For many impact investors and entrepreneurs, it was a day to step back, lay low and make sense of an election outcome that was always a possibility but was rarely fully contemplated.
The results “are a shock to the system – not just to our political system, but also in how our economy operates and our society functions,” Fran Seegull of the US Impact Investing Alliance told ImpactAlpha.
To help us understand the new terrain, ImpactAlpha reached out across our networks for perspectives, reflections and emotional reactions to Tuesday’s US elections, in which Donald Trump won both the popular and electoral votes and Republicans flipped the US Senate. The majority in the House of Representatives remains in play.
Many were taking time to process developments. Others, off the record, briefly indulged their anger and defeatism. Most quickly pivoted to reflection and humility, and then to resolve and determination to prove out solutions that lift and unite – and to prove their popularity as well.
Responsibility to engage
“Whether you call it ‘middle-out’ or ‘kitchen table’ politics, it’s clear that our economy and electorate have a Reconstruction-sized hole that needs more than just rhetoric to be filled,” said ImpactAlpha contributing editor Napoleon Wallace, the subject of the new documentary, “Equity and Ownership.”
“The assignment hasn’t changed: Money matters,” said Wallace, who in North Carolina has championed strategies to capitalize underserved entrepreneurs and communities. As an impact investor, he said, “I still feel a deep responsibility to help bring about that change, regardless of the political climate.”
Seegull likewise said the impact investing alliance will continue to work across ideologies in the service of shared prosperity. It’s time to “double down on our work, not to disengage,” she said.
If the incoming Trump administration steps back from addressing economic, social, and environmental hardships in communities, “The private sector must rise to the occasion,” says Seegull. “There is no other path but to move forward with conviction.”
Lean into economic populism
It takes a Canadian to cut straight to the heart of American politics. “Only populist messages are working, and they’re quite similar on the left and the right,” says Social Capital Partners’ Jon Shell from Toronto. “People are mad for the same reasons most of us in the impact community do our work: our system has produced outcomes that seem very unfair.”
Over drinks at conferences, Agents of Impact bond over “how the system sucks and how much we want to change it,” Shell says. “Then we go on stage and try not to offend anyone.”
Maybe it’s time to embrace our own brand of populism, Shell says. “Our wealth inequality solutions are populist: Community wealth funds keep outside money out of our neighborhoods. Employee ownership saves local jobs from foreign and big corporate ownership. So does supporting independent small businesses.”
Together with economic populist ideas like antitrust and rebuilding domestic manufacturing, such strategies can reduce inequality and ownership concentration. “All have a common enemy: corporate and financial power, which also happens to be a great political target,” Shell says.
But limited and general partners in impact investing tend to shy away from such fights, preferring to partner with corporate and philanthropic elites.
“Maybe it’s time to take the gloves off, and to start building our own economic populist narrative, without the nativism, isolationism, racism and sexism, that those who are justifiably angry can rally behind.”
“The pieces are all there. Today, that’s what gives me hope.”
Women’s leadership matters now more than ever
Yet again, the US rejected a female presidential candidate. Harris’ backers view the election of Trump as a setback for women’s reproductive rights. Trump’s Supreme Court nominations set the stage for the overturning of Roe vs. Wade, ending constitutional protections for abortion. He may get a chance to fill more seats on the bench.
Investors are taking a stand on the value of women. “I almost feel like saying that this is when we turn a page,” Heading for Change’s Sana Kapadia told ImpactAlpha. “This is an active choice we get to make as humans, in the face of such denial, that we can choose to live differently, and we can choose to create something.
“Now is the time to aggregate that work with positivity,” says Kapadia. “I’d like to believe that that’s what we will remember this day for and we can make it happen. Because I know there’s enough of us who care about making the world better for everybody.”
Many investors expect an escalation in the pushback against environmental, social and governance, or ESG. Some banks are advising the ESG funds to have their lawyers “on speed dial.” Kristin Hull says Nia Impact Capital is “doubling down on our engagement with companies, making sure they know that regardless of who lives at 1600 Pennsylvania Ave, that investors care and are here to hold them accountable to the highest standard of sustainability and human capital management,” says Hull.
“We are doubling down on women in leadership,” Hull wrote. As an early Tesla investor, she has taken Elon Musk to task for threatening the electric vehicle company’s long-term climate impact with his embrace of right-wing extremism and problematic labor practices . “We are going to keep showing up, one conversation at a time. We are going to keep showing up for the change we need.”
