Transcript B Corp: New Company for New Economy

The B Corporation
A New Kind of Company
For a New Sector of the Economy
A Conversation with
ACG Philadelphia
February 18, 2010
Quick Background
3 Co-Founders with successful 15 year private sector careers as
Entrepreneurs, Operators, Investors
MSD Capital, L.P.
$250 MM Brand
$13B Private Equity
B Lab - Overview
501(c)3 non-profit which certifies and supports B Corporations
Objective 1:
Expand corporate accountability
through new legal framework
Objective 2:
Drive social and environmental impact
through standards
What is a B Corporation?
The B Corporation is a new kind of company which uses the power of
business to solve social and environmental problems
- Meets higher standards* of social and environmental
performance, accountability, and transparency
- Amplifies voice for a diverse marketplace
through the power of the unifying B Corporation brand
- B stands for Benefit
* B Lab is the nonprofit which certifies and supports B Corporations.
B Corporation – Performance Standards
B Impact Rating System
Free web-based tool
for impact assessment
and improvement
• Comprehensive
• Transparent
• Dynamic
• Independent
• 5,000+ users
• 80 out of 200 points
for certification
B Corporation – Legal Standards
B Corp Legal Framework
• Amend Articles of Incorporation requiring companies to
consider of the impact of decisions not only on shareholders,
but also stakeholders
• Benefits
-
protection for Directors to consider non-financial interests
accountability to shareholders to uphold new standard of conduct
survives new management, capital and ownership
no additional liability from non-shareholders
Significant Momentum - Companies
Companies
Diverse and growing community of leaders
Financial Services Consumer Products Business Services Energy/Tech.
Significant Momentum – Media
Media
Receiving fair share of press
Objective 1 – New Legal Framework
Policy Makers
Infrastructure and incentives for a New Economy
• Benefit Corporation legislation
new corporate form with higher standards of corporate purpose, accountability, transparency
2010 : VT, MD, NY and PA possible
2011: CO, NC, OR
• Incentives for certified sustainable businesses
2009: Philadelphia B Corp tax break passed ($500k/25 companies/5 years)
2010: Respond to inquiries from cities and Champions
Objective 1 – New Legal Framework
Benefit Corp Legislation – Major Provisions
Purpose
• shall create general public benefit
• shall have right to name specific public benefit purposes
(e.g. 50% profits to charity, carbon neutral, 100% local sourcing, serve the poor)
Accountability
• directors and officers shall consider effect of decisions on stakeholders
• shall have an independent Benefit Director
• shareholders and directors have right of action (no third parties)
Transparency
• shall publish annual Benefit Report in accordance with recognized standards for
defining, reporting, and assessing social and environmental performance
Objective 2 – Drive Impact through Standards
What is Impact Investing (SRI 2.0)
• Generate both financial return and social and/or environmental value
-
Includes community development finance (CDFI’s), microfinance,
Cleantech, and other triple bottom line businesses in industrialized and
developing world
-
New investment grew by average of 35% over past 5 years
-
Sector has grown to over $50B in total assets
-
Projected to grow to 1% of total managed assets in 10 years, or $500B of
capital flows to social and environmental impact
Objective 2 – Drive Impact through Standards
Capital Markets
Driving capital beyond SRI to Impact
GIIRS (Global Impact Investing Rating System )
- Indpnt ratings agency based on B Ratings System (S&P analog)
- Fund Ratings and Company Ratings
- Including companies in developing world
Objective 2 – Drive Impact through Standards
Global Impact Investing Ratings System
-
Assess the social and environmental impact of private companies and
funds using a ratings approach
- analogous to Morningstar investment ratings or S&P credit risk rating
-
Allow for comparable measurement of positive impact across
- investment products
- developing and advanced economies,
- industries, company size, and impact focus
-
Used by both institutional investors and investment intermediaries to
- evaluate, screen, manage, and communicate the social impact of
their sustainable private equity and debt investments
Objective 2 – Drive Impact through Standards
Investors
Historic Opportunity
To create social impact through business and transform
corporate accountability
- Chorus of prominent voices
- Gates, Creative Capitalism
- Yunus, Social Business
- Blood&Gore, Friedman, Sustainable Economy
- Financial crisis
-
Seizing the Opportunity
Building a new sector of the economy
• Creates economic opportunity
• Strengthens communities
• Restores environment
• Alleviates poverty
Legal
Private Equity
Wealth Managemt
Building Industry
Telecom
Banks
Clean Tech
Media
Real Estate
Biotechnology
Retail
PR
Footwear
Home
Architecture
Comm
Hospitality
Apparel
Education
Restaurant
Consulting
Marketing
Personal Care
Food
Arts
Developing World
Renewable Energy
Pharmaceuticals
B2B
IT
B2C
Thank you
For your time
For your leadership and support