The Impact Economy Brief | 9 July

Welcome to the latest edition of Bates Wells’ Impact Economy Brief, a helpful reference point and resource for our network. Here we provide 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:

“Steward ownership”

Editor’s Pick

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

With New Sustainability Commitments, Allbirds Accelerates A ‘Cradle-To-Grave Approach’ That Incorporates Consumers And Supply Chain. For Forbes, Professor Christopher Marquis of Cornell University interviews Hana Kajimura, Head of Sustainability at B Corp apparel company Allbirds, about facilitating carbon reduction targets through data collection and understanding product impact, working with impact-aligned suppliers and influencing product use, as well as examples of tangible measures for internal accountability.

Highlights from this month’s Brief

Each month, our Brief provides a selection of news and materials from across the Impact Economy, with a particular focus on legal and regulatory developments. Included in this month’s edition:

B Lab Europe and a coalition of more than 60 businesses call for EU-level measures to mandate stakeholder governance; the Ellen MacArthur Foundation’s statement on Extended Producer Responsibility schemes to reduce packaging waste is endorsed by more than 150 businesses and organisations; and the newly formed Value Reporting Foundation publishes Integrated Thinking: A Virtuous Loop, to help businesses and investors assess and communicate enterprise value.  

Big Society Capital’s new report, The Social Impact Investment Sector: Perspectives and Priorities, presents insights from across the sector; the UK Government publishes its Green Financing Framework, and HM Treasury publishes its new roadmap for the future of the financial services sector, including plans to make the UK a global leader in green finance.

A new Private Members’ Bill aims to strengthen the Modern Slavery Act, including in relation to supply chain transparency; the FCA has published consultations on extending climate-related disclosure requirements; and the Taskforce for Nature-related Financial Disclosures (TNFD) begins its development of a framework for reporting nature-related risk.

Impact Business

B Lab Europe and a coalition of more than 60 businesses, including WeTransfer, Tony’s Chocolonely and Impact Hub, have launched the Interdependence Coalition, which aims to build a coalition of leaders across business, academia, law, policy making and environmental practice, calling for EU-level measures, including legislative changes, to mandate stakeholder governance. For more, Pioneers Post provides commentary on the launch event, a recording of which is available on YouTube.   

A longer read – Extended Producer Responsibility: a necessary part of the solution to packaging waste and pollution. The Ellen MacArthur Foundation has published a statement, endorsed by over 150 businesses and organisations, publicly recognising the need for Extended Producer Responsibility (EPR) schemes (whereby producers’ responsibilities extend to the post-consumer stage of the product life cycle) in tackling the global problem of packaging waste and pollution. The accompanying position paper considers how to make the economics work for scaling collection and recycling systems for packaging, and explains why mandatory, fee-based EPR schemes for packaging are necessary (press release). For more, B The Change talks to B Corps ReCIRC and Numi Organic Tea about developing sustainable packaging and supply chains with climate justice in mind.

2021 Stephen Lloyd Awards Open for Entries! Applications are now open in search of enablers of change with creative solutions to everyday societal problems. The Stephen Lloyd Awards provides emerging innovations with the critical backing needed to cultivate their ideas. Entrants with an early-stage project addressing a social problem in a novel way are invited to apply before 31 August 2021. Winners receive funding of up to £20,000 along with opportunities to receive pro bono support from experts in the charity and social enterprise sector. Become a story with an inspiring journey through the 2021 Stephen Lloyd Awards! For details on how to apply, visit (The Stephen Lloyd Awards are an initiative of the Bates Wells Foundation, Char Reg No 1150321).

What Institutional Investors Really Think About Systems-First Investing. With the support of Beyond Alpha, The Shareholder Commons has summarised insights from a roundtable of 17 investment organisations from around the world, collectively representing US$1.3trn AUM, which considered what the financial markets could look like if ‘systems-first’ thinking became the dominant paradigm, and how obstacles to stewardship of our shared system could be overcome (press release). For more, The Shareholder Commons writes for B The Change, arguing for focusing on tackling system risks, rather than on ESG integration.

A longer read – Integrated Thinking: A Virtuous Loop is a report from the new Value Reporting Foundation, a global non-profit formed through the merger of the IIRC and SASB, which aims to provide tools to help businesses and investors assess and communicate enterprise value. The report draws from a sample of businesses for best practice on integrated thinking and reporting, through which decisions are based on interconnected information across multiple capitals, including natural, social and relationship, human, manufactured and intellectual, as well as financial, creating transparency on businesses’ economic, social and environmental impact (press release). 

