The Impact Economy Brief | 6 March

Welcome to the latest edition of Bates Wells’ Impact Economy Brief.

Our fortnightly ‘Brief’ is intended to be a helpful reference point and resource for our network, providing an overview of activity in the Impact Economy. You won’t be surprised to see that we’ve taken a particular interest in legal and regulatory developments.  

We hope you find the Brief to be a valuable digest of the things you need to know, and invite you to tell us what you’d like to read more about.

Talk the Talk

As the language of the Impact Economy develops, we’ll add relevant terminology to our Impact Economy Glossary, to help share a common understanding. This week’s jargon is:

“Natural capital”

Editor’s Pick

If you only have 5 minutes of quiet this week, we recommend…

Big Society Capital considers the importance of bringing impact intent to venture investing, and describes how purpose-led start-ups provide a unique opportunity for innovation and the scaling of proven impact models.

Impact Business

Re-wiring Contracts and Laws to fight Climate Change. The Chancery Lane Project has published its Climate Contract Playbook and Green Paper of Model Laws (press release). The Playbook contains 16 precedent clauses designed to help lawyers and businesses build into contracts rights and obligations to tackle climate change. The Green Paper sets out 7 model laws to accelerate the transition to net-zero emissions.

Event – esela Annual Conference, 27-28 April 2020, ‘The Impact of Business in a Changing Climate’. The agenda for this year’s conference has been announced, and the main themes will be: Business and Human Rights, Impact Investing, Climate and the Environment, The Next Economic Paradigm, and Legal Innovations and Collaborations.

Applications are open for the 2020 Stephen Lloyd Awards. Start-up charities, social enterprises, founders and thinkers who are ready to make positive changes to our world with their outside-of-the box solutions to society’s problems are invited to apply. Applications close at midnight on 15 March. The Awards provide emerging innovations with the vital encouragement needed to cultivate their ideas and spread their impact. Winners receive funding of up to £20,000, along with an opportunity to receive valuable pro bono support from experts in the charity and social enterprise sector. For full details on the application process, please visit the website or email Mona Rahman at [email protected].

A longer read – The Alliance for Corporate Transparency has published its 2019 Research Report, providing analysis of the sustainability reports of 1000 companies pursuant to the EU Non-Financial Reporting Directive (press release and database). The research finds that in most cases the quality and comparability of companies’ sustainability reporting is not sufficient to understand their impacts, risks, or plans.

Podcast – Joseph Cureton: A New Breed of Worker Coops. This Lift Economy podcast takes a look at a US-based worker cooperative, The Staffing Cooperative, using a holding company model to overcome some of the limitations of the more common worker-cooperative model.

Impact Investment

KKR Closes $1.3 Billion Global Impact Fund, focused on private equity risk-adjusted returns through investment in lower middle market companies that contribute toward the UN SGDs.

Consultation – The UK government has launched a consultation on expanding the dormant assets scheme. The current scheme enables participating firms to voluntarily channel funds from dormant accounts (cash accounts with at least 15 years of customer inactivity) towards good causes. The proposed expansion would include new dormant financial assets, such as the proceeds of savings endowments, term insurance, whole-of-life assurance, investment bonds, share proceeds and investment asset distributions and proceeds. The consultation closes on 16 April 2020.

Lord Victor Adebowale CBE, Chair of Social Enterprise UK, has announced the creation of a new Commission on Social Investment that will look at how the £3.5bn social investment market, and the wider investment market, can serve the growth of social enterprise and help build a new economy. The Commission’s first report is due in autumn 2020.

A longer read – The Young Foundation has published new research, Nothing About Us, Without Us – Lived experience insight & social investment, setting out how and to what extent bringing more diverse voices (particularly user voices) into different parts of the social investment process has the power to positively impact stated social investment outcomes.

Backing bold ideas: How DFID’s IMPACT Programme seeks to catalyse change.Tom Adlam, from the IMPACT Programme, writes for Pioneers Post to provide commentary on three core insights coming from the Programme.

Legal & General: Inside the UK’s largest impact investor. Euromoney takes a look at Legal & General’s approach to investing into infrastructure and other projects that aim to resolve social issues in the UK, such as a lack of housing and the need for clean energy, and promote key industries such as life sciences and the creative industries.

Legal & Regulatory

The UK’s new Environmental Bill has passed its second reading in the House of Commons and is now at Committee Stage, the report from which is due in May. The Bill provides for the creation of various new powers, including to compel producers to take more responsibility for products and materials on the market and to prevent waste being exported to developing countries, and creates an independent Office for Environmental Protection, which has capacities including investigating complaints and taking enforcement action against public authorities.

Consultation – The European Commission has published a consultation on possible revisions to the Non-Financial Reporting Directive, as part of its efforts to scale up sustainable finance, through improving corporate transparency in relation to social and environmental impacts. The consultation runs until 14 May 2020. In addition, the Climate Disclosure Standards Board and CDP have released a new EU Environmental Reporting Handbook, to help companies improve disclosure under the Directive (press release).

The Association for Financial Markets in Europe (AFME) has published State of Play: Status of European Regulatory Developments on Sustainable Finance, which provides a useful overview of the latest European regulatory developments on sustainable finance.

The Financial Reporting Council has announced a review of the extent to which UK companies and auditors respond to the impact of climate change to ensure reporting requirements are being met. In addition, Accounting for Sustainability announced a call to action in response to climate change, signed by 13 chief executives representing 14 accounting bodies, which includes eight actions that accountants are called to take.

The Ethical Trading Initiative has published a free, open source guide for businesses on how to write a robust Modern Slavery Statement, which has been co-designed with and road tested by ETI’s corporate members (press release).

A (much) longer read – Study on due diligence requirements through the supply chain is the final report from the European Commission’s study into market practices and regulatory frameworks relating to due diligence in companies’ operations to identify and prevent adverse corporate impacts on human rights and the environment. The study has been conducted by the British Institute of International and Comparative Law, Civic Consulting and LSE Consulting.

Disclaimer – The information contained in this briefing is not intended to be a comprehensive update – it is our selection of third party reports, news, podcasts and other materials, as well as some content produced by Bates Wells where indicated as such which we think will be of interest to those working in the Impact Economy. This content is necessarily of a general nature; it does not constitute advice, and specific advice should always be sought for specific situations.

This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of March 6, 2020.