The investor perspective: why B Corps make resilient investments
Resilience in crisis is one of the most important attributes when considering a potential investment opportunity. Future Business Partnership explain why B Corps have the advantage.
Investors want to be sure that their investments can withstand difficult economic conditions and survive turbulence, so that valuable capital is not lost.
At the Future Business Partnership we invest in the best mission-driven brands and suppliers. We like B Corps because they are resilient, in good times and in bad.
If your founding principles are to do the right thing and treat people well, people generally tend to treat you well in return. This respectful, co-operative and collaborative approach or “goodwill” creates a community spirit and a tolerance that will help you face tough times and find solutions together.
The benefit of this goodwill cannot be taken for granted, especially during times of crisis. It creates fundamental resilience throughout the impact ecosystem for the benefit of all stakeholders, including investors.
And beyond this notion of community goodwill, we can look to customers, workers and suppliers for further validation about why B Corps make good investments.
Customers favour brands with strong ethical principles, in good times and in bad
Purchasing power is shifting into the hands of millennials and now also GenZ. A recent report by First Insight illustrates that 62% of millennials prefer to buy from sustainable brands and 68% are willing to pay more.
Our own report published earlier this year, Ethical Business as Usual (in collaboration with Kin+Carta) also shows that, in the UK, ethically-driven consumer brands are growing faster than their market in every single consumer category (by between 4x and 13x). With ethically-conscious consumers increasingly choosing to vote with their wallet, the prospects for B Corps look bright.
Laura Tenison MBE, founder of B Corp and baby clothing brand JoJo Maman Bébé, warns that change in consumer buying habits is slow: “ethical values help to protect (your) customer database to a certain degree” but “a good ethos is still only icing on the cake”.
However Geoff MacDonald, FBP Operating Partner & former Global VP for HR at Unilever, has already seen significant momentum behind authentic, environmentally and socially impactful brands with “70% of Unilever’s growth (coming) from brands that are directly aligned to its ethical goals”.
Our recent report, Brand Ethics During Lockdown (in collaboration with digital advisory firm BenchSpark) shows that B Corps received by far the largest uplift in online positive interest over the initial ‘lockdown’ period of the COVID pandemic in 2020. The sample of 40 B Corps in Europe outperformed their non B Corp competitors in terms of social media engagement (54% increase in comments), customer sentiment (12% improvement in net positive sentiment), press coverage (32% increase in online PR) and search engine interest (+24%). Whilst these measures are not equivalent to booked revenues, they indicate that customers are more interested in and engaged with B Corps, even during difficult times.
Ethical businesses attract and retain top talent
Attracting and retaining the best talent is one of the hardest things to do well and one of the most significant levers for determining business success or failure.
Geoff McDonald believes that B Corps have an edge for attracting first-rate talent. He goes further to say that “ethics and sustainability will be a requirement to succeed in the next 5–10 years”…”otherwise you are not going to attract the people you want”.
Laura Tenison agrees that as an ethical company “you [can] retain good employees because they believe in what you are doing and they have a good quality of life working in the business”.
A cohesive team, who intimately understands your business and can adapt quickly to change, is the key to business resilience. Happy and aligned employees are more likely to go the extra mile for their employer to deliver great service and a genuine emotional connection for customers, particularly in a tough moment.
Embedded supplier networks are supportive and efficient
Brands like JoJo Maman Bébé empower their supplier base by paying a fair price and staying loyal. Laura Tenison says “it’s important to support people along the journey” and “if you do so, you can retain good suppliers because they know…. that [you] will be loyal to them.”
There are also efficiencies in ethics: Geoff McDonald points out that in his experience “environmental goals…drive significant cost savings in the supply chain, in recycling of materials, of water, of better management of resources”.
Our conclusion is clear: Ethically-driven companies benefit from the goodwill they create with their customers, their employees and their suppliers. B Corps, especially, are successfully building the resilience we investors look for which will enable them to survive and thrive over the long term.
By Future Business Partnership, providing the best ethical and sustainable consumer businesses with ethically-motivated capital and expertise in growth as well as sustainability.
A first step for businesses interested in measuring their social and environmental impact is by using the free B Impact Assessment tool. Any company wishing to certify as a B Corp has its performance assessed by B Lab across all dimensions of its business. These companies are on a journey of continuous improvement to ensure business leverages its power to be a positive force in the world.