Impact Investment

The Social Impact Investment Sector: Perspectives and Priorities is a new report from Big Society Capital, intended to summarise the views, experiences and priorities of those working within the Social Impact Investment Sector, including views on the progress made in recent years, what aspects of the sector are working well, and the challenges and difficulties encountered (press release).

The Impact 12 Fund has been announced, intended to fund social ventures and mission-driven businesses spinning out of, or that are part of, 12 universities and their ecosystems. The universities involved include Oxford, Cambridge, Northampton, Cranfield and Keele. For more, Pioneers Post provides commentary on the launch.  

Bethnal Green Ventures joins Connected Asset Management. B Corp tech-for-good VC business, Bethnal Green Ventures, has announced its acquisition by impact-focused investment management firm and fellow B Corp, Connected Asset Management, which works to help pension funds engage with impact investing.

A longer read – The UK Government has published its Green Financing Framework, which describes the Government’s environmental agenda and vision for enhancing the UK’s leadership as a green financial centre. The Framework also sets out the basis for selecting, verifying and reporting on projects that are eligible for financing from the Government’s Green Gilt programme and retail Green Savings Bonds, to help tackle climate change, biodiversity loss and other environmental challenges (landing page). For more, the Impact Investing Institute welcomes the Framework’s commitment to reporting on the social co-benefits of the new green bonds, such as job creation and support to SMEs.

In addition, HM Treasury has published A new chapter for financial services; a roadmap for the future of the UK’s financial services sector, which includes a section on making the UK a world-leader in green finance (landing page). The measures described include businesses disclosing their risks and opportunities from, and impact upon, the environment through implementing integrated sustainability disclosure requirements, and combatting greenwashing with definitions of sustainable activities and investments. For more, HM Treasury has published a summary based on the Chancellor’s speech at Mansion House outlining some of the new measures, and the Government has published details of the Green Taxonomy Advisory Group (terms of reference and membership).

UK Infrastructure Bank opens for business. The Government has announced the launch of the new UK Infrastructure Bank, which is intended to help tackle climate change and support regional and local economic growth. Capitalised with an initial £12bn and able to issue £10bn of government guarantees, the bank is intended to unlock more than £40bn of overall investment, working in partnership with local government and the private sector.

Legal and Regulatory                                     

Modern Slavery (Amendment) Bill. A new Private Members’ Bill has been introduced in the House of Lords that would amend the Modern Slavery Act 2015, including by increasing disclosure requirements and enabling formal warnings to commercial organisations that fail to meet the requirements, and creating criminal offences for incomplete or false slavery and human trafficking statements and for continuing to source from suppliers or sub-suppliers that fail to demonstrate minimum standards of transparency following a formal warning (landing page).

A longer read – BEIS has publishedthe Government’s consultation response, Establishing a new single enforcement body for employment rights, confirming the intent to bring together existing labour market enforcement bodies (HMRC National Minimum Wage Enforcement, the Gangmasters and Labour Abuse Authority and the Employment Agency Standards Inspectorate) into a single body that will support employers to comply with the law, such as through providing guidance and other tools, and improve responses to non-compliance, including through new civil penalties and powers of enforcement regarding statutory entitlements and transparency in supply chains (landing page and press release).

Consultations – The FCA has published two papers for consultation, closing on 10 September 2021 (press release):

Simple, practical & market-led: stakeholder visions for the TNFD. The Taskforce for Nature-related Financial Disclosures (TNFD) held a launch event last month, and provides a summary of the discussion and access to a recording of the event. The TNFD now embarks on a two-year workplan to develop a framework for organisations to report and act on evolving nature-related risks. For more, you can access a summary of the workplan and the proposed technical scope.

The Net Zero Lawyers Alliance has launched, aiming to help in-house lawyers play a role in the practical activity required to maintain a sustainable future, so that ‘climate aware counsel’ can help their organisations avoid greenwashing and achieve Net Zero. For more, The Law Society Gazette reports.

Right to repair rules will extend lifespan of products, government says. The BBC reports on the UK’s new ‘right to repair’ rules, which will require producers to make certain spare parts for some electrical appliances available to consumers, in order to encourage repair, cut costs and reduce waste. For more, Raconteur considers whether tech manufacturers will embrace the circular economy if they are not legally obligated to do so, and in the US, shareholder advocacy non-profit, As You Sow, has filed a shareholder resolution requesting that Microsoft analyses the environmental and social benefits of making its devices more repairable.

Get in touch

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

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 July 7, 2021.