Welcome to your roundup – a monthly selection of news hand-picked to keep you up to date with what’s going on for businesses wanting to create positive impact.
In this roundup you can find out what’s new in the B Corp, social enterprise, and impact investing spaces, amongst others, collated under helpful headings. We’ll also share links to resources and information that our expert lawyers have selected as being useful to you and your networks.
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Corporate purpose
Pioneers Post explores what the UK impact economy might expect from the new Government, drawing on commentary from some key figures in the space. The article considers topics including the possibility of impact finance being used to unlock private capital, the extent to which the Government’s expressed intention to ‘support diverse business models’ will include social enterprise, and the value in talking in terms of ‘missions’. For more, members of the Future Economy Alliance have commented on the possibilities of the new Government.
Shortly before the election, Stephen Timms MP wrote for City A.M. about how a new Labour Government could harness the power of the impact economy to help it achieve its five missions. Timms states that a “Labour Government should set up something like an Office for the Impact Economy – a joint Treasury-Business and Trade unit to partner with key stakeholders, working to align socially motivated capital and business with our missions”. The article highlights the importance of collaboration between the Government and philanthropists, social and impact investors, charities, and purpose-driven businesses.
The new Secretary of State for Environment, Food and Rural Affairs has announced steps for addressing current difficulties in the water sector. The proposed measures include constitutionally embedding purpose-beyond-profit: “Water companies will place customers and the environment at the heart of their objectives. Companies have agreed to change their ‘Articles of Association’ – the rules governing each company – to make the interests of customers and the environment a primary objective.”
B Corp corporate communications and change consultancy Pulse has published a new report, The Purpose of Business in an Uncertain World. It contains a series of interview-based thought-leadership writings with Jane Davidson, former Minister in the Welsh Government and pioneer of the Well-being of Future Generations (Wales) Act 2015, economist and author of Growth for Good Alessio Terzi, former Chair of the UK Climate Change Committee Lord Deben, and participants from Good Economy. The writings explore different aspects of the implementation of purpose, including the role of regulation and the need for business to work in partnership with government, the value in redefining ‘growth’, the courage required to take a long-term approach in business, place-based innovation and investment, and how purpose motivates and builds trust within the workforce.
B Corps
Chris Turner, Campaign Director of the Better Business Act and Executive Director of B Lab UK, has shared his thoughts on how the new UK Government can create an economy that benefits all, including noting some alignment between B Corp values and the planned creation of a ‘mission-driven government’. Turner argues that regulation is needed to ensure that a purposeful approach to business becomes the norm, referring to the Better Business Act campaign.
Edie reports on the recent removal of B Corp certification from several agencies owned by advertising multinational Havas. B Lab is reported to have investigated Havas London, Havas Lemz, Havas New York and Havas Immerse, and concluded that the wider Havas group’s work with oil and gas giant Shell constituted “a breach of the B Corp community’s core values”.
B Lab’s New Standards: Preparing for Change and Growth. B Lab has shared an update on its new B Corp Impact Assessment standards for certification. B Lab notes that it has received over 16,000 pieces of feedback on the proposed new standards and that it is working on creating ‘B Impact’, an upgrade to B Lab’s digital offering to complement the new standards, inclusive of a new version of the B Impact Assessment. B Lab also comments that one of its priorities is interoperability with relevant regulations, starting with EU directives and other certification schemes, to help avoid duplication of efforts by businesses in relation to their data collection and reporting. B Lab states an approximate timeframe for the introduction of the new standards, expected to be in 2026.
B Lab reports on the progress of #EmpresasConPropósito, a campaign for a legal framework for purpose-driven business in Spain. B Lab hopes that regulations regarding the Sociedades de Beneficio e Interés Común model will be finalised in the second half of 2024.
Climate & biodiversity
The UK’s Climate Change Committee has published its 2024 Progress Report to Parliament, on the UK Government’s progress to date on reducing emissions. The report finds that only a third of the emissions reductions required to achieve the UK’s 2030 target are covered by credible plans, undermining our Net Zero trajectory (press release). At the same time, the report found that the UK’s emissions are now less than half the levels they were in 1990, largely due to the phase out of coal and increase in renewables. The Committee has written a list of ten priority recommendations, and calls on the new Government to show a clear commitment to the Net Zero transition, backed with rapid policy action and a focus on removing barriers.
