Research Insight: B Corp certification in investment organizations - A movement towards impact?

"Benefit Corporations (B Corps) align purpose and profit. While pursuing entrepreneurial opportunities, B Corps look to preserve natural resources for future generations and aim to reduce inequality and poverty."

The Center for Sustainable Finance and Private Wealth (CSP) has recently launched the latest Investor’s Guide on B Corp certification for investment organizations. Including 18 interviews on B Corp certified investment organizations around the world, the report aims at impact-oriented wealth holders and investment organizations wondering how to address the B Corp movement. The report was written in collaboration with CSP, EBS University and B Lab Germany.

Interesting Facts:

• Since its inception in 2006, over 8,100 organizations have been B Corp certified in 95 countries and across 161 industries.
• Globally, 394 B corp certified organizations operate in finance.
• Some well-known B Corps include businesses such as Patagonia, the luxury brand Chloé, and ice cream maker Ben & Jerry’s.
• While B Corp certification may not be as common in the financial sector, there are notable B Corps in finance, including the Australian asset manager First Sentier Investments and the Banque de Luxembourg.

The profile of B Corp investment firms

There is a broad diversity in B Corp certified investment organizations. Within our sample, private equity firms represent the largest group (36%), followed by investment advisers (29%). Venture capital investors, family offices, private banks, and public equity investors combined make up 21%.

Also, the degree of engagement varies: 50% pursue certification but no engagement with the B corp network (considered ‘responsible engagement’) and 50% pursue at least one social or environmental goal (considered ‘active engagement’). Notably, 29% of the certified investment firms interviewed are classified as ‘transformative’ organizations promoting a broader transformational change in finance (figure below). These firms are strongly oriented towards making a positive impact and request certification from the companies they invest in. An example of such a firm would be a family office that builds collaborative partnerships with the companies in its portfolio. They provide patient capital and other non-financial support to create a positive impact.

Pushing this sort of transformative engagement will open up opportunities for system-level change—an increasingly relevant goal in the sustainable investing space. For the financial system at large, this transformative change could signify a shift towards more resilient and equitable economic structures. Nevertheless, for this change to become tangible, more firms must prioritize a more holistic approach to development and societal progress, and inspire other firms to be part of this movement. As more firms join this movement, a tipping point can be reached, driving widespread adoption of practices that promote a sustainable and equitable world.

One strategy that we consider central to catalyzing systems change from private wealth holders is recognizing the different “levers” that drive change, as our director Falko Paetzold mentions in this interview with Swiss sustainable finance. While the most known lever is economic capital (such as investment capital, philanthropic giving, and possibly direct operating businesses), there are other levers and forms of influence that private wealth holders have, including their status in society, their time, their networks and more. When investing in B Corp firms with this systemic and multi-lever approach, private wealth holders can maximize their impact not only on the firms they are investing in but on the financial system at large. Stay tunned and find out more about system-level change in one of our next Investor’s Guides coming 2025!

For more on the Investor's Guide to B Corp certification in investment organizations click here.