b corporation backgrounder
DESCRIPTION
This presentation is a backgrounder on B Corps, as delivered at an information session at MaRS on May 13th, 2011. It includes background on: what is a B Corporation, their ratings system, service offerings, public policy, and implications for access to capital.TRANSCRIPT
Information SessionB Corporations
MaRS is where science, technology and social entrepreneurs get the help they need. Where all kinds
of people meet to spark new ideas. And where a global reputation for innovation is being earned,
one success story at a time.
Prepared for MaRS Clients, MaRS Advisors and GTA Area Social and Environmental Purpose Businesses
Friday, May 13th, 2011
WHAT IS A B CORPORATION?
RATINGS SYSTEM
SERVICE OFFERINGS
PUBLIC POLICY
ACCESS TO CAPITAL
OUR WORK
OPPORTUNITY
DISCUSSION & QUESTIONS
Summary
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Certified B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems.
What is a B Corporation?
B Corporation concept launched in the US in 2006.
What is a B Corporation?
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377 B Corporations I $1.82B Revenues I 54 Industries I
$1M Annual Savings
Comprehensive Company Focus
vs. Thematic Focus (Industry, Product, or Limited Focus)
• Social and Environmental criteria considering: Product/Service impact, community, workers, governance, suppliers and customers.
• Transparency requirement• Legal requirement to ensure long-term sustainability• On-site audits
Social and environmental practices in the forestry industry
Social and environmental practices for rainforest protection
Facility, product, or service energy efficiency
Facility energy efficiency and use of green materials
Level of disclosure on Social & env. Issues.
Sustainability embedded in full life-cycle of product
Recycled contentOf product
Fair labor practicesTo make product
Agricultural practice Of food product
Systems established to measure & reduce environmental impacts
What is a B Corporation?
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Different from mainstream business:• entrenched social mission;• meet comprehensive and transparent standards
of social and environmental performance, transparency and accountability;
• institutionalize stakeholder interests; and • build collective voice through the power of a
unifying brand.
No single sector or industry focus:o Sectors: Manufacturing, Wholesale,
Service/Retailo Industries: Building, Business Products and
Services, Consumer Products and Services, Education and Training Services, Financial Services, Health, Legal, Media, Restaurant/Hospitality/Travel, Retail and Other
Accredited by the U.S. non-profit
organization B Lab, based in
Philadelphia, Pennsylvania. They
focus on standards,
mobilizing capital and public policy.
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407 B Corporations$1.91B Revenues54 Industries+$1M Annual Savings
What is a B Corporation?
What is a B Corporation?
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Consumer ProductsFinancial Services Bus. Services Canada (26)
Other Examples
Diverse and growing group of business leaders…
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To become a B Corporation, you have to do three things:1. Take and pass the B Impact Ratings System 2. Adopt the B Corporation Legal Framework to embed social mission3. Sign a Term Sheet that makes your certification official.
What is a B Corporation?
B Corp Legal Framework• Amend Articles of Incorporation requiring companies to embed
social mission and 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
• Standardized: In 2009, MaRS worked with Blakes to draft a memo on making amendments to articles of incorporation in Ontario/Canada
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What is a B Corporation?
The Term Sheet commits B Corporations to:• Submit all supportive documentation for their B Impact Assessment.• Submit proof of amended articles within 90 days• Submit to an on-site review if randomly selected • Pay B Lab annual certification fees based on the full-priced tiered
structure below
Annual Sales Annual Fee
$0 - $1,999,999 $500
$2 M - $4,999,999 $1,000
$5 M - $9,999,999 $2,500
$10 M - $19,999,999 $5,000
$20 M - $99,999,999 $10,000
$100 M + $25,000
Comprehensive Assessment Tool• Built upon GRI and National Capital Institute (Wiser Business), the
standards are:• transparent (not black box);• independently governed by a Standards Advisory Council to
avoid conflict of interest; and • dynamic to drive continuous improvement.
• measures impact in five key areas related to accountability, employees, consumers, community and environment
• assessment tools tailored to: Sectors and Industries• transparent and freely available on the web: thousands have utilized
B Impact Assessment• certification requires a composite score of 80 out of 200 points
available
B Impact Ratings System
Tools and Best Practices
Not just an assessment tool: • Guidelines: survey has guidelines to improve social and
environmental performance• Management tool: benchmark and implement continuous
improvement
Governance and Evolution• Standards Advisory Council (SAC): independent body that oversees
the certification ratings and auditing requirements for B Corporations
and GIIRS rated companies in both developed and emerging markets• Beta Version 3.0: Just launched in May 2011• Version 2.0: new version released every two years; SiG@MaRS
contributed to this version• Version 1.0: reviewed by 600+ entrepreneurs, investors, thought
leaders and academics
B Impact Ratings System
B Impact Ratings System
B Corporation Standards Advisory Council
• Cathy Clark, Adjunct Asst. Professor, Duke University, CASE
• Debra Dunn, Director, Skoll Foundation
• Hewson Baltzell, Head of Sustainability Solutions, Risk Metrics
• Don Shaffer, President & CEO, RSF Social Finance
• Bonny Moellenbrock, Executive Director, SJF Advisory Services
• Beth Sirull, Executive Director, Pacific Community Ventures
• Rhonda Evans, Science Advisor, GoodGuide
• Doug Claffey, Founding Partner & CEO, Workplace Dynamics
• Bart Houlahan, co-founder B Lab
What makes it different? Comparable by geography,
industry, and company size; Improvement tool which allows
others to use it to get better; Sets a single bar for entry
without making distinctions (ie. no gold, silver, bronze).
