“I don’t want to comment on social justice as I’m an investor”, was something I heard from a market participant recently. The context is not as important as the attitude which is still pervasive in the funds management community. As Panvestors at Panarchy Partners we may not have the silver bullet to deal with social injustice, but we have adopted a social movement which is called B Corp, short for Benefit Corporation. I am proud to announce the we are the First Fund Manager in Singapore, and one of a few in Asia to be certified as a B Corp. Today, Davina Ho our Partnership Panvestor will share with you what this movement means to us and its overall impact. The Funds Management industry is no doubt pivoting towards stakeholder capitalism, and its leaders the likes of BlackRock and company can truly change our impact if they were to also adopt the B-Corp movement…. Can they? Munib Madni Founding Panvestor
“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. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.” Source: B Corps
Firstly, What Is a B Corp Certified Company?
B Corporation is seen as a social movement, set up in the US, with the first B Corps certified in 2007. It has since become a global call to action by companies focused on creating value for all stakeholders including employees, customers, the environment and society not just shareholders.
In 2019, a record number of 650 companies were certified B Corporation globally and today there are now 3,358 B Corps from 71 countries around the world. B Corp certification is only given to companies who have gone through the rigorous B Lab assessment, confirm a minimum standard and promise ongoing improvements.
What does it mean to be a B Corp?
Once verified a company is to required change their legal structure into a Benefit Corporation (if available in their jurisdiction) or sign an agreement to do so as and when the structure becomes available. But it’s much more that. One of the most interesting aspects of joining this community is the coming together of ‘Businesses as a Force for Good.’ For example, in December last year at COP25 in Madrid, more than 500 B Corps agreed to accelerate the reduction of their greenhouse gas emissions to reach a 1.5 degree trajectory leading to net zero by the year 2030—20 years ahead of the 2050 targets set in the Paris Agreement. This makes B Corp more of a community of inspired businesses rather than a simple certifying body.
Identifying as a B corporation is a way to publicly claim an identity as an organization interested in both shareholder and stakeholder success. Having a clear identity can help firms communicate their values to customers, which is particularly beneficial when they are claiming an identity different from the industry norm.
Source:HBR
Why did Panarchy Partners become a B Corp?
Many companies are now talking about ‘purpose’ and their ‘mission’ but few are able to demonstrate how they do it and be independently verified. This rigorous process provided us with some soul searching where we looked at our working practices, how we create impact through The Global Panvest® Fund and the Panarchy Foundation, while bringing value to all of our stakeholders. It has also created a deeper sense of belonging within the team who are proud to join the ranks of companies such as Patagonia, Natura, Danone and Ben and Jerry’s (the last two we own in our portfolio). It also signals to our panvestments that we are serious about our mission and gives us a better understanding of what our panvestments need to do to become B Corp Certified. Danone, for example, has committed to have all of its subsidiaries B Corp Certified by 2030.
"Getting B Corp certification seemed more like a process at first, as I considered ourselves to be aligned with the principles of the B Corp movement already. But once we got into the process I realised that B Corp was much more than simply box-ticking and helps differentiate companies from the 'good ones' to 'one of the best."
Tayef Quader, Sustainability Panvestor
What did we learn?
Well, humility goes a long way – B Corp certification was a challenging and comprehensive process yet a worthwhile task. The team spent most of 2019 putting in place policies, structures and processes, with over 100 hours in preparing for verification in 2020.
As a young, growing company ourselves, while we had addressed the basic needs of a small team and organisation for the size of our business, we still had a significant amount of improvement work to do. To meet B Corps standards we spent time documenting and verifying hundreds of questions such as:
Describe your company's approach to creating positive impact.
How does your company engage and empower workers?
What percentage of your purchases were from companies that are majority-owned by women or individuals from underrepresented populations?
Do a majority of your funds commit to donate a specific % of gains to charitable organizations? If so, what is the committed % of gains?
So how did Panarchy Partners fair across the assessment and where can we do better?
The scores are publicly available for all companies. Our final score was 105.6 out of a total of 200, with 80 being the minimum to be certified. The job is not done, as for re-certification B Corps aim to score 10% more than their last score when they are re-verified in 3 years.
Governance – Being a funds management company you can expect that we did well on this section.
Customers – For this section we scored well on delivering impact outcomes on our portfolio for our clients. We also scored well on capacity building – through regular engagement with our companies on best practices. Our next step is to do more formal engagement with other stakeholders such as governments and releasing industry white papers – both of which we aspire to do.
Workers – Given the service orientation of our business, this was our second largest contributor to our final score. We scored well in health and well-being, career development and overall benefits for our team. There really wasn’t much room for improvement given our focus on our employees being key partners from the start of our journey.
Community – An area that we excelled on, having 50% of our fund performance fees going to the Panarchy Foundation as a separate non-profit entity was a meaningful part of our score. We also did well with our civic engagement efforts and diversity metrics. Room for improvement will come, over time, from the Panarchy Foundation’s work on our 3 identified causes Children, Animals and The Earth.
Environment – This section is a very small part of our overall score given we are a service-based company. Nonetheless the team has put in place company and personal targets to contribute to the global efforts.
So what does this mean for Panarchy Partners?
For us B Corp Certification signals to all stakeholders that we are serious about delivering on our mission. It also signals to our team and future talent that we care. And it cements our responsibility as stewards for change together with our partners to build a better world.
Happy Panvesting,
Davina Ho
Partnership and Stewardship Officer