by Bonnie Host, JD, November 1, 2017
A revolution is unfolding aimed at changing corporate philosophy in the USA and harnessing corporate power to do good and effect change in the world:
- State Legislatures — Approximately 2/3 of the State Legislatures passed Benefit Corporation Legislation creating a corporate form requiring a public benefit, third party standards, consideration of stakeholders in addition to shareholders, and annual social purpose reporting. The new corporate format also protects the original entrepreneurial purpose during financing, capitalization, and IPOs.
- Banks/Investment Firms — Are forming executive committees to strategize about social impact investing. Banks and Investment firms have created investment units and funds devoted to impact investing, and have begun training programs for employees in this developing area.
- The Sustainability Accounting Standards Board (SASB) — Established and maintains industry-based sustainability standards for the recognition and disclosure of material environmental, social, and governance impacts.
- Universities/Professors — Offer/Teach courses devoted exclusively to impact investing and ESG business principles.
- Private Foundations — Are moving money from traditional endowment investments into Mission Related Investments. For example, the Ford Foundation committed 1 billion to MRIs over the next ten years.
- 85% of Millennials — Report that they are interested in or are actually participating in impact investing, according to a Bank of America study. Millennials also expressed a desire to work for purpose driven employers.
Pension Funds, Trust Funds, and Investment Advisor Clients have the purchasing power to play a significant, profitable, and morally just role in the development of impact investing. Demand for corporate attention to social and environmental factors and demand for impact investment financial products by these constituents will drive the movement forward.