How are investors and financial services firms engaging with B Corp? – Shoremount Guide To Human Organisations

Investors primarily engage with the B Corp movement by one of four means:

Certifying as B Corps themselves.
Using the B Impact Assessment ("BIA") to evaluate internal/portfolio activity.
Making direct investments into B Corps or Pending Bs (Pending B is the B Corp status given to start ups).
Corporate merger and acquisition departments bringing B Corps in house.
Following and funding performance analysis of purpose-driven business

1. Becoming B Corps

The B Corp narrative and the supporting data is so compelling that investors are not only investing in B Corps, they are becoming them as well. All types of investors are doing so: venture capital firms, private equity houses, wealth managers, impact investors, private banks and so on.

Some examples would include the likes of Coutts, TowerBrook, InvestIndustrial, Lombard Odier, Helios, Future Business Partnership, Resonance, Business Development Bank of Canada and Bridges. As are investor engagement and membership organisations such as Pensions for Purpose.

2. Application of the B Impact Assessment

The BIA is the tool B Lab uses to evaluate whether a firm is sufficiently committed to being a force for good to warrant certifying as a "B Corp". It's not just for companies pursuing certification. As an open, online tool, B Lab actively encourages its widespread use by any organisation that wants to think and improve. Widely used as a gold standard tool to raise performance and lower risk, there are over 200,000 organisations using the BIA for analysis and benchmarking.

A wide variety of financial services firms using the BIA to think internally and review the activities of their portfolio (but may not a B Corp themselves). This list illustrates the breadth of firms using it, from global banks to major private equity firms to small investment houses:

Bain Capital
KKR (Kohlberg, Kravis, Roberts)
Apollo
Thoma Bravo
Prudential
Bancolombia
Quadria Capital
BNP Paribas
UBS
SJF Ventures
Deutsche Bank
Mars Catalyst
Anthos
BDC
Inversor
Grassroots CM
Arborview
Annona
WCS
Redpoint
Village
Leapard
Heron
Sorona
Renewal
Elevar
Bamboo
Alphamundi
Anthos
CoreCo PE
Adobe Capital
Osiris Group
Investeco Capital
Sembrador
Quona
Fondo
Endeavor
Caspian
Sustain VC
PCP
Renovus
Vox
Velum
SEAF
Techstars
White Road

3. Direct Investment into B Corps/Pending Bs

Over $3 billion has been invested in B Corps. But this is only what's known by B Lab: most B Corps are privately owned where transparency is lower. This figure is in the context of an investable pool that is small. B Corps are of all sizes and sectors, further reducing the number that would represent a target opportunity for any given investment strategy. As such, B Corps are an active recipient of investment attention.

Venture Capital

Over 150 venture capital firms have invested in a B Corp, many receiving multiple funding rounds. Virtually every Silicon Valley VC firm has invested in a B Corp, including:

Sequoia Capital
Benchmark Capital
Founders Fund
Andreessen Horowitz
GV (Google Ventures)
New Enterprise Associates
Prelude Ventures
Tao Capital Partners
Hunt Technology Partners
Shasta Ventures
Fyrfly Venture Partners
Greylock Partners
Khosla Ventures
S2G
Collaborative Fund
Blueberry Ventures
Thrive Capital
General Catalyst
Chicago Ventures
LiveOak Venture Partners
Sherpa Asset Management
Octopus Ventures
Kleiner Perkins
Goldman Sachs (ventures)

Examples

Altschool

An education company that had already raised $130M from the venture community, announced a $40M raise in May 2017.

Lemonade

In April 2017, Lemonade, a peer-to-peer personal insurance startup, received a strategic investment from Allianz, after having closed a $34 million Series B round in December 2016.

Data.world

In March 2017, Data.world, an Austin-based tech startup, announced that it had secured a $19M Series B round.

TowerBrook Capital Partners

In February 2019, TowerBrook - with c$14Bn AUM (source: Google) - became the world's first mainstream private equity firm to certify as a B Corp.

Helios Investment Partners

Helios's certification in Jan 2020 makes them the largest emerging markets private equity B Corp. Helios has c$3Bn AuM (source: Google).

Generation

The breakthrough investment management firm founded by David Blood, former Goldman Sachs's Head of Asset Management and Al Gore, former US Vice President.

Lombard Odier

In early 2019, the historic Swiss bank, Lombard Odier, was the first mainstream banking institution to certify. This covers their asset management division as well, which includes a range of alternative investment strategies, such as private equity.

Bridges Ventures

British impact investing fund manager.

Resonance

Multi-award-winning social finance intermediary.

Laureate

Laureate Education is a KKR-backed higher education company with campuses around the world. In February 2017, Laureate raised $490 million in an IPO having previously closed a $383 million private equity pre-IPO round in December 2016, which included Apollo Management, KKR and the Abraaj Group. Subsequent to the IPO, a Fidelity fund disclosed filed a 13G disclosing that it had bought 10 per cent of Laureate’s Class A Common Stock on the open market. Laureate going public was a milestone moment for the B Corp movement because some were unsure how the market would respond to a company that legally held itself accountable to all stakeholders.

Rally Software

Was acquired as a public company in 2015 for $480 million.

Debt Markets

BNP Paribas led Danone's $2 Billion syndicated, revolving credit facility in 2017. They and a group of banks (including Societe Generale, Credit Agricole, Natixis, HSBC, Citibank, JPMorgan, Barclays, ING, NatWest, MUFG and Santander) agreed to reduce Danone's cost of capital on the basis of the percentage of their consolidated sales from their B Corp subsidiaries and third-party ESG verification. "Every CFO should know this...".

Other listed B Corps trading on the public markets include Silver Chef, Natura,

4. M&A Activity

Danone

In April 2018, Danone, the French multinational, announced that it had combined all of its U.S. operations into DanoneWave, a $6 billion revenue company that intends to certify as a B Corp by 2020. Danone is gradually certifying all its own brand subsidiaries. Non-Danone branded subsidiaries and acquisitions include Happy Family.

Hain Celestial

Acquired Ella's Kitchen.

Cambell Soup Co.

Acquired Plum Organics and The Soulfull Project.

Unilever

Acquired Pukka Herbs, Ben & Jerry's, Sundial Brands, Seventh Generation, Sir Kensington's and Mãe Terra.

P&G

Acquired New Chapter.

Coca-Cola

Acquired Innocent Drinks which then certified as its first B Corp subsidiary.

Gap

Acquired Athleta.

Natura

The Body Shop (recently certified) - the first billion-dollar acquisition by B Corp.

The sale of Avon to Natura was the first time a listed company's board (with shareholder primacy governance) agreed to sell itself to a B Corp, creating the world's fourth-largest beauty brand in the process. Read more.

Other Publicly Traded

Other listed B Corps include Rally Software, Etsy (now decertified), Australian Ethical, Murray River Organics, Silver Chef, Vivid Technologies, Yash Papers (India) and O-Bank (Taiwan).

5. Performance Data

Virtually every major consulting, financial services and academic institution has produced research supporting purpose-driven businesses, of which B Corp is a leader.

"What data and evidence are there for a "better", more purpose-driven approach to business?"

Side note: The great irony is that despite corporates' pursuit of data, it's not for lack of it that they don't pursue real change. It's a cultural problem, not an empirical one.

As for B Corps specifically, there hasn't been much research completed yet (because of its relative youth and private market positioning).

"What evidence is there that B Corps outperform?"

Investor Paper

Download "Just Good Business: An Investor's Guide to B Corps by Yale, Patagonia and Caprock".