THE BLOG

B Corps: Big Impact Attracts Big Investors (The Good Business of *Good* Business)

08/29/2013 04:48 EDT | Updated 10/29/2013 05:12 EDT

I saw the press release hit the Canadian Newswire.

And then The Globe & Mail.

The Wall Street Journal.

The MaRS Discovery District Blog.

And then tweets, tweets, and more tweets.

The world of Social Finance found a serious good-news story last week when The Royal Bank of Canada entered the world of impact investing through a $500,000 deal with the MaRS Cleantech Fund.

The Fund describes itself as "a private venture fund focused on early-stage cleantech investing. The Fund invests in capital-efficient companies with strong intellectual property, a global market opportunity and experienced management teams." Led by Dr. Tom Rand and Murray McCaig, the MaRS Cleantech Fund has a firm grasp on the market potential in the development of smart and efficient alternative energy solutions.

The two men have long held the belief that "in a market economy, if you solve a big problem you get a big reward." As the realities of resource scarcity continue to emerge, the MaRS Cleantech fund will be positioned to do very well by doing a whole lot of good. Evidently, The Royal Bank of Canada sees the same sort of potential.

"in a market economy, if you solve a big problem you get a big reward."

The global B Corp movement is based on the premise that the power of business can be harnessed for positive social & environmental impact while maintaining an organizational trajectory for sound fiscal growth. It's the good business of good business. With certifications topping 800 individual companies across 60 industries in 27 countries, the momentum is clear. And for many business owners, the theory is one that they have been testing to great success...in some cases...for decades. When a business balances its commitment to direct shareholders with a commitment to indirect stakeholders (workers, community, the environment) the long term business prognosis is good.

Beyond the anecdotal, we also know that Harvard Business Review reports that millennials, roughly 50% of the global workforce, want work that connects with a larger purpose and Hewitt Associates reports that companies with higher levels of employee engagement outperform the stock market average by nearly 20%. So while there are, of course, outlier stories of tyrannical bosses driving a company to greatness--it is clear that intentionality and commitment to your workforce translates into smart business.

And when IBM is reporting in their 2012 Trust Study that only 17% of consumers in mature markets trust manufacturers to give honest feedback on product information -- outside endorsements & certifications (a la B Corp) are becoming more critical in the effort to authentically engage with a customer base.

"With so many companies marketing themselves as 'good' and 'green', it's important to honour those walking the talk". --Jay Cohen Gilbert

This is exactly what B Corp Certification does. It honours visionary business leaders that are coming together to use the power of business as a force for good. Through a completely transparent and fully measurable process, B Corp offers an umbrella of "trust" that has proven to be attractive to both entrepreneurs and consumers alike.

But even if you buy into this...one must ask: "What about investors?" Sure, there will always be small niche investment groups that will see the appeal in throwing a little bit of funding towards a smart feel good project, but won't the explicit commitment to social & environmental impact symbolized by B Corp Certification hurt a business' ability to attract the biggest players?

While it is true that some investors simply won't see the math for long-term value (financial, environmental, and social) in impact investing, this week's announcement that The Royal Bank of Canada (Canada's largest bank - an historic institution if there ever was one) is investing $500,000 into Certified B Corp, MaRS Cleantech Fund, should serve as strong proof of a B Corp's ability to attract significant investment from mainstream players.

This specific investment is being made through the newly launched RBC Generator. Royal Bank describes The Generator as "a $10-million pool of capital for investment in businesses that tackle social and environmental challenges, while generating a financial return". The entire B Corp community takes great pride in the fact that the MaRS Cleantech Fund was chosen as the inaugural investment for RBC's Generator. The head of RBC's Social Finance initiative, Sandra Odendahi, sees this first investment as setting a tone for both her organization and the Canadian investment community writ large. In the initial announcement she expressed her "hope that others in the business community will make similar commitments to help create positive social and environmental change."

For those that have had their reservations about B Corp's ability to attract major main-stream funders and secure significant financial investment, I think that the partnership between MaRS Cleantech Fund and the RBC Generator can be pointed to in dispelling any such fears. If the product or service is good -- the addition of being intentional with how you engage with workers, community, and the environment around you will only add to the overall value your organization delivers.

This is what B Corp looks like: a smart business offering with an eye on the long-game in which we seek success for our businesses, our communities, and our environment.