Investing in Equitable & Sustainable Solutions for India’s Unsecured Workers
Summary
Acumen has made a five-year commitment to accelerate and invest in equitable and sustainable solutions for unsecured workers in India. Investing in and accompanying business models focused on sustainable green growth has the potential to build new entrepreneurial ecosystems that provide stable incomes, social protections, safe working conditions and contribute to climate-positive, inclusive economic growth in India. With initial funding support from the Target Foundation, we launched the Green Growth Initiative – a three-year project that will deliver accelerators and provide seed funding for early-stage climate-focused companies that can create financial stability for unsecured workers in India making them more resilient to economic and climate shocks.
Approach
By investing patient capital— long-term, risk tolerant investments supported by philanthropic capital — we pioneered impact investing in markets where traditional investment had failed, and aid had fallen short. Our approach enables us to support high-impact entrepreneurs focused on the challenges of poverty, accompany businesses on their path to scale and maturity, and enable long-term growth and economic development. The construction, waste management and textiles/apparel industries employ more than 5M informal workers in India and are responsible for a substantial share of emissions. Acumen has made a five-year commitment to accelerate and invest in equitable and sustainable solutions for unsecured workers in India. Investing in and accompanying business models focused on sustainable green growth has the potential to build new entrepreneurial ecosystems that provide stable incomes, social protections, safe working conditions and contribute to climate-positive, inclusive economic growth in India. With initial funding support from the Target Foundation, we launched the Green Growth Initiative – a three-year project that will deliver accelerators and provide seed funding for early-stage climate focused companies that can create financial stability for unsecured workers in India making them more resilient to economic and climate shocks. Acumen’s experience identifying and seeding early stage businesses, helping them scale, and building new entrepreneurial ecosystems leads us to believe that there are models that can help solve some of the challenges around workforce informality and environmental degradation in India. As part of the first phase of the Green Growth Initiative, Acumen proposed to conduct a scoping study in order to understand the key sectors of the economy that cause environmental harm and disproportionately impact the lives of informal workers. With this understanding, the study would be used to identify social enterprises and business models that are aligned with circular economy principles and are simultaneously creating sustainable livelihoods. These findings would then inform the parameters of the Green Growth Accelerator program being designed in phase two. Depending on the individual needs of the enterprises participating in the accelerators (up to twelve per cohort) , the in-country Acumen team along
Action Plan
Acumen hopes to engage and organize a collective of partners around the investment activities that will take place throughout 2022-2026. Pioneer/early-stage investments will be made into companies that are either coming out of the accelerator programs mentioned below or are already within Acumen’s portfolio and network. Throughout each phase, we will document and gather insights that can be shared more widely with the impact investing sector.
The Green Growth Initiative (GGI) funded by Target Foundation is a three-year project that aims to improve the lives of informal workers while mitigating the drivers of climate change in India. An initial scoping study (phase one) was completed in mid-April 2022 that helped the team identify four sectors – waste management, textiles and apparel, construction and transportation/logistics – and the emerging business models that are best suited for the program. The Green Growth Accelerator (phase two) , which will be delivered in partnership with Acumen Academy, is designed for leaders in India who are committed to creating dignified, secure employment opportunities while generating positive environmental impacts in the textile and apparel, construction, waste management, and transportation/logistics industries. Grounded in moral imagination, the 16-week program will embolden a cohort of changemakers with the tools, skills, community, and capital needed to scale their innovative, circular, and environmentally sustainable business models. Applications for the accelerator are live and will close mid-May. The program runs through November 2022 and will culminate in a “demo day” where participants will have the opportunity to pitch Acumen and other stakeholders for seed funding. A local university incubation center (NSRCEL) is a knowledge partner for the accelerator program in Year 1. Over the course of the 16-week program, 10-12 enterprises will:
– Develop and refine a profitable and scalable business model;
– Create strategies to bolster financial sustainability;
-Understand their company’s potential for social and environmental impact;
-Sharpen presentation skills and pitch investors and other stakeholders for seed funding; and
– Build a professional network of experts in green growth and join a lifelong community of social entrepreneurs As part of the program, we will also facilitate structured interactions with companies and leaders in Acumen’s existing investment portfolio. Acumen will run the second accelerator in 2023, engaging 10-12 new enterprises in the cohort and incorporating/sharing learnings throughout.
