B Corporation Backgrounder

Information SessionB Corporations

MaRS is where science, technology and social entrepreneurs get the help they need. Where all kinds

of people meet to spark new ideas. And where a global reputation for innovation is being earned,

one success story at a time.

Prepared for MaRS Clients, MaRS Advisors and GTA Area Social and Environmental Purpose Businesses

Friday, May 13th, 2011

WHAT IS A B CORPORATION?

RATINGS SYSTEM

SERVICE OFFERINGS

PUBLIC POLICY

ACCESS TO CAPITAL

OUR WORK

OPPORTUNITY

DISCUSSION & QUESTIONS

Summary

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Certified B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems.

What is a B Corporation?

B Corporation concept launched in the US in 2006.


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377 B Corporations I $1.82B Revenues I 54 Industries I

$1M Annual Savings

Comprehensive Company Focus

vs. Thematic Focus (Industry, Product, or Limited Focus)

• Social and Environmental criteria considering: Product/Service impact, community, workers, governance, suppliers and customers.

• Transparency requirement• Legal requirement to ensure long-term sustainability• On-site audits

Social and environmental practices in the forestry industry

Social and environmental practices for rainforest protection

Facility, product, or service energy efficiency

Facility energy efficiency and use of green materials

Level of disclosure on Social & env. Issues.

Sustainability embedded in full life-cycle of product

Recycled contentOf product

Fair labor practicesTo make product

Agricultural practice Of food product

Systems established to measure & reduce environmental impacts


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Different from mainstream business:• entrenched social mission;• meet comprehensive and transparent standards

of social and environmental performance, transparency and accountability;

• institutionalize stakeholder interests; and • build collective voice through the power of a

unifying brand.

No single sector or industry focus:o Sectors: Manufacturing, Wholesale,

Service/Retailo Industries: Building, Business Products and

Services, Consumer Products and Services, Education and Training Services, Financial Services, Health, Legal, Media, Restaurant/Hospitality/Travel, Retail and Other

Accredited by the U.S. non-profit

organization B Lab, based in

Philadelphia, Pennsylvania. They

focus on standards,

mobilizing capital and public policy.

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407 B Corporations$1.91B Revenues54 Industries+$1M Annual Savings



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Consumer ProductsFinancial Services Bus. Services Canada (26)

Other Examples

Diverse and growing group of business leaders…

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To become a B Corporation, you have to do three things:1. Take and pass the B Impact Ratings System 2. Adopt the B Corporation Legal Framework to embed social mission3. Sign a Term Sheet that makes your certification official.


B Corp Legal Framework• Amend Articles of Incorporation requiring companies to embed

social mission and consider of the impact of decisions not only on shareholders, but also stakeholders

• Benefits- protection for Directors to consider non-financial interests- accountability to shareholders to uphold new standard of conduct- survives new management, capital and ownership- no additional liability from non-shareholders

• Standardized: In 2009, MaRS worked with Blakes to draft a memo on making amendments to articles of incorporation in Ontario/Canada

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The Term Sheet commits B Corporations to:• Submit all supportive documentation for their B Impact Assessment.• Submit proof of amended articles within 90 days• Submit to an on-site review if randomly selected • Pay B Lab annual certification fees based on the full-priced tiered

structure below

Annual Sales Annual Fee

$0 - $1,999,999 $500

$2 M - $4,999,999 $1,000

$5 M - $9,999,999 $2,500

$10 M - $19,999,999 $5,000

$20 M - $99,999,999 $10,000

$100 M + $25,000

Comprehensive Assessment Tool• Built upon GRI and National Capital Institute (Wiser Business), the

standards are:• transparent (not black box);• independently governed by a Standards Advisory Council to

avoid conflict of interest; and • dynamic to drive continuous improvement.

• measures impact in five key areas related to accountability, employees, consumers, community and environment

• assessment tools tailored to: Sectors and Industries• transparent and freely available on the web: thousands have utilized

B Impact Assessment• certification requires a composite score of 80 out of 200 points

available

B Impact Ratings System

Tools and Best Practices

Not just an assessment tool: • Guidelines: survey has guidelines to improve social and

environmental performance• Management tool: benchmark and implement continuous

improvement

Governance and Evolution• Standards Advisory Council (SAC): independent body that oversees

the certification ratings and auditing requirements for B Corporations

and GIIRS rated companies in both developed and emerging markets• Beta Version 3.0: Just launched in May 2011• Version 2.0: new version released every two years; SiG@MaRS

contributed to this version• Version 1.0: reviewed by 600+ entrepreneurs, investors, thought

leaders and academics



B Corporation Standards Advisory Council

• Cathy Clark, Adjunct Asst. Professor, Duke University, CASE

• Debra Dunn, Director, Skoll Foundation

• Hewson Baltzell, Head of Sustainability Solutions, Risk Metrics

• Don Shaffer, President & CEO, RSF Social Finance

• Bonny Moellenbrock, Executive Director, SJF Advisory Services

• Beth Sirull, Executive Director, Pacific Community Ventures

• Rhonda Evans, Science Advisor, GoodGuide

• Doug Claffey, Founding Partner & CEO, Workplace Dynamics

• Bart Houlahan, co-founder B Lab

What makes it different? Comparable by geography,

industry, and company size; Improvement tool which allows

others to use it to get better; Sets a single bar for entry

without making distinctions (ie. no gold, silver, bronze).

