The Impact Economy Brief | 7 June

Welcome to the latest edition of Bates Wells’ Impact Economy Brief, a helpful reference point and resource for our network, providing an overview of activity in the Impact Economy, including legal and regulatory developments.

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:

“Double materiality”


Editor’s Pick

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

How impact mitigates start-up risk. Big Society Capital Investment Manager, Nicholas Andreou, considers how having an impact lens could help with managing risks, and with preventing disappointing IPOs, as part of a blog series that will go on to consider different risk types, such as customer and talent related risks.


Impact Business                                          

A longer read – ReGenerate has published its latest report, Helping purpose-driven business thrive, which considers reforms that could encourage businesses to help the UK recover from the pandemic in a way that supports people and planet to flourish. The report sets out a number of recommendations, including having an accessible legal form for purpose-driven companies and a policy goal to make the UK a centre of excellence for impact reporting (landing page and summary). For more, ReGenerate has co-created a vision statement for purpose-driven business becoming the new normal, to which the recommendations in the report are intended to contribute, and also created an ecosystem map of the profit-with-purpose business landscape, to help users navigate the supporting infrastructure.

Amending UK Company Law for a Regenerative Economy is a new discussion paper from the IoD Centre for Corporate Governance’s Regenerative Business Working Group, which sets out legal reform to bring the law on directors’ duties in line with the principles of a regenerative economy, and describes how companies can integrate profit-with-purpose into their constitutional documents and decision-making processes (press release).

A longer read – The Purposeful Company has published The Purpose Tapes – Purpose driven leaders in their own words, based on interviews conducted between November 2020 and March 2021 with fourteen organisational leaders who have a stated commitment to purpose.

The CBI has published a new interactive report on its website, Seize the Moment: How can business transform the UK economy?, which sets out six business-led opportunities by 2030, with accompanying recommendations, including a decarbonised economy, an inclusive economy where work enables all talent to progress, and a healthier nation, with health the foundation of wellbeing and economic growth (press release).

A view from France – Number of French mission businesses jumps by 42% in five months. Pioneers Post reports on the latest findings from the Observatoire des Sociétés à Mission, which gathers data on the ‘entreprises à mission’ sector. (Entreprises à mission are businesses formed under the French PACTE law, with a social and environmental mission written into their bylaws and other features to support mission governance.)


Impact Investment

A longer read – The Place-Based Impact Investing Project (PBII) has published Scaling up institutional investment for place-based impact, a White Paper looking at how institutional capital can be mobilised to help ‘build back better’ and ‘level up’ the UK, and offering practical guidance for investors to engage in place-based impact investing and report their impact (landing page). The PBII is a collaboration between The Good Economy, the Impact Investing Institute and Pensions for Purpose.

How are outcomes funds evolving over time? The University of Oxford’s Government Outcomes Lab blog discusses how ‘outcomes funds’ differ from impact bonds, and highlights how these funds are developing in different ways.

Setting up for success – Enterprise lending report 2021. Responsible Finance, the UK’s industry body for Community Development Finance Institutions (CDFIs) and purpose-driven lenders, has published a report to celebrate the 6,000 start-ups, businesses and social enterprises that CDFIs have supported in 2019/2020, with £263m of investment.  

A longer read – The Global Impact Investing Network (GIIN) has published COMPASS: The Methodology for Comparing and Assessing Impact, which aims to offer a standardised approach for investors, including asset owners and asset managers, to analyse and compare impact performance across the investment process, and to support the development of benchmarks, ratings and other analytic tools to further impact measurement (landing page).

A €17.5bn fund to ensure no one is left behind on the road to a greener economy. The EU has announced the agreement of the Just Transition Fund, intended to help EU countries address the social and economic impact of the transition to a climate neutral economy, with a “Green Rewarding Mechanism” to be introduced if the fund’s resources are increased after 2024 (please see the EU Parliament briefing for more detail).

A longer read – Integrating Biodiversity into Natural Capital Assessments. The Capitals Coalition has published new guidance, complementary to the Natural Capital Protocol, intended for businesses and financial institutions who recognise the importance of natural capital and want to better incorporate the value of biodiversity into natural capital assessments (landing page).


Legal and Regulatory                                     

A longer read – The FRC has published Workforce Engagement and the UK Corporate Governance Code: A Review of Company Reporting and Practice, which explores the current intersection of corporate governance with employee voice, in light of requirements in the 2018 Corporate Governance Code for boards to ensure effective workforce engagement (press release). The report describes a range of approaches being implemented, and sets out key learnings identified in order to help businesses develop their practices.

Consultation – The Competition and Markets Authority (CMA) has issuedfor consultation its newDraft guidance on environmental claims on goods and services, designed to help businesses comply with consumer protection law when they make ‘green’ claims in relation to their products or services. This follows from the CMA’s investigation into the impact of green marketing on consumers, and concerns about the veracity of green credentials (press release and landing page).

Measuring what matters: the scramble to set standards for sustainable business. The FT’s Moral Money Forum has published a short report looking at the current momentum behind creating a global framework for sustainability measurement and reporting, exploring some of the difficulties that businesses face with multiple standards and the influences pushing sustainability reporting up the agenda.

The Dormant Assets Bill has been introduced in the House of Lords. The legislation aims to expand the dormant assets scheme to include the insurance, pension, investment, wealth management and securities sectors. It aims to unlock around £900m in funds for supporting important social and environmental initiatives across the UK.

A view from the Netherlands – Shell ordered to deepen carbon cuts in landmark Dutch climate case. Reuters reports on climate litigation, the result of which is a ruling by a Dutch court, ordering Royal Dutch Shell to reduce its carbon emissions by 45% by 2030 from 2019 levels.


Contacts

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


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 7, 2021.