The Impact Economy Brief | 8 October

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.

Editor’s Pick

If you only have a few minutes today, we recommend…

Martin Bunch joins business leaders to call for action on climate change in a Letter to the Earth. In the run up to COP26, Bates Wells has teamed up with Business Declares and Letters to the Earth to highlight the importance of taking immediate action on climate change (press release). Managing Partner, Martin Bunch joins other business leaders, including from Triodos, Riverford and Forster Communications, by writing his own letter to the Earth. The letters will be presented to delegates at COP26. Find out more about the campaign on the Letters To The Earth website.

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:

“Triple bottom line”


B Lab partners with Fairtrade International to create SDG standards and campaigns to increase supply chain sustainability and global corporate transparency, and the British Academy launches Policy & Practice for Purposeful Business, the final report from its Future of the Corporation programme.

A new ISO Standard is launched for governance, encouraging practices that align with an organisational purpose that delivers long-term value, and a group of global corporations and social enterprise bodies have launched a pan-European initiative to develop ‘social procurement’.

Big Society Capital explains updates to the social investment Outcomes Matrix, developed with Good Finance, and publishes its 2025 strategy “refresh” for scaling impact. Also, the Impact Investing Institute and others have published a report setting out the investment case for social and affordable housing.

The CMA has published guidance on making environmental claims on goods and services; this ‘Green Claims Code’ and the CMA’s awareness campaign come ahead of COP26 and a review of ‘green claims’ expected in 2022.

The FRC is seeking input on ESG data production, acknowledging the importance to boards and investors of high quality data on businesses’ social and environmental impacts, and the Taskforce for Nature-related Financial Disclosure has announced its membership, to begin work to deliver the Framework in 2023.

Impact Business                                                   

With an Eye on Agenda 2030, Fairtrade and B Lab Launch ‘Key’ SDG Partnership. B Lab and Fairtrade International have announced a new partnership aimed at advancing the United Nations Sustainable Development Goals (SDGs), through encouraging responsible business practices, sustainable supply chains, and global corporate transparency. The partnership is intended to include developing standards, advocacy, public campaigns and mobilization, and special programmes and projects in pursuit of the SDGs.

The British Academy has published its final report from the Future of the Corporation programme, Policy & Practice for Purposeful Business, providing recommendations on how to achieve the “principles of purposeful business” (landing page). The report’s findings, described by the FT as “one of the world’s most ambitious efforts to reform capitalism for the 21st century”, conclude four years of engagement on purposeful business and corporate accountability, setting the agenda for business policy to embrace purpose. Bates Wells has been proud to support the Future of the Corporation programme. For more, Pioneers Post provides commentary on the report’s publication, and you can still watch the launch event.

First ever international benchmark for good governance. The ISO (International Organization for Standardization) has published ISO37000, ‘Governance of organisations’, which puts the pursuit of purpose and sustainability at the centre of the organisation. The standard would allow organisations to demonstrate that their governance practices align with achieving an organisational purpose that delivers long-term value, consistent with the expectations of relevant stakeholders.

Bates Wells rewrites fellow B Corp Planit IE’s articles of association and employment contracts to better reflect its values. Paul Seath, a partner at Bates Wells, shares insights on embedding a purpose-driven business’ ‘DNA’ into its constitution and contract templates.

New pan-European initiative launched to make supply chains fairer and more sustainable. Social Enterprise UK has announced a new partnership with global corporations, including Compass Group PLC, SAP and Zurich Insurance Group, and other social enterprise bodies, which aims to support the development of ‘social procurement’ across Europe. For more social enterprise news, Pioneers Post reports from the Social Enterprise World Forum 2021 on an interview with Doughnut Economics Action Lab’s business and enterprise lead, Erinch Sahan, about his view that social enterprise is ‘proof of concept’ for tomorrow’s economy.

Impact Investment

Applying an equality and equity lens to measuring social impact outcomes. Big Society Capital explains updates to the Outcomes Matrix, developed with Good Finance, to apply an equality and equity lens to measuring social impact outcomes. For more, Big Society Capital has published a strategy “refresh”, Our 2025 Strategy: Scaling Impact, announcing a new target to double social investment flows by 2025. CEO Stephen Muers shares his reflections on the new strategy.

A longer readIs there an investment case for social and affordable housing in the UK? The Impact Investing Institute, Property Funds Research, Homes England and the Investment Property Forum have launched a report setting out the case for social housing investment, particularly as an increased proportion of institutional investment portfolios (press release).

Why Sustainable Investment Means Investing in Advocacy. In the Stanford Social Innovation Review, Alan Schwartz and Reuben Finighan from the Universal Commons Project set out how asset management firms could benefit from using a portion of their fees to advocate for regulatory changes necessary for achieving positive social and environmental impact.

Empowering businesses to unlock transformation: 47 days to COP26. In the leadup to COP26, Responsible Finance examines the importance of empowering SMEs to make positive interventions in the climate crisis, and the role of CDFIs in providing the necessary finance.

A longer read Flying blind – The glaring absence of climate risks in financial reporting. A new report by Carbon Tracker, based on a study by the Climate Accounting Project and PRI, shares findings from analysis of 107 companies identified by investors as having significant carbon footprints or being crucial to the energy transition, and finds that the vast majority did not evidence consideration of climate in their 2020 financial statements, with their auditors appearing not to assess the climate risks to those companies (press release).

Legal and Regulatory                                     

The CMA has published new guidance, Making environmental claims on goods and services, dubbed the ‘Green Claims Code’, in order to help businesses understand how to communicate their green credentials while reducing the risk of misleading consumers (press release). The Code is part of the CMA’s awareness campaign, launched ahead of COP26, and precedes an anticipated review of misleading green claims by the CMA in 2022.

Consultation – The CMA is seeking views on environmental sustainability and the competition and consumer law regimes, with a view to providing advice to the Government on how current regulation and policy may be hindering, and could instead support, the UK’s Net Zero and sustainability goals (press release). In particular, the CMA is interested in specific instances where businesses or consumers felt that competition or consumer law impacted their ability to act sustainably. The call for inputs will be open until 10 November 2021.

A case study on using The Chancery Lane Project (TCLP) Net Zero clauses. TCLP, a global collaboration of lawyers creating template contract clauses that aim to fight climate change, has published a case study on work by Bates Wells using one of TCLP’s Net Zero model clauses in a client’s licence agreement (announcement).

Call for participantsESG data – production. The FRC’s Financial Reporting Lab is starting a study on the production, distribution and consumption of ESG data, acknowledging the importance to boards and investors of high quality data on businesses’ social and environmental impacts (press release). The Lab is inviting companies, investors, service and systems providers and other stakeholders to express interest by 15 November 2021.

Global businesses and financial firms join TNFD to tackle nature-related risks. The Taskforce for Nature-related Financial Disclosure has announced the taskforce membership, and the launch of the Consultative Forum, who will now work with TNFD Co-Chairs to deliver the Framework in 2023, with a beta version expected for feedback in 2022.

In anticipation of the EU’s new legislative proposal on corporate due diligence, which is expected to obligate businesses to identify and prevent adverse social and environmental impacts within their ‘value chains’, ClientEarth has published Close the Loop: Addressing businesses’ adverse environmental impacts (press release and landing page). The report sets out recommendations, including that the legislation should be inclusive of SMEs and apply to the ‘value chain’ (not just the supply chain), with enhanced reporting and transparency requirements.

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 October 7, 2021.