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:
If you only have a few minutes of quiet this week, we recommend…
Earth Rising: The Global B Corp Community Responds to the Climate Emergency. Kim Coupounas, Global Ambassador for B Lab US & Canada, and Charmian Love, Chair and Co-Founder of B Lab UK, write for B The Change to explain what the B Corp community is doing to achieve global net zero carbon in a regenerative economy, describing it as taking up the role of “pace-setter” business.
A longer read – For-Benefit Business and the Future of the Corporation is a new report from the British Academy exploring, alongside research from the Fourth Sector 2030 Initiative, the application of the Principles for Purposeful Business to ‘for-benefit’ business in the ‘Fourth Sector’ (press release). The British Academy has also published the results of a survey highlighting appetite for a new definition of corporate purpose among UK businesses, including for Government initiatives on tax and company law and regulation.
A longer read – What is holding purpose-driven business back? is a new discussion paper from ReGenerate, based on a review of studies and interviews with stakeholders from the government, investment, entrepreneurial and established business communities, looking at what features of the current system are hindering the development of purpose-driven business (press release).
The Not-So-Sweet Bite of a Private Equity Buyout. The Shareholder Commons analyses the potential Dunkin’ Brands Group private equity deal in the US through the lens of investor success through long-term, systemic sustainability.
Podcast – The pro-business case for reimagining capitalism. Pitchfork Economics welcomes Harvard Business School professor and British Academy fellow, Rebecca Henderson, discussing why she thinks businesses should reject the sole purpose of the corporation as maximising shareholder value, and how businesses can help reform the market system (Spotify; Apple; Google).
Bates Wells has published a short guide, Acquiring and investing in B Corps – our top tips, setting out the key things to consider before starting such processes (landing page).
The Ellen MacArthur Foundation has announced the launch of its Circulytics 2.0 tool, designed for businesses to measure their circular economy performance. Among other features, the new version boasts more indicators, outcome themes and industry benchmarking.
Big Society Capital shares research results showing that the UK social impact investment market is now worth more than £5 billion, representing a 20% increase since 2018 and a six-fold increase in the past 8 years, and outlines some specific findings on the breakdown of the market. For more, Big Society Capital’s Chief Investment Officer, Jeremy Rogers, shares his reflections from the recent BVCA Summit, on the extent to which impact is reaching the mainstream.
The Big Issue and a coalition of industry partners (including Nordea, Aberdeen Standard Investments, Columbia Threadneedle, Liontrust, and WHEB) have launched The Big Exchange, to ‘let people do better with their savings’. The online marketplace offers access to 36 funds that aim to create positive social and environmental impact, with options including ISAs, JISAs and General Investment Accounts.
Understanding a maturing Community Shares market is a new report from Co-operatives UK, which finds that more than 100,000 community share investors have raised over £150m since 2012, and provides commentary and key statistics illustrating the development of this landscape (press release).
A longer read – The Impact Investing Institute has published Reporting of Environmental, Social and Economic Outcomes, setting out its vision for consistent and comparable reporting on environmental, social and economic outcomes (press release), and announced a new collaboration with Good Economy and Pensions for Purpose on place-based impact investment, aimed at mobilising more institutional investment to support inclusive and sustainable development across the UK. For more, the Institute has also recently highlighted its ‘Green+ Gilt’ proposal, prepared in collaboration with the Green Finance Institute and LSE’s Grantham Research Institute on Climate Change and the Environment, which has been presented to the Government and calls for a sovereign bond that supports a green recovery (press release).
A longer read – The Global Impact Investing Network (GIIN) has published two new ‘Understanding Impact Performance’ reports, on Financial Inclusion Investments and Agriculture Investments, which aim to further GIIN’s work towards standardised impact performance analytics and increasing the transparency and availability of comparable impact data for investors (report landing page).
Tech Nation and Dealroom have published research findings indicating that Europe leads the world for impact-focussed investment, and have announced the launch of the Impact and Innovation database, an open-access platform aimed at accelerating purpose-driven entrepreneurship and innovation and supporting policy making, through improving access to data.
Why and How Investors Should Act on Human Rights is a new report from the Principles for Responsible Investment Association (PRI) setting out a three-part responsibility for institutional investors to respect human rights, through policy commitments, due diligence processes and enabling or providing access to remedy. The PRI will introduce human rights questions into its Reporting Framework on a voluntary basis by 2022, with the intention that this becomes mandatory (landing page and press release).
Legal and Regulatory
Consultation – A Matter of Principles – The Future of Corporate Reporting. The FRC has published for feedback a new discussion paper, presenting a new model for corporate reporting involving a ‘network of reports’, which aims to recognise the needs of different stakeholders and take a more holistic approach, governed by a set of overarching principles. Feedback is requested by 5 February 2021 (press release). There will be a launch event for this initiative, on 11 November 2020.
The FRC’s Financial Reporting Lab has published a new summary document, Section 172 statements – How to make them more useful, developed following the Lab’s discussions with investors and other stakeholders about what information is most useful on how directors have had regard to the matters set out in s.172(1)(a)-(f) of the Companies Act 2006, and how it can be presented effectively (press release).
The FRC has published The UK Stewardship Code – Review of Early Reporting, looking at examples of early reporting using the new Code, which took effect at the start of this year, and providing further explanation of the FRC’s expectations for reporting under the Code. The publication is intended to support prospective signatories in meeting the higher reporting standards of the new Code (press release).
Consultation – The EU Commission has launched a new consultation, Sustainable Corporate Governance, seeking views from a range of stakeholders on initiatives to embed sustainability into corporate governance and, thereby, encourage businesses to consider environmental, human and economic impact in their decisions, focusing on long-term sustainable value creation. The consultation will close on 8 February 2021.
Alongside BiTC, Aviva, Cranfield University and a number of other founding partners, the CBI has announced 20 new signatories to the Change the Race Ratio campaign, which aims to increase racial and ethnic participation in British businesses. For more, The Investment Association reported that nearly three-quarters of the FTSE100 failed to report the ethnic make-up of their boards in this year’s AGM season and calls for action to address this, drawing on the progress being made on gender diversity.
A longer read – The Task Force on Climate-related Financial Disclosures (TCFD) has published its 2020 Status Report, gauging the extent to which its recommendations are being implemented in current disclosure practices and identifying implementation challenges, based on an analysis of approximately 1,700 large companies over a three-year period (press release). For more, ShareAction has published a short Briefing for MPs on the implementation of the TCFD recommendations in the UK context.
CORE, the UK civil society coalition on corporate accountability, has published a short parliamentary briefing, A Corporate Duty to Prevent Negative Human Rights and Environmental Impacts, calling for a new law to hold companies to account when they fail to prevent human rights abuses and environmental harms, mandating ‘human rights and environmental due diligence’ across supply chains.
ClientEarth has published a new paper, Principles for Paris-alignment, setting out ‘red line’ requirements for meaningful action by businesses to achieve alignment with the Paris Agreement, including that a net-zero objective be adopted in the entity’s articles of association in order to increase accountability (press release).
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 November 6, 2020.