“The hope of a secure and livable world lies with disciplined nonconformists dedicated to justice, peace, and brotherhood” -MLK Jr.
It is 2023; a new revolution around the sun will give us another shot to create sustainable value and reduce inequalities through business, entrepreneurship and investing.
2022 has been a bumpy ride of adaptation and resilience building.
War, inflation, the zero COVID policy, and labor shortages have generated fear. However, purpose and connection are on everyone’s hearts and minds after facing mortality and isolation.
The world has not quite shed its pandemic woes as COVID-19 lockdowns continue in China and the global economy shakes from the inflationary effects of supply chain disruptions. The unprovoked war in Ukraine continues creating tremendous volatility in energy prices. The Fed interest rate hikes have succeeded in slowing down inflation (5.7% core in Dec 2022), following over a decade of low rates in response to the credit crisis of 2008. Some investors have reduced exposure to the riskiest assets and sectors such as venture capital and cryptocurrencies, and valuations have trended downward. Stock market volatility has wiped out large amounts of gains across all sectors except oil and gas, with technology taking some of the largest hits. Energy prices and growing global consensus on climate action highlight the urgency and importance of doubling down on investments in renewables and clean energy. The Inflation Reduction Act generates tremendous tailwinds for the climate sector. ImpactAlpha reported that climate tech investment is up 89% from 2021 to $70B, coupled by continued net zero commitments from corporations, insurance companies, and governments around the world.
What does this all mean for ESG and impact investing
ESG and impact investing remain necessary, and more timely than ever.
Why? Climate Mitigation and reducing inequality remain key to long term stability and sustainable growth. If we focus on these goals we will notice that they cross party lines.
The bottom line:
ESG and impact analysts don’t all share the same view. They naturally differ, as do those of analysts’ perspectives on growth, value, speculative trading, forex, geopolitics, or emerging markets trends. Much like any other analyst in the financial markets they weigh risks differently, and recommend differing evidence-based strategies as core to their theory of change and measurement framework. However, as professionals and fiduciaries, what is key is how solidly and consistently they can back up their reasoning or adjust their thesis using new metrics. The intention and practice behind ESG and impact investing is to better manage risk, value and engage stakeholders, and grow sustainably over the long-term in a resource-constrained, interdependent world. This necessitates goal clarity and a connection to the why behind the metrics. As a result, we will likely, and understandably, continue to see more scrutiny on transparency and metrics being used. However we believe diversity in weightings and metrics should be encouraged as hypotheses are tested and retested towards authentic and lasting impact and financial returns.
Key 2022 Highlights & Trends
Sustainable investing commitments continue to grow globally
*Imvest estimates ESG-related assets under management globally crossed $40T in 2022
*Global impact investments surpassed $1.164T in 2022 (GIIN).
*273 asset managers, with USD 61.3 trillion in assets*, have committed to achieve net zero alignment by 2050 or sooner.
*Between 42-62% of alls VCs and GPS surveyed by Pitcboook in 2022 demand portfolio companies to report on key ESG/impact indicators.
*71% of women considering sustainability when investing, and will manage two-thirds of household wealth by 2030.
*Cambridge Associates Benchmarks of Impact/ESG Returns in VC and PE are outperforming traditional investment (as of Q2 2022).
The Inflation Reduction Act showcased the government’s commitment towards Climate action and clean energy with $500B in funding, and provides the climate tech sector tremendous tailwinds.
*The global renewable energy sector grew 10%+ YoY, and is expected to overtake coal as the largest source of energy by 2025.
*EV adoption continues to grow at a faster pace, supported by over $100B in EV infrastructure investment (Bloomberg).
*Climate remains at the top of global agendas crossing party and religious lines as a major economic, financial, and stability risk.
imvest 2022 Impact
imvest helped portfolio companies and mentees develop sustainable technology, operations, and human capital. Our team mentored 12 entrepreneurs through imvest and our partners.
imvest supported our high-impact portfolio companies to:
*Develop pricing, go-to-market, sales, and hiring strategies
*Lead technology integrations
*Map stakeholders, create ESG policies, and measure impact
*Financial modeling and analysis
*Meditate Strategy and Visioning Sessions
imvest introduced and facilitated the negotiations with institutional impact investor SUSI Partners, towards $15 M in financing for our portfolio company OBE Power.
imvest supported investors integrate ESG, perform due diligence on impact investments, and strategize the roadmap to drive value, reduce risk, and build a sustainable future:
*Supported fund managers, wealth advisors, and accelerators
*Led 4 events on climate: climate tech, climate anxiety, and climate finance
*Hosted and/or participated in 15+ thought leadership and education events on impact investing, gender lens investing, climate tech, ESG and more
imvest held 3 internships in 2022 and 1 in 2021, attracting world-class talent from around the globe
Our former interns started exciting new opportunities:
*Anahit is starting a full-time credit analyst at Morgan Stanley
*Anshul is getting his MBA at IIM
*Saum is finishing his senior year at IIM and planning how to maximize impact through finance and analytics
*Rishi continues with imvest until February, and plans to apply to global MBA programs to prepare to become a social entrepreneur. Keep leaning into discomfort Rishi!
Andrew Brenner is now Director of Investment Management Integration at International Financial Reporting Standards (SASB). We see great synergies to continue supporting each other and are so grateful for his time with imvest.
imvest also Published 3 impact playlists connecting the impact investing world through music. Music is a universal language that brings people together across belief systems, and builds community. That’s why we will be featuring impact investors and social entrepreneurs’ playlists from around the world. The first 3 mixes come from our own team.
CLICK HERE TO LISTEN to Joss, Rishi, and Julia’s impact playlists
What’s Happening in 2023?
Miami continues to be on fire, as a growing capital of investment and opportunity. We are inspired by the number of immigrant-led, women-founded, and BIPOC leaders, and the purpose-driven businesses, events, and funds in the region.
We are an active member of the climate tech movement, led by Miami Dade County and Opportunity Miami, growing from the urgency, need, and opportunity to transform this coastal city to a carbon sink economy.
We also have built our network and team with close roots in both the US and Latam. Miami is therefore a perfect hub, uniting our core clients, funds, and community in the Americas.
And what can be more important during a market-downturn, political uncertainty, and economic transformation? Creating value toward a stable and resilient economic future through impact investing.
imvest also continues development of our climate investments strategies. In particular, we have been modeling and structuring a private market multi-manager product for 2023 launch.
The portfolio is a systemic climate mitigation, transition, adaptation portfolio of diverse niche managers from the US and Latin America. In the process we have performed diligence on 50+ private market climate funds across asset classes, themes, and geographies.
We are also excited to announce imvest and University of Pennsylvania Impact Investing Club have partnered this semester to support our research and modeling for our climate investing portfolio strategy.
Next Gens in Impact Series Continues
Next Gens lead as visionaries pushing for a greener, more equitable tomorrow.
That’s why imvest keeps wanting to hear more from them!
We created the Next Gens in Impact series in 2020 to learn from the next generation of global impact leaders. Tune in to our latest interview with a bright and thoughtful impact leader who comes from Latin America, Mario Arancibia Founder – Director of clyc.me
Clyc.me is a SaaS B2B solution linking the private world with social and environmental impact, through technology and transparency.