New Global Head of Sustainable Finance & Innovation spoke with SecondMuse about her ambition to engage global investors in building inclusive economies of the future.
SecondMuse Capital welcomes Erica Barbosa this month as Global Head of Sustainable Finance & Innovation. She comes to the role with more than 15 years of experience in social innovation, social finance, and impact investing portfolio and strategy management. Erica most recently served as Director of Solutions Finance at The J.W. McConnell Family Foundation, one of Canada’s leading private philanthropic foundations and a leader in social finance, recognized world-wide for its unique approach to impact investing.
At McConnell, Erica spearheaded the Foundation’s Solutions Finance work. As part of this, she developed their practice of impact investing, leading to the Foundation’s adoption of responsible investing for 100% of its endowment and growth of an impact investing portfolio of over $130M — including impact investments in a range of asset classes, markets, and impact domains. She also led a portfolio of national market-building initiatives, including Canada’s first accelerator program for impact investing funds, Solutions Finance Accelerator.
During her nine years at McConnell, Erica also developed a close relationship with SecondMuse, through collaboration on various initiatives. Most recently, she worked with SecondMuse Capital (the finance arm of SecondMuse) along with RealVentures and La maison d’innovation sociale to create the Future Economy Lab (FEL), a global research and design lab innovating the financing and development of new, inclusive and resilient economies. The FEL laid the groundwork for SecondMuse Capital’s soon-to-launch CLIO Fund, which will align with its complementary ecosystem building program and raise $55 million in blended capital to create an inclusive and resilient climate economy in Québec.
Together with SecondMuse Capital Senior Director Sylvain Carle and Director Natalia Arjomand, Erica will work from Montreal to advance the team’s mission to finance economies of the future.
Ahead of her start, she spoke with SecondMuse about her vision for her new role, her outlook on 2021 and her personal interest in scaling SecondMuse Capital’s innovations around the globe.
What attracted you to this new role?
I’ve known the work of SecondMuse since I joined the McConnell Foundation, and was always fascinated by its unique approach to innovation and its art of collaboration, mastered through all of its programming building entrepreneurial ecosystems and cross-sectoral partnerships. I’m particularly drawn to their approach of working on whole systems and economies, and not only focusing on companies or individual solutions.
The development of SecondMuse Capital offers the opportunity to now engage investors — institutional, governmental, individuals, asset managers — in new ways in this development of inclusive economies. This work builds on what I’ve been doing at McConnell and the timing was ripe for me to bring that experience to SecondMuse Capital and think about how we utilize blended finance and other mechanisms to develop much-needed market infrastructure and collaboration at a global scale. Having the ability to work jointly on the development of economies and the supply of capital in a holistic way is quite powerful and promising in my view, and I have not encountered any other organization that works this way or knows how to do this. So it is really an honor for me to join the team as we build specialized investment funds to manage and develop into a global financial innovation firm.
I also just admire the people of SecondMuse in so many ways. I know I am joining a team of extraordinary humans who are highly committed to improving the state of the world.
You’re joining amid an interesting global moment. The pandemic has exposed so many social and economic vulnerabilities. How has this moment shaped your outlook as it relates to impact investing?
I spend a lot of time speaking with institutional investors, and lately there is the increased recognition that environmental and social issues are essential factors with material implications and they need to be part of investment decisions. But what is more promising is that there is also increased recognition that all these issues — climate change, human rights, social equity — are interrelated and cannot be dealt with in isolation from one another. The challenge is making this actionable for different types of investors.
I think the essence of impact investing — which is investing to generate positive social and environmental impacts, while reducing negative ones and generating a range of financial returns — is more relevant than ever. But it is an evolving practice. When we talk about impact at SecondMuse Capital, we consider entire economic and social systems and not only companies and their products and services. When developing investment solutions we want to consider every aspect of the investment process: the nature of the capital being brought to the table, their governance structures, who participates, the underlying values and ethics guiding decisions, the nature of the partnerships of stakeholders. Ultimately, we want to see investment and other forms of capital fully connected to entire economies that are centered around communities, that are sustainable and regenerative, socially diverse, inclusive, just, and that promote the wellbeing of everyone and everything. These are the attributes we need for long term resilience.
As you know SecondMuse Capital’s CLIO Fund will be fundraising this quarter. How do you see this fund helping to move the needle on climate action?
The CLIO Fund will focus on investing in the next generation of climate innovations in transportation, agrifood and data/AI for climate. We want to invest in high-impact innovations that can lead to large industry disruptions through optimization and efficiency, and that get us closer to our global climate targets for 2030.
We will also qualitatively engage in the climate economy in a different way. Through the larger initiative that will be co-managed with additional partners, we want to make sure that the climate economy itself and the entrepreneurial ecosystem as a whole are socially inclusive and diverse. That is why this initiative is composed of the investment fund alongside an ecosystem-building program* that will support the climate economy at large. By investing in the growth of an entire ecosystem — meaning the knowledge, resources and relationships surrounding entrepreneurs — we will be working to promote more diverse participation and to generate a range of public goods and benefits, beyond just support for companies in the CLIO fund.
It is quite unique that those two complementary components (ecosystem-building program + fund) and objectives (climate innovation + social inclusion) are combined in one overarching structure and strategy. The fund will be the first of this kind in Montreal and Quebec.
*learn more about the work of FEL in Quebec and the climate economy here.
As you mention, the CLIO fund happens to be based in Montreal, but SecondMuse Capital has its sights set far beyond Canada. How do you see the fund as a model for other regions around the world?
The fund is intended to have an important role in our local and regional climate economy, but the opportunity for similar models and processes is global. In fact, we already have initiatives underway, such as The Incubation Network in Southeast Asia and M-Corps in New York. If we can scale the development of innovation platforms and ecosystems that are addressing climate imperatives at the same time as advancing social inclusion, diversity and equity, we will be much closer to developing healthier economies. With SecondMuse Capital, we want to contribute to the transformation of capital markets at a global scale and to figure out how to build inclusive economies of the future with the participation of investors everywhere.
Being originally from Latin America, I am personally interested in also expanding this work more broadly across the global south. As we complete the fundraising and begin investing and rolling out the complementary programming, the fund will be an important addition to the growing set of blended finance mechanisms we see around the world. In addition to the fund model, the Future Economy Lab collaborative process that led to its development is highly replicable and, applied in different contexts building on local opportunities, may lead to other financial models and innovation as well. We are currently running a lab looking at impact-aligned financing for P-16 education across the U.S.
No matter where we are, we have much to learn and to contribute from our unique experiences. SecondMuse Capital holds at its core a global learning vision, and we intend to continue scaling our work around the world.
For more information about the CLIO Fund, the Future Economy Lab, or SecondMuse Capital, contact info@secondmusecapital.com.
