
Accion has an opening for an accounting assistant in Bogota… Oikocredit is on the hunt for an interim investment officer in Côte d’Ivoire… Acumen is looking for a senior investment associate in Nairobi… Grounded Capital seeks an investment associate in San Francisco… Also in San Francisco, RE-volv is looking for a finance director… Arctaris Impact Partners is hiring a director of investor relations in Wellesley, Mass.
Thank you for your impact.
– July 18, 2023