Climate and clean technologies can outcompete
The climate itself was top of mind. “Unlike public opinion and politics, climate change isn’t fickle,” said Enduring Planet’s Dimitry Gershenson. “It grows more potent with every pound of CO2 we spew.”
Many climate tech investors insist that clean energy solutions are riding curves of adoption and cost declines that make them unstoppable even without government incentives and subsidies. In the words of climate investors like Chris Sacca and Tom Steyer, cleantech is simply cheaper, faster and better. Gershenson’s day-after message to climate tech founders: “Our door is open.”
And the Biden administration’s major climate accomplishment, the Inflation Reduction Act, may prove more resilient than expected. Jobs and projects funded by the IRA have overwhelmingly flowed to so-called “red” states that support Trump, such as Georgia, the Carolinas, Nevada and Oklahoma. Some 18 Republican representatives in August urged Speaker of the House Mike Johnson not to scuttle the IRA’s tax credits.
“If we keep the conversation on the economics and the value of climate action, I think we will be okay in the next administration,” Taj Eldridge of Include Ventures told ImpactAlpha.
Gina McCarthy, who served as Biden’s climate advisor, said that despite what Trump may say, “the shift to clean energy is unstoppable and our country is not turning back. Our coalition is bigger, more bipartisan, better organized, and fully prepared to deliver climate solutions, boost local economies, and drive climate ambition.”
Globally, climate action continues. The election is a “major blow” to climate action but “will not halt the changes underway to decarbonise the economy,” said Christiana Figueres, the Costa Rican diplomat who led the global climate negotiations that resulted in the 2015 Paris Agreement.
If the new administration depresses demand for climate solutions in the US, “I’m looking at this as an opportunity for America to export our services, products and talent abroad,” says Include Ventures’ Eldridge, “because the rest of the world is not slowing down on their focus on alternative energy.”
Build political resiliency
Leaders have learned from the first Trump administration to build what they say are more resilient networks. Among the strides made since Trump’s last term: science-based targets, the historic climate law, transition plans that companies are putting forward at the behest of investors, and a regulatory environment in the EU that’s putting pressure on US companies to follow suit.
“We have been really building relationships with Republican offices, which is vital,” Anne Kelly of the advocacy group Ceres tells ImpactAlpha. “We’re basically trying to make sure the Inflation Reduction Act is durable. It’s cost effective. We want to make a clean economic case for climate action.”
When Trump was elected in 2016, among the first things he did was initiate the US withdrawal from the Paris climate agreement. In response, Ceres helped launch “We Are Still In,” a network of thousands of business leaders, investors, states and local governments, tribes, schools and other groups that committed to supporting the Paris goals.
“In many ways, we are better positioned than we were in 2016,” says Kelly. “I think you’ll see over time companies staying committed to their decarbonization goals. They may not put it on the front page. They may not be writing op-eds to this effect. There may be some green hushing that still goes on. But overall, I think you’ll see they are still in.”
EU and state-level regulations to keep responsible AI on track
n deregulation mode, Trump has promised to overturn Joe Biden’s executive order on “safe, secure and trustworthy development and use of artificial intelligence.” The order promised a “whole-of-government” approach that leveraged existing laws, like anti-discrimination, to secure the development and application of AI technology.
A lack of guardrails at the federal level will likely be tempered by strong EU and US state-level regulations, TechBetter’s Ravit Dotan told ImpactAlpha (Ravit laid out her case for how the US election will reshape AI regulation). Already, AI-specific laws in New York City, and non-AI-specific privacy laws in Illinois have been used to hold AI companies to account nationally and globally.
Investors will need to step up their AI responsibility game as well, says Dotan. “AI responsibility is not only important for social impact, it’s important for return on investment,” says Dotan, who has created a “Responsible investing in AI” guidebook for venture capitalists. “With the explosion of AI startups, how will you know which ones are more likely to succeed?” she asks. “I would go with those that are responsible, because it implies that the product is just better.”
In her concession speech Wednesday, Vice President Kamala Harris said she knew “many people feel like we are entering a dark time, but for the benefit of us all, I hope that is not the case.”
“Do not despair. This is not a time to throw up our hands. This is a time to roll up our sleeves.
This is a time to organize, to mobilize and to stay engaged for the sake of freedom and justice and the future that we all know we can build together.”
Disclosure: The US Impact Investing Alliance sponsors ImpactAlpha’s Policy Corner.
