The Impact Economy Brief | 5 June

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

Our ‘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:

“Benefit Corporation”


Editor’s Pick

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

3 Ways to Put Your Corporate Purpose into Action. Prof. Robert G. Eccles of Oxford University, the former chief justice and chancellor of Delaware, Leo E. Strine, and Timothy Youmans of Federated Hermes, write for Harvard Business Review about how the benefit corporation model in the US gives substance to corporate promises on stakeholders and purpose-beyond-profit.


Impact Business

Danone to pioneer French “Entreprise à Mission” model to progress stakeholder value creation. Confirming the business’s commitment to a sustainable shared value creation model, at Danone’s AGM on 26 June it will be proposed that the business becomes the first listed company to adopt the ‘Entreprise à Mission’ model, which was created in French law in 2019.

A longer read – Stakeholder capitalism during and after COVID-19 is a new paper from UCL’s Institute for Innovation and Public Purpose, looking at how the pandemic offers an opportunity to rebuild a positive symbiotic relationship between the public and private sectors, address dysfunctional corporate practices and reward collective value creation, for a more sustainable and inclusive model of capitalism. For more, the World Business Council for Sustainable Development has published The consequences of COVID-19 on the decade ahead (Vision 2050 Issue Brief), looking at the failings of shareholder primacy revealed by the pandemic and the role of business in moving to stakeholder capitalism (landing page).

ReGenerate, a research body that runs programmes to support the development and leadership of companies doing good in the world, has launched its new purpose-driven business ecosystem map and directory of organisations in this ecosystem in the UK.

Podcast – Grow the Pie With Profit AND Purpose. The Mann Institute interviews Alex Edmans, Professor of Finance at London Business School, about market efficiency and its effect on ESG, and the premise of his new book, that purpose drives profitability (SpotifySoundCloudApple). For more, Alex recently wrote about ‘growing the pie’ for Board Agenda.

The World Economic Forum announced the formation of the COVID Response Alliance for Social Entrepreneurs, consisting of more than 40 global organizations that support over 15,000 social entrepreneurs, cumulatively impacting around 1.5bn people, to provide a coordinated response as social entrepreneurs overcome the impacts of the pandemic (press release). 

A longer read – Social Enterprise UK has published Social Enterprise and COVID-19, a report using survey data to gauge the impact of the pandemic on social enterprises in the UK and the extent to which government support is accessible to the sector, and outlining actions Social Enterprise UK is taking to support the sector.

Low-carbon transition – Analysis from McKinsey & Company, How a post-pandemic stimulus can both create jobs and help the climate, draws on recent research from Oxford University and others to consider the potential environmental and economic opportunities of stimulus focused on the low carbon transition. Meanwhile, research by Futerra and OnePulse suggests that nearly 80% of people would personally do as much for the climate as they have for tackling Coronavirus. And, lastly, Bates Wells is part of group calling on the Government to prioritise a green recovery.


Impact Investment

Opinion: Investing in a Resilient Future – Impact Investing Offers a Pathway. Laurie Spengler, non-executive director of the Impact Investing Institute, describes the ‘SPOT’-on playbook for impact investment: Solutions driven, Proximate to community, Outcomes managed, and with a Tolerance for innovation. The Impact Investing Institute also provides a summary of the recent annual leadership meeting of the Global Steering Group for Impact Investment.

A longer read – UK Social Housing – Building a Sector Standard Approach for ESG Reporting is a new whitepaper from a group of housing associations and participants in the impact investing and residential property sectors, aiming to establish a credible and comparable set of ESG reporting criteria to demonstrate the social and environmental performance of social housing investment (landing page).

Green projects given support to attract private sector investment. Defra, the Environment Agency, Esmée Fairbairn Foundation and Triodos Bank UK are collaborating to support four environmental projects designed to create sustainable funding models and attract private investment.

Podcast – Covid-19 Implications and ESG Funds. BMO Sustainability Leaders interviews Head of Sustainable Investing Research for Morningstar, John Hale, about how COVID-19 has impacted ESG funds, and how Morningstar assesses this type of investing. (SpotifyAppleGoogleStitcher)

Impact investors are invited to express interest in joining the Response, Recovery, and Resilience Investment Coalition. The ‘R3 Coalition’ aims to mobilise and coordinate impact investors to quickly fill financing gaps in efforts to address the impacts of the pandemic.

The Government has announced its plans to expand the Dormant Assets Scheme to accelerate the release of £71m of new funds from dormant accounts and repurpose £79m already unlocked. £45m of this funding will be deployed by Big Society Capital to allow better access to investment including emergency loans for charities, social enterprises and some small businesses facing disruption due to coronavirus. Another £30 million will go to Access to support social enterprises helping vulnerable people by way of emergency support through social lenders, and a programme of recovery finance for the social sector.

A longer read – Point of No Returns, Part II – Human Rights, An assessment of asset managers’ approaches to human and labour rights is a new report from ShareAction, a charity that campaigns for responsible investment, assessing the extent to which the world’s largest asset managers take action to mitigate human rights abuses through their investment decisions (press release). In the same theme, the Investor Alliance for Human Rights and others recently published Safeguarding Human Rights Defenders: Practical Guidance for Investors, aiming to highlight the need for investors to identify whether their practices contribute to abuses regarding human rights defenders (landing page).


Legal and Regulatory

The Co-operative and Community Benefit Societies (Environmentally Sustainable Investment) Bill will go to second reading in the House of Commons this month; it will enable co-operatives and community benefit societies to issue “green shares”, in order to raise external finance for environmentally sustainable investment (explanatory notes).

EU Commissioner for Justice, Didier Reynders, announced that in 2021 the Commission will introduce a legislative proposal on mandatory human rights due diligence for companies. The announcement was made at a webinar hosted by the Responsible Business Conduct Working Group, following the Commission’s recent study on supply chain due diligence across Europe.

The FRC has published an update, Strategic Report: Section 172 Reporting Requirements, outlining amendments to its Guidance on the Strategic Report, including in relation to the application of s.172 statement requirements (under s.414CZA Companies Act 2006) to some medium sized companies (press release).

A longer read – the Climate Disclosure Standards Board has published a new report, Falling short? Why environmental and climate-related disclosures under the EU Non-Financial Reporting Directive must improve, analysing the 2019 environmental and climate-related disclosures of Europe’s top 50 largest listed companies. Findings include a major shortfall in meeting the requirements of the Non-Financial Reporting Directive and implementing the recommendations of the Task Force on Climate-related Financial Disclosures (press release).

The UK government has introduced the Corporate Insolvency and Governance Bill, aimed at relieving the burden on businesses during the pandemic and supporting economic recovery (press release). If enacted, the Bill would provide for various measures, including: a moratorium on legal action by creditors (without permission of the court) in which businesses can seek rescue; restrictions on suppliers relying on termination clauses triggered by insolvency; temporarily removing the threat of personal liability for wrongful trading for directors trying to manage the impacts of the pandemic; and temporarily providing greater flexibility for the holding of AGMs. Bates Wells provides analysis of some key aspects of the Bill.


Contacts

If you’d like to speak to us about our work in the Impact Economy, please get in touch.

If you’d like to speak to us about the Brief, please contact our editor, Phillippa Holland.


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 June 5, 2020.