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Investors widen focus to business models in assessing ESG impact

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on Financial Times or enjoy below:

🗞️ Driving the new: Impact investors are increasingly focusing on business models and leadership structures to ensure companies maintain their social and environmental missions as they grow or change ownership
• Public benefit corporations (PBCs) and similar entities are becoming popular for embedding these commitments into their charter documents

🔭 The context: Traditional investments often prioritize financial returns, but PBCs balance financial interests with social, environmental, and stakeholder considerations
• Despite their benefits, navigating various models and legal forms, like PBCs versus B Corps, can be challenging for investors

🌍 Why it matters for the planet: Ensuring companies retain their ESG commitments through structured business models helps mitigate risks of mission dilution, supporting sustained positive environmental and social impacts

⏭️ What's next: More entrepreneurs are likely to adopt these corporate forms to secure their missions, while investors may increasingly consider leadership and ownership models that promote equity and sustainability in their investment decisions

💬 One quote: "Being a PBC as a first step can be a meaningful way to signal to your stakeholders that, legally, you have shared interests." - Lyel Resner, Cornell Tech

📈 One stat: According to a 2021 survey by PwC, 79% of institutional investors stated that ESG risks are an important factor in their investment decisions

Click for more news covering the latest on sustainable finance

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