A landmark UK Supreme Court ruling (summary) could pave the way for claims against water firms for the release of sewage into waterways. The Court ruled that The Manchester Ship Canal Company Ltd (MSCC) could bring a nuisance or trespass action against United Utilities Water Ltd (UU) to seek compensation for the release of foul water contaminated with untreated sewage into a canal owned by MSCC. UU argued that legislation passed at the time of privatisation (the Act) shielded the company from legal challenges, with only the regulator able to take action for breaches of duty by sewerage undertakers, unless the sewerage undertaker is guilty of negligence or deliberate wrongdoing. However, the Court ruled that polluting discharges were not authorised under the Act, and that the Act neither ousted the rights of watercourse owners nor excluded common law remedies such as for nuisance. The Court noted in its judgment that the “discharge of polluting effluent could be avoided by means of investment in improved infrastructure and better treatment processes”. For more, the BBC reports on the case.
The Grantham Research Institute on Climate Change and the Environment at the London School of Economics has published a new report, Global trends in climate change litigation: 2024 snapshot (press release). Among other points, the report finds that strategic climate cases continue to be filed against companies. Key trends include a growth in ‘climate-washing’ cases, with more than 70% of completed cases decided in favour of the claimants; developments in ‘polluter pays’ cases, seeking to hold companies accountable for climate-related harm allegedly caused by their contributions to greenhouse gas emissions; and new ‘corporate framework’ cases, which seek to ensure companies align their group-level policies and governance processes with climate goals. For more on litigation in this area, and others, Bates Wells’ Leticia Jennings, Katy Sawyer and Angela Monaghan have published their latest summary of the strategic litigation landscape.
Secretary of State Ed Miliband has outlined priorities for the Department for Energy Security and Net Zero in a message to the department’s staff. The priorities include boosting energy independence and cutting bills through cost-efficient clean power by 2030, reducing fuel poverty and the creation of the state-owned Great British Energy. Meanwhile, the government issued a policy statement announcing the lifting of the ban on onshore wind, by amendment to the National Planning Policy Framework (here), and committing to doubling onshore wind energy by 2030.
Impact investing
Gaming for good: Can social impact investors make a difference through the gaming industry? Impact Investor considers the increase in initiatives around ‘gaming for good’, as the gaming industry grapples with social and environmental challenges. The article notes that there are over 3.32 billion active video gamers in the world and highlights gaming for good examples such as the Money Wise Challenge that aims to help children become financially literate, created by UK educational video game provider Dot Dot Fire. Dot Dot Fire is now planning to connect in-game learning to real life by seeking to partner with a credit union to offer a higher rate savings account for players who have completed certain levels of the game. The article shares insights on what impact investors might need to consider as they look at investment opportunities in this space.
Adaptation and resilience – a $2 trillion market opportunity the private sector cannot ignore. British International Investment’s (BII) Managing Director and Head of Climate, Diversity and Advisory, Amal-Lee Amin, makes the case for increasing private investment into climate adaptation and resilience (‘A&R’). Amin notes that decarbonisation solutions currently receive the greatest share of investment, but that the need for A&R solutions is already pressing. Amin states that over the past 50 years weather, climate and water-related disasters have had an economic cost of $4.3 trillion, with costs rising every decade, but that A&R represents a $2 trillion opportunity according to the World Economic Forum. Amin also refers to BII’s Climate Investment Playbook, published recently in collaboration with FMO and created particularly with VC and private equity in mind, which aims to help investors get into investing in a range of climate-related solutions including A&R.
Understanding Local Access: A Place-Based Social Economy Movement. Access – The Foundation for Social Investment has published a blogpost outlining their Local Access programme, which is a ten-year social economy programme delivered by six local partnerships across England. £30 million is being jointly invested by Access and Better Society Capital across the partnerships (in Bradford, Bristol, Gainsborough, Greater Manchester, Hartlepool/Redcar/Cleveland and Southwark), which have tailored plans for enterprise support and social investment to respond to the needs of the local economies. Access “want to learn how to build strong local infrastructure that supports enterprise growth for charities and social enterprises and to understand whether, by doing this, there is a wider impact on the resilience of local communities and economies”. Access plans to share its learnings from the programme over the next few months and will share experiences on topics such as the process of the programme and challenges of enterprise development.
