Impact Cords: This Week's Moves (No. 3) January 15, 2025
In a week that feels like a decade in ESG time, the impact investing world is adjusting to seismic shifts that would make even the most seasoned sustainability professional reach for their reusable water bottle. Let's dive into what's keeping impact investors up at night (besides their low-carbon anxiety).
The ESG Exodus: More Than Just a Bad Breakup
The sustainable investing world got ghosted harder than a climate denier at a Sierra Club BC meeting, as major financial institutions continued their retreat from climate alliances. The Net Zero Initiative for Asset Managers suspended operations after BlackRock's departure, dealing another blow to collective climate action. Meanwhile, Tennessee dropped its lawsuit against BlackRock after the asset manager agreed to increased disclosure around its ESG practices and promised to avoid coordinating proxy votes with other investors (Financial Times).
Trump's Day One Drama: Executive Orders Galore
President Trump wasted no time wielding his executive pen, signing more than two dozen orders affecting everything from offshore wind to diversity initiatives. Among the most impactful: suspending new wind energy leases, withdrawing from the Paris Climate Agreement (again), and directing federal agencies to terminate "discriminatory" DEI programs. However, RBC Capital Markets analysts note that existing offshore wind projects are likely to continue unaffected (The Wall Street Journal).
The Silver Lining: Markets Still See Green
Despite the political headwinds, money continues to flow into sustainable funds, with global net inflows of $10.4 billion in Q3 2024, according to Morningstar data. The sector is evolving rather than dissolving, with greater focus on transparency and measurable impact. As one European asset manager told the Financial Times, "Climate is a financially material aspect in understanding a company's future success."
Grid Resilience in Puerto Rico
The Department of Energy's Loan Programs Office made a final push before the administration change, committing $1.2 billion for three utility-scale solar and battery storage projects in #PuertoRico. The funding includes $584.5 million to Convergent Energy and Power for over 200,000 megawatts of solar and battery storage, promising to create 540 construction jobs (ImpactAlpha).
Social Innovation: The Quiet Revolution
While environmental issues grabbed headlines, social enterprises have been quietly building economic muscle. According to data presented at Davos, there are now 10 million social enterprises worldwide generating $2 trillion in annual revenue - more than the entire apparel industry - and employing 200 million people (Impact-Investor.com).
Mental Health Takes Center Stage at Davos
THE REAL Mental Health Foundation, led by Shawn Lesser, made waves at WEF by launching an ambitious plan to mobilize $10 billion for mental health solutions by 2030. With a $200 million fund of funds in development, they're tackling the global shortage of mental healthcare providers and funding (ImpactAlpha)
WHO Withdrawal Impact
Trump's executive order to withdraw from the World Health Organization puts global health programs in a precarious position. The U.S. was WHO's largest financial backer, providing 14.5% of total funding. This could affect disease surveillance, crisis response, and medical product safety programs in developing countries (Axios).
The Plot Twist: Opportunity Zones 2.0
In an unexpected development that could bridge the political divide, the Trump administration appears poised to extend and potentially improve the Opportunity Zones program. Arctaris Impact Investors is betting on it, raising its fourth Opportunity Zones fund targeting $200 million. The program has already mobilized $84 billion in private equity investments in low-income communities (ImpactAlpha).
Looking Ahead
As we navigate this new landscape, one thing is clear: while the political pendulum swings, the fundamental case for sustainable investing remains strong. Climate risks haven't disappeared with a stroke of a presidential pen, and social challenges continue to demand innovative solutions. The question isn't whether impact investing will survive - it's how it will evolve to meet the moment.
About the Cordes Foundation
The Cordes Foundation was founded in 2006 by Ron Cordes and Marty Cordes. Following the sale of Ron’s investment management business, the couple blended Ron’s experience in financial services with Marty’s work on issues that affect women and girls to create a family foundation focused on social entrepreneurship, impact investing and the economic advancement of women. In 2014, when they were joined by their daughter, Steph Stephenson, and son-in-law, Eric Stephenson, the Foundation expanded its strategic focus to include ethical fashion brands, sustainable supply chains and engaging millennials in impact investing. Its mission is to connect social entrepreneurs with the resources they need, convene events to strengthen the ecosystems of impact investing and social entrepreneurship and catalyze 100% of its balance sheet for impact.