Validation Process Survey Review Documentation Submission Audit/On-Site Review


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B Report• comparable

across industries to drive consumer and investor capital

• offers rating and narrative highlights of assessment


Service Partners: Major Cost Savings on packages from major companies including SalesForce (CRM), Intuit, Netsuite, and Inspire Commerce (credit card processing) and dozens of other smaller partners

B to B Discounts amongst B Corps Learning opportunities: monthly webinars and other development

opportunities Resources: Downloadable guides on governance, employees,

suppliers, environment, and community (ie. How to write and employee handbook)

Meet-ups and Events: at a local and international level (in US).

Service Offerings

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Social and environmental ventures have difficulties accessing capital

Access to Capital

• B Lab created a separate venture known as the Global Impact Investing Ratings System (GIIRS)

• GIIRS is a ratings agency that provides comparable and transparent social and environmental performance data on enterprises seeking investment capital using ratings methodology analogous to Morningstar or S&P

• independent third-party impact ratings product that is comparable, transparent, and easy to use (Note: not financial measurement or a CSR rating) based on the B Impact Assessment

• provides ratings for impact funds and companies with focus on mission focused investment opportunities targeting investors

Access to Capital

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What will GIIRS do?• used by institutional investors and investment intermediaries like the

SVX to evaluate, screen, manage and communicate impact of debt and equity investments

• allows for comparable measurement of impact across businesses and investment products in different industries, sizes and focus areas

• reduce due diligence costs for impact investors and communications burden for companies by creating a universal standard

Access to Capital

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Invest for impact.

The SVX will be a local, impact first market connecting social ventures, impact funds, and impact investors in order to catalyze new debt and equity investment capital for local ventures that have demonstrable social and/or environmental impact, including nonprofits, co-operatives, and for-profit corporations. (Launching summer 2011)

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Public Policy

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B Lab is advancing a new corporate form through state legislation to create benefit corporations. Ontario has the opportunity to take the lead in Canada.

We won’t have a new economy without a new type of corporation.

Public Policy

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20th Century:Shareholder Capitalism

21st Century:Stakeholder Capitalism

Maximizeshareholder valuealmost exclusively

Create social and shareholder valuesimultaneously

4 US states have already adopted benefit corporation legislation (MD, VT, NJ, and VA)

7 other states moving forward in 2011, including NY, PA, MI, HI, CA, CO, & NC

11 benefit corporations registered on the first day in MD

Public Policy

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Public Policy

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Major Provisions of Benefit Corporation Legislation

Purpose• shall create general public benefit• shall have right to name specific public benefit purposes

(e.g. 50% profits to charity, carbon neutral, 100% local sourcing, poverty reduction)

Accountability• directors and officers shall consider effect of decisions on stakeholders• shall have an independent Benefit Director• shareholders and directors have right of action (no third parties)

Transparency• shall publish annual Benefit Report in accordance with recognized

standards for defining, reporting, and assessing social and environmental performance

Strategy Benefit Corporation Legislation Working Group: a small group of

researchers, lawyers, and local businesses Legislative Framework Paper will be developed over the summer

to scope parameters of legislation in Ontario

Legislative strategy advances through a number of stages over many years: Recognition: official recognition through legislation of the new

corporate form; Procurement Advantage: Different levels of government offer

preferred procurement status to benefit corporations; Tax advantage: tax advantage could eventually be offered by

different levels of government, likely starting with municipalities, then moving to investment incentives, then corporate tax incentives.

Public Policy

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Activate this aligned agenda in a new partnership with MaRS playing a leadership role for Ontario and Canada

Partners roleso MaRS: Community organizing, local business development for service

partners, feedback on assessment process, and public policy development

o B Lab: Brand, training, assessment system, auditing and other supports.

MaRS will be the B Lab hub for Canada, with first focus on Ontario during two-year pilot period;

Baseline objective: 60 B Corps registered within the two years; Increasing access to capital through the SVX platform and affiliated

GIIRS/B Corp ratings process

Our Work

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Building a new sector of the economy that:

• Creates economic opportunity

• Strengthens communities

• Restores environment

• Alleviates poverty

Opportunity

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Private Equity

Contractors

Consulting

Wealth Mgmt Home Apparel Education

Building Industry Retail Architecture Arts

Telecom Developing World

Restaurant

Personal Care

FoodClean Tech

B2B

Real EstateBanks

Hospitality

Renewable Energy

B2CBiotechnology

IT

Legal

Media

Footwear

Pharmaceuticals

Marketing

CommPR

Discussion & Questions