Social enterprise
Social Enterprise UK (SEUK) has published a short analysis of the King’s Speech (full briefing notes), regarding the possible implications of proposed legislation for the social enterprise sector. Key proposed Bills noted include the Employment Rights Bill, Product Safety and Metrology Bill, the Digital Information and Smart Data Bill and the English Devolution Bill. SEUK notes that the sector awaits more detail to fully understand the possible impacts of the Government’s legislative programme and policies. For more, Dan Gregory, Director at SEUK, explores what the new Government’s policies may mean for social enterprise, noting that the Labour manifesto stated support for ‘diverse business models’ and an intention to double the size of the UK co-operatives and mutuals sector, and highlighting existing regional action by Labour mayors on ‘social economy’ and ‘business for good’ agendas.
Pioneers Post has announced the NatWest SE100 Index 2024, a list of the UK’s top 100 social businesses. Businesses are selected according to criteria that reflect both commercial and impact aspects, such as financial performance, impact measurement, and commitment to positive action on climate issues and equality and diversity. The winners of the NatWest SE100 Awards have also been announced.
Co-operative sector leaders have sent the new Prime Minister, Keir Starmer, a joint letter thanking Labour for its pledge to work to double the size of the co-operatives and mutuals sector. The letter also sets out that unlocking new capital raising options and removing barriers to co-operative growth are important to delivering the Government’s ambition. For more, Coop News provides commentary on the joint letter and the sector’s response to the new Government.
The Schwab Foundation for Social Entrepreneurship and the World Economic Forum have published the second report in the AI for Impact series in collaboration with EY and Microsoft: The PRISM Framework for Responsible AI in Social Innovation provides adoption pathways and real-life case studies through which social innovators, impact enterprises and intermediaries can filter their impact mission, capabilities and risks against their use of the technology. The framework outlines three layers of AI implementation, impact mission and strategy, adoption pathways and capabilities and risks, and is described as the basis of an AI Readiness Assessment Matrix, as part of a roadmap for integrating AI.
ESG
The UK Institute of Directors (IoD) has published a factsheet aiming to explain the difference between sustainability and ESG. Under the IoD definition, ESG is a framework for assessing performance on social and environmental issues and for identifying and managing specific risks and opportunities associated with a company or investment. Sustainability is described as an approach for long-term value creation that encompasses a range of responsible and ethical business practices across the business and in relation to its wider stakeholders. The factsheet notes that performance measurement and reporting differ under these concepts, as do associated regulatory frameworks and voluntary standards.
Video: Balancing responsibility & innovation – How can we develop and implement ethical AI? If you missed our panel event on AI and ethics, hosted by Bates Wells Partner Eleonor Duhs, the recording is now available. On the panel were Lord Clement-Jones (House of Lords Liberal Democrat spokesperson for Science, Innovation and Technology and Co-founder and Co-chair of the APPG on AI), Dee Masters from Cloisters Chambers, who was involved in drafting the TUC’s AI Bill, and Associate Director of Policy at techUK, Neil Ross.
CDP and Boston Consulting Group have published a new research report that highlights the importance of tackling Scope 3 (corporate supply chain) emissions. The analysis found that corporates’ Scope 3 emissions are 26 times higher than their operational (Scope 1 and 2 combined) emissions, with upstream supply chain emissions from manufacturing, retail, and materials sectors having a footprint 1.4 times the total C02e of the EU in 2022, but that only 15% of corporates have set upstream targets for these emissions (press release). The report also identifies three significant drivers of action on supply chain emissions (having a climate-responsible board, supplier engagement, and using internal carbon pricing), and estimates that disclosed upstream emissions from the manufacturing, retail, and materials sectors indicate a carbon liability of over $335 billion, which may be overlooked by corporates and investors.
The Taskforce on Nature-related Financial Disclosures (TNFD) has announced a 30% increase in adopters of its corporate reporting recommendations since January 2024 and has published a suite of guidance, including recommended sector-specific disclosure metrics, to support reporting by companies and financial institutions. The total number of companies committed to disclosing their material nature-related issues to investors and other stakeholders based on the TNFD recommendations is now 416, including 114 financial institutions representing US$15.9 trillion in assets under management.
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