The Impact Economy Brief

Talk the Talk

Impact Economy

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:

 “Sustainability-linked loan”

Editor’s Pick

If you only have a few minutes of quiet this week, we recommend…
The Future of ESG Is … Accounting? Professors Richard Barker, Robert G. Eccles and
George Serafeim write for the Harvard Business Review, looking at the IFRS Foundation’s recent proposal for global sustainability reporting standards and a new Sustainability Standards Board. For more, various organisations have responded to the consultation, including the FRC and ShareAction.

Impact Business

In celebration of its 5th anniversary, B Lab UK has published an interactive e-book. The Story So Far, which shares how the UK community of more than 400 B Corps has developed, B Lab UK’s thoughts on the next 5 years, and announcement of the forthcoming Better Business Act campaign

A Message to the B Corp Community. In this blog, B Lab shares its plans for a review of the B Corp Certification requirements, outlining some current challenges and its ambition for development, and invites stakeholder feedback including by way of a survey open until 31 January 2021.

Webinars – The British Academy is hosting its Second Purpose Summit, on 1, 2 and 4 February 2021, as part of its Future of the Corporation research programme. The Summit will consist of three top-level discussions on the role of purposeful business in delivering solutions to the macro crises we face, and explore how governments can help further engage the business sector. Confirmed speakers include: Al Gore, Alok Sharma, Ed Miliband, Victor Adebowale, Rebecca Henderson and Leo Strine.

Podcast –Author Interview: Competition is Killing Us. Pitchfork Economics interviews Michelle Meagher, UCL Senior Policy Fellow and co-founder of the Inclusive Competition Forum, about the themes of her new book, including debunking the myths of market capitalism, the concentration of wealth and the idea that free markets are competitive (29 minsGoogle; Apple; Spotify).

Daring to leap. In his blog for A Blueprint for Better Business, CEO Charles Wookey contrasts shareholder maximisation with purpose-driven business, and describes the courage and mind-set leap required to move towards genuine purpose.

A longer read – Innovation and resilience: a global snapshot of social enterprise responses to Covid-19 is a new report by the British Council, UN ESCAP and Social Enterprise UK, outlining the findings of a survey of social enterprises across 38 countries, including that many benefited from an agile response to the pandemic but that inequality was evident, with social enterprises led by certain groups (women and young people) facing greater challenges. Pioneers Post provides commentary on the publication.

Bates Wells has announced its accreditation under the Good Business Charter, an initiative of the Good Business Foundation, which seeks to raise the bar on business practices for employees, tax, the environment, customers and suppliers, and encourage responsible capitalism through commitment to the 10 Components of the Charter.

Impact Investment

Schroder BSC Investment Trust raises £75m from London IPO in impact investing first. Pioneers Post reports on the IPO of Schroder BSC Social Impact Trust, created by Big Society Capital in partnership with global investment manager Schroders, on the London Stock Exchange. For more from Big Society Capital, its 2020 Impact Report has been published and Stephen Muers, Interim Chief Executive Officer, provides commentary.
A longer read – Barriers to Growing the Purpose-Driven Banking Sector is a discussion paper by The Finance Innovation Lab’s Senior Fellow, Dr Gemma Bone Dodds, which sets out how social and environmental purpose can be hard-wired into the banking system and what’s preventing this from scaling (landing page). For more, Deloitte’s recent Better Banking Survey suggests that most UK customers want their bank to do more to create positive impact.
A (much) longer read – Climate Finance Markets and the Real Economy is a new report from the Global Financial Markets Association and Boston Consulting Group, which argues that the  scale of financing urgently needed to transition to a low-carbon economy will require all sectors to work together, to aggressively unblock capital flows and build the necessary Climate Finance Market Structure. The report provides recommendations, including legally enforceable carbon pricing mechanisms (press release).  
The UK Government announces a major boost to coronavirus recovery through expansion of the Dormant Assets Scheme, across the insurance and pensions, investment, wealth management and securities sectors, with potentially more than £800m available to support good causes, social investments and environmental initiatives.
Resonance launches the new National Homelessness Property Fund 2, with an initial investment of £20m and a target size of £50-£100m. Greater Manchester Pension Fund, Greater Manchester Combined Authority and Big Society Capital are the initial investors.
How social impact investment will provide safe homes for women. Karen Ng, Investment Director at Big Society Capital (BSC), writes about the launch of the Women in Safe Homes fund, a joint venture with Resonance and Patron Capital, with BSC providing £10m towards its first close and the fund intending to scale in the next 2 years, up to £200m.

Legal and Regulatory

The FCA has published amendments to the Listing Rules (LR 9.8) and an accompanying policy statement, Proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations, which from 1 January 2021 will require companies with a UK premium listing to include a statement in their annual report about whether their disclosures are consistent with the TCFD recommendations (press release).
The European Parliament has adopted a resolution for sustainable corporate governance, calling for business interests to be aligned with society’s, through updating non-financial reporting requirements and strengthening directors’ duties regarding long-term interests and sustainability (press release).
The Wellbeing of Future Generations (No. 2) Bill 2019-21, part of The Big Issue’s Today For Tomorrow campaign, is due to have its second reading in the House of Commons this month. The Bill, sponsored by Caroline Lucas MP and championed by Lord John Bird, aims to obligate the UK Government to act to prevent problems such as the climate crisis, poverty and pandemics, give voice to current and future generations and deliver a sustainable vision for the nation.
In its new position paper, the Alliance for Corporate Transparency welcomes the European Commission’s commitment to Reform of the EU Non-Financial Reporting Directive and exploring mandatory non-financial reporting standards, and sets out its recommendations.
The Climate Disclosure Standards Board has published a new report, The state of EU environmental disclosure in 2020, which analyses disclosure among the 50 largest companies in the EU under the Non-Financial Reporting Directive, finding signs of improvement in the completeness and quality of environmental disclosure but also challenges remaining relating to TCFD adoption, risk disclosures and the application of materiality (press release).
Three Commission Delegated Regulations supplementing Regulation (EU) 2016/1011, the Benchmarks Regulation (as amended by the Low-Carbon Benchmark Regulation (EU) 2019/2089), entered into force in December. The new Delegated Regulations provide the awaited guidance regarding the explanation in the benchmark statement of how ESG factors should be reflected ((EU) 2020/1816), the minimum requirements of the explanation of how ESG factors are reflected in the benchmark methodology ((EU) 2020/1817) and the minimum standards for the EU climate transition benchmarks and EU Paris-aligned benchmarks ((EU) 2020/1818).

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 January 18, 2021.