B Corps Featured in Impact Investing Policy Recommendations
This morning, the National Advisory Board on Impact Investing (NAB) released their report Private Capital, Public Good: How Smart Federal Policy Can Galvanize Impact Investing—and Why It’s Urgent. Formed after a 2013 meeting of the G8, the NAB brought together thought leaders from every corner of the impact investing space to come up with recommendations for how U.S. policymakers can encourage the growth of this new sector of the economy. No surprise—B Corps are part of the solution!
What’s the good news?
The good news is that, according to J.P. Morgan and the GIIN (one of B Lab’s partners), there are $46 billion in impact investments under management in 2014. That’s nearly 20 percent more than in 2013, though still a drop in the bucket compared to the wider financial market.
Moreover, the report recognizes B Corps as leaders in the space. Revolution Foods, d.light, Etsy, and Patagonia are all highlighted—not just for their amazing work, but as B Corporations specifically. B Corps are the exact kind of impact-oriented organizations that the report recommends policymakers should “encourage and support.”
Suggestions on what types of support to offer included piloting programs in which impact-oriented contractors would be explicitly preferred by government agencies. The report also encouraged Congress to shine a light on successful impact-oriented businesses in order to inspire others to follow their example. One suggestion even specifically called out B Corps as companies that might be considered for a flat-rate “impact economy tax brackets.”
Private Capital, Public Good also recognizes the value of companies that have incorporated stakeholders into their legal obligations. The report calls for a “modernization” of fiduciary duty to help fight the short-termism that currently plagues our markets. The passage of benefit corporation legislation in 25 states and the District of Columbia is a major step in the right direction. You can learn more about the legal requirements of B Corp certification here, and more about benefit corporations here.
Measure What Matters
Beyond celebrating enterprises like B Corporations, the report also underlines a fact that the B Corp community has known for a long time: for our economy to create shared prosperity, for-profit businesses—and those who wish to invest in them—need to start measuring what matters. A company’s social & environmental performance should be considered as seriously as their financial performance, which is why the NAB calls for the sharing of more impact data & the standardization of impact metrics.
The B Impact Assessment & B Analytics were created with this principle in mind, and B Lab is proud to see our GIIRS Rating called out as an important moment in the history of impact investing. To learn more about how companies and investors are using the BIA, check out the case studies on the B Impact Assessment and B Analytics websites.
So what’s next?
We’re excited to see what concrete steps come from the US NAB’s recommendations. The B Corp community was started with the understanding that no one sector—governmental, non-profit, or for-profit—can solve our society’s problems on its own. The fact that the policy suggestions in Private Capital, Public Good so closely mirror actions that the B Corp community has already taken sets the stage for a turning point in how we work together to tackle the most pressing issues of our time. Whatever comes next, we know B Corps will be at the cutting edge!