Validation Process Survey Review Documentation Submission Audit/On-Site Review
B Impact Ratings System
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B Report• comparable
across industries to drive consumer and investor capital
• offers rating and narrative highlights of assessment
B Impact Ratings System
Service Partners: Major Cost Savings on packages from major companies including SalesForce (CRM), Intuit, Netsuite, and Inspire Commerce (credit card processing) and dozens of other smaller partners
B to B Discounts amongst B Corps Learning opportunities: monthly webinars and other development
opportunities Resources: Downloadable guides on governance, employees,
suppliers, environment, and community (ie. How to write and employee handbook)
Meet-ups and Events: at a local and international level (in US).
Service Offerings
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Social and environmental ventures have difficulties accessing capital
Access to Capital
• B Lab created a separate venture known as the Global Impact Investing Ratings System (GIIRS)
• GIIRS is a ratings agency that provides comparable and transparent social and environmental performance data on enterprises seeking investment capital using ratings methodology analogous to Morningstar or S&P
• independent third-party impact ratings product that is comparable, transparent, and easy to use (Note: not financial measurement or a CSR rating) based on the B Impact Assessment
• provides ratings for impact funds and companies with focus on mission focused investment opportunities targeting investors
Access to Capital
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What will GIIRS do?• used by institutional investors and investment intermediaries like the
SVX to evaluate, screen, manage and communicate impact of debt and equity investments
• allows for comparable measurement of impact across businesses and investment products in different industries, sizes and focus areas
• reduce due diligence costs for impact investors and communications burden for companies by creating a universal standard
Access to Capital
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Invest for impact.
The SVX will be a local, impact first market connecting social ventures, impact funds, and impact investors in order to catalyze new debt and equity investment capital for local ventures that have demonstrable social and/or environmental impact, including nonprofits, co-operatives, and for-profit corporations. (Launching summer 2011)
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Public Policy
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B Lab is advancing a new corporate form through state legislation to create benefit corporations. Ontario has the opportunity to take the lead in Canada.
We won’t have a new economy without a new type of corporation.
Public Policy
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20th Century:Shareholder Capitalism
21st Century:Stakeholder Capitalism
Maximizeshareholder valuealmost exclusively
Create social and shareholder valuesimultaneously
4 US states have already adopted benefit corporation legislation (MD, VT, NJ, and VA)
7 other states moving forward in 2011, including NY, PA, MI, HI, CA, CO, & NC
11 benefit corporations registered on the first day in MD
Public Policy
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Public Policy
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Major Provisions of Benefit Corporation Legislation
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, poverty reduction)
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
Strategy Benefit Corporation Legislation Working Group: a small group of
researchers, lawyers, and local businesses Legislative Framework Paper will be developed over the summer
to scope parameters of legislation in Ontario
Legislative strategy advances through a number of stages over many years: Recognition: official recognition through legislation of the new
corporate form; Procurement Advantage: Different levels of government offer
preferred procurement status to benefit corporations; Tax advantage: tax advantage could eventually be offered by
different levels of government, likely starting with municipalities, then moving to investment incentives, then corporate tax incentives.
Public Policy
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Activate this aligned agenda in a new partnership with MaRS playing a leadership role for Ontario and Canada
Partners roleso MaRS: Community organizing, local business development for service
partners, feedback on assessment process, and public policy development
o B Lab: Brand, training, assessment system, auditing and other supports.
MaRS will be the B Lab hub for Canada, with first focus on Ontario during two-year pilot period;
Baseline objective: 60 B Corps registered within the two years; Increasing access to capital through the SVX platform and affiliated
GIIRS/B Corp ratings process
Our Work
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Building a new sector of the economy that:
• Creates economic opportunity
• Strengthens communities
• Restores environment
• Alleviates poverty
Opportunity
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Private Equity
Contractors
Consulting
Wealth Mgmt Home Apparel Education
Building Industry Retail Architecture Arts
Telecom Developing World
Restaurant
Personal Care
FoodClean Tech
B2B
Real EstateBanks
Hospitality
Renewable Energy
B2CBiotechnology
IT
Legal
Media
Footwear
Pharmaceuticals
Marketing
CommPR
Discussion & Questions