Background
India’s unsecured workers are constrained by a lack of opportunity, mobility and security. Pervasive workforce informality and low wages are caused by the lack of dignified employment opportunities and the absence of an accessible, high-quality workforce infrastructure. Poor workforce infrastructure drives segments of India’s unsecured workers, such as artisans, of which 56.13 percent are women, waste-workers and petty traders, into subsistence entrepreneurship – leaving them without access to markets and formal financial services. An infrastructure for the working age population that provides formal, demand-led training solutions, trusted and secure job and information portals, access to affordable financial services and government benefits – in their own language(s) – becomes critical .As the world’s second most populous country, India’s success in fighting climate change is critical to reducing poverty and maintaining global stability. Innovations that provide formalization services and efficient energy solutions to MSMEs could potentially create new employment opportunities and mitigate the effects of climate change in India. Based on emerging models that already exist in Acumen’s network, solutions that foster inclusive economic opportunities are likely to improve the resilience of informal workers (e.g. access to existing socio-economic government benefits or financial products) . The effects of climate change in the urban context – resource conservation, urbanization and pollution – and the COVID19 pandemic have exacerbated problems for the informal workforce, reinforcing the urgent need to catalyze sustainable, long-term, solutions.
Progress Update
In the third year of the Green Growth Initiative, Acumen is learning alongside their partner organization to understand how their strategy of forward integration can support the development of a profitable business model in waste management. In Acumen’s pipeline evaluation, they are focusing on enterprises that: (1) Use technology to improve waste sorting, reduce human interaction, and enhance traceability, which may reduce jobs and require upskilling. (2) Upcycle waste into value-added products, sourcing from waste collectors, farmers, or other waste management companies, with indirect workforce impact.
Acumen is undertaking further business diligence where the models support their workforce development thesis. They are especially excited about an additional company which is developing a unique revenue model through insights from waste, and they have presented this model to their investment committee. The commitment has also considered working with another company managing menstrual waste, but are currently holding on for further development of the business plan by the founder. Acumen is excited to continue deepening their understanding of this sector, collaborating with ecosystem stakeholders, and they are hopeful that their work can continue to attract more investors.
Target Foundation is continuing its support of Acumen’s work in India through 2026 and the IKEA Foundation has also come on board through 2027.
Partnership Opportunities
As interests in workforce development and climate mitigation strategies continue to rise in India, Acumen is inviting stakeholders to support our five-year commitment with financial resources so that we can make pioneer, long-term investments into companies who are ready to scale and provide targeted expertise in green growth. We are also looking for partners who are interested in “measuring what matters” and collaborating with our regional specialists to sharpen our impact framework. Our intention is to contribute to climatepositive, inclusive economic growth in the region and hope that the activities and insights gathered from the commitment support the goals of others who want to become more sustainable and circular businesses In the spirit of collaboration and “putting people and planet over profit,” we hope to leverage our collective resources and create greener, more equitable growth in India., Acumen invests philanthropy-backed patient capital into early stage companies and high impact entrepreneurs focused on solving the challenges of poverty around the world. This pioneer investing approach enables us to support business models that have the potential for commercial viability, but are still considered too risky for traditional investors. In addition to providing patient and flexible capital, Acumen’s model of accompaniment is a key differentiating factor of the way we invest for impact. This deep, customized work yields more results and improvement for the companies we work with than programmatic, one-size-fits-all interventions, and is critical for ensuring the long-term success of enterprises that can shift markets, policies and perceptions.
Acumen regularly convenes stakeholders to share knowledge and lessons learned based on our experience with companies within our portfolio and/or with enterprises and changemakers that belong to our global network.
We have in-country, regional teams who lead our investing activities and an insights and strategy team that consistently measures impact for the purposes of sharing more widely with the sector. Acumen adds immense value in terms of offering feasible, pragmatic approaches that not only encourage social enterprises to improve their practices, but can also influence the wider sector on steps to take next. Through this commitment, we