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The B Corporation A New Kind of Company For a New Sector of the Economy. A Conversation with ACG Philadelphia February 18, 2010. Quick Background. 3 Co-Founders with successful 15 year private sector careers as Entrepreneurs, Operators, Investors. MSD Capital, L.P. $13B Private Equity.

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The B Corporation A New Kind of Company

For a New Sector of the Economy

A Conversation with

ACG Philadelphia

February 18, 2010


Quick Background

  • 3 Co-Founders with successful 15 year private sector careers as Entrepreneurs, Operators, Investors

MSD Capital, L.P.

$13B Private Equity

$250 MM Brand


B Lab - Overview

501(c)3 non-profit which certifies and supports B Corporations

Objective 1: Expand corporate accountability

through new legal framework

Objective 2: Drive social and environmental impact through standards


What is a B Corporation?

  • The B Corporation is a new kind of company which uses the power of business to solve social and environmental problems

  • Meets higher standards* of social and environmental

  • performance, accountability, and transparency

  • Amplifies voice for a diverse marketplace

  • through the power of the unifying B Corporation brand

  • - B stands for Benefit

* B Lab is the nonprofit which certifies and supports B Corporations.


B Corporation – Performance Standards

B Impact Rating System

  • Free web-based tool

  • for impact assessment

  • and improvement

  • Comprehensive

  • Transparent

  • Dynamic

  • Independent

  • 5,000+ users

  • 80 out of 200 points

  • for certification


B Corporation – Legal Standards

B Corp Legal Framework

  • Amend Articles of Incorporation requiring companies to

  • consider of the impact of decisions not only on shareholders,

  • but also stakeholders

  • Benefits

    • - protection for Directors to consider non-financial interests

    • - accountability to shareholders to uphold new standard of conduct

    • survives new management, capital and ownership

    • no additional liability from non-shareholders


Significant Momentum - Companies

Companies

Diverse and growing community of leaders

Financial Services

Consumer Products

Business Services

Energy/Tech.


Significant Momentum – Media

Media

Receiving fair share of press


Objective 1 – New Legal Framework

Policy Makers

Infrastructure and incentives for a New Economy

  • Benefit Corporation legislation

    • new corporate form with higher standards of corporate purpose, accountability, transparency

  • 2010 : VT, MD, NY and PA possible

  • 2011: CO, NC, OR

  • Incentives for certified sustainable businesses

  • 2009: Philadelphia B Corp tax break passed ($500k/25 companies/5 years)

  • 2010: Respond to inquiries from cities and Champions


Objective 1 – New Legal Framework

Benefit Corp Legislation – Major Provisions

  • Purpose

  • shall create general public benefit

  • shall have right to name specific public benefit purposes

    • (e.g. 50% profits to charity, carbon neutral, 100% local sourcing, serve the poor)

  • Accountability

  • directors and officers shall consider effect of decisions on stakeholders

  • shall have an independent Benefit Director

  • shareholders and directors have right of action (no third parties)

  • Transparency

  • shall publish annual Benefit Report in accordance with recognized standards for defining, reporting, and assessing social and environmental performance


Objective 2 – Drive Impact through Standards

What is Impact Investing (SRI 2.0)

  • Generate both financial return and social and/or environmental value

    • Includes community development finance (CDFI’s), microfinance, Cleantech, and other triple bottom line businesses in industrialized and developing world

    • New investment grew by average of 35% over past 5 years

    • Sector has grown to over $50B in total assets

    • Projected to grow to 1% of total managed assets in 10 years, or $500B of capital flows to social and environmental impact


Objective 2 – Drive Impact through Standards

Capital Markets

Driving capital beyond SRI to Impact

  • GIIRS (Global Impact Investing Rating System )

  • Indpnt ratings agency based on B Ratings System (S&P analog)

  • Fund Ratings and Company Ratings

  • Including companies in developing world


Objective 2 – Drive Impact through Standards

Global Impact Investing Ratings System

  • Assess the social and environmental impact of private companies and funds using a ratings approach

    • analogous to Morningstar investment ratings or S&P credit risk rating

  • Allow for comparable measurement of positive impact across

    • investment products

    • developing and advanced economies,

    • industries, company size, and impact focus

  • Used by both institutional investors and investment intermediaries to

    • evaluate, screen, manage, and communicate the social impact of their sustainable private equity and debt investments



Historic Opportunity

  • To create social impact through business and transform corporate accountability

  • Chorus of prominent voices

    • Gates, Creative Capitalism

    • Yunus, Social Business

    • Blood&Gore, Friedman, Sustainable Economy

  • Financial crisis


  • Seizing the Opportunity

    Building a new sector of the economy

    • Creates economic opportunity

    • Strengthens communities

    • Restores environment

    • Alleviates poverty

    Contractors

    Legal

    Clean Tech

    Food

    Hospitality

    Private Equity

    Wealth Managemt

    Home

    Apparel

    Education

    Building Industry

    Retail

    Architecture

    Restaurant

    Arts

    Telecom

    Media

    PR

    Comm

    Consulting

    Developing World

    Banks

    Marketing

    IT

    Real Estate

    Footwear

    Renewable Energy

    Biotechnology

    Personal Care

    Pharmaceuticals

    B2B

    B2C


    Thank you

    • For your time

    • For your leadership and support


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