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Four reasons why a B Corp certification adds value for investors

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Published: 27 March 2021

“B Corp is for business what Fairtrade is for coffee.” That’s according to Stefanie Kneer, head of impact management at London-based fund manager Bridges Fund Management. “For us, B Corp is probably one of the most relevant social and environmental accreditations.”

Stefanie Kneer
The B Corp framework has “100%” helped Bridges add value to its investments, said Stefanie Kneer, head of impact management at London-based Bridges Fund Management. Private photo

B Corp explained

  • B Corporation or B Corp is a private certification of social and environmental performance, public transparency and legal accountability of for-profit companies.
  • The certification scheme was launched by B Lab Foundation in 2006.
  • To date, there are over 3,500 B Corps in 70 countries and 150 industries.

B Lab, the certification body, is conducting a global campaign this month to promote B Corporations. What value does the certification add to investors? “It is one that we absolutely rely on”, said Stefanie Kneer, Head of Impact Management at Bridges Fund Management.

The investment firm which was founded by sir Ronald Cohen and two other investors in 2002, has been involved with the B Corp movement since it first came to the UK in 2015.

Bridges was one of the founding members in the UK, and also one of the first British companies to get certified. The B Corp framework has “100%” helped Bridges add value to its investments, said Kneer.

Companies that are certified B Corporations “are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose,” according to the B Corporation website.

Kneer has identified four areas in which a B Corp framework can add value for investors.

1. Originating deals

Being part of the B Corp community not only gives investors the chance to connect with companies that are serious about wanting to build a better future for our planet and its people, but it also “keeps the pipeline for new ideas and new businesses,” going, said Kneer.

“They organise events, so we get to know new companies through our B Corp community. And that is how we originate a lot of ideas for new potential deals,” she said.

“For example, recently B Corp has focused very much on net-zero topics and how you see that as a business. For us, it’s definitely a way to double-down on topics that we want to learn more about.”

2. Benchmarking performance

Over the years, the B Corp framework has been very helpful in providing tools that can complement Bridges’ own due diligence as an investor.

In 2016, Bridges invested in World of Books (WOB), which resells or recycles old books that would otherwise have ended up in a landfill. After going through an impact assessment, and benchmarking themselves against existing B Corp companies, World of Books realised it could reduce its overall carbon footprint by reorganising its logistics in order to reduce mileage and fuel consumption per book delivery. This eventually led to significant cost savings.

“It’s a way to benchmark impact performance in Europe,” said Kneer.

3. Continuous monitoring

The B Corp framework also provides investors with tools to monitor and track performance of its portfolio companies over the years.

“It does really give you a good baseline in terms of understanding: this is where we started in year one, and three years down the line of investment, look at what we’ve achieved on the employee engagement side, or look at what we’ve achieved on everything around carbon and the environment. So for us, it’s something that we continue doing,” said Kneer.

4. Exiting an investment

A B Corp certification will help investors when it comes to selling their portfolio companies, according to Kneer.

“For a typical asset, the commercial due diligence is usually quite straightforward, whereas the impact due diligence is often more difficult: defining the social and environmental benefits, and quantifying the pound value created through environmental, social and governance engagement can be a real challenge.

“The B Corp certification is really helpful here, because it not only signals to advisors and prospective buyers that there has been a focus on creating positive value, but also tries to define and quantify that value,” said Kneer.

“For instance: has a focus on staff engagement led to improved retention or enhanced productivity? Has a focus on improving the quality of the product or service led to more repeat business or greater resilience to external shocks?

“Quantifying these benefits is key,” said Kneer. “The B Corp certification is relevant for us because it is a widely-recognised way of saying: ‘We are adhering to or surpassing the highest social and environmental standards.’”

Five or ten years ago, Kneer said, “some advisors wouldn’t have known what a B Corp was. Today, the term is increasingly common.”

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