When I got a call from Joel Solomon suggesting I write a column on social investing, I agreed to talk.
Solomon and his partner Carol Newell are well known around North America for their investments in social causes and related businesses. (Locally, they are also on the receiving end of accusations related to links between their charitable grants, their investment funds, Endswell and Tides Canada foundations, and various political causes, all of which I will leave for others to pursue.)
He wanted to impress on me how much this “fourth sector” of business – merging public, private and non-profit business models – had grown and how much was going on in B.C.
“When we started up [in 1993] there was no one screening public markets [for a company’s social and environmental impacts]…” he told me. “Since then I have watched a network of investment screening organizations grow up.”
Added Solomon, who was also at the founding of Business for Social Responsibility (BSR), Canadian Business for Social Responsibility (CBSR) and Tides Canada Foundation, “Endswell was the first funder outside Vancity to do purpose investing. Now I can’t keep up with the conferences, organizations and industry associations in this sector.”
In the U.S., one out of eight dollars under professional management is now in socially responsible investments.
Investors in those days were fewer and more hesitant to sign on to the first Renewal fund’s value portfolio: only organic food, green consumer products and environmental innovation.
Solomon’s success with companies like Seventh Generation sustainable paper products, Stonyfield Farm Yogurt, Happy Planet and Horizon Distributors planted the seed for a second fund, Renewal2, which he said is “mostly invested out” and beating its targeted return on investment of 15% as he ramps up Renewal3.
Something really is going on here. Solomon occupies one part of the increasingly blurry spectrum between charity and venture capital. Charities are moving into more social enterprise businesses, and corporations are morphing to face up to the crushing social and environmental crises facing humanity.
Somewhere in between are Social Venture Partners “venture philanthropist networks,” now in 29 cities across Canada, where venture capitalists invest their cash and expertise in local causes. BC New legal structures are popping up to enshrine social, environmental or other non-financial goals in a company’s articles: California has Benefit Corporations; Britain has Community Interest Companies, and in August, B.C. will lead the country in creating Community Contribution Companies under the B.C. Company Act.
A governance ecosystem is rapidly taking shape to cope with these new types of business structures. I’m involved with the Natural Step Canada board in creating a gold standard for sustainability, a collaboration with certifiers like B-Corp to help investors, customers and employees know where a company really sits on that spectrum.
Given its impact on the planet, it’s not surprising that business is feeling compelled to take responsibility for transforming our economic activities toward lasting economic prosperity, social equity and environmental well-being. Businesses that aren’t overtly helping avert the massive social, economic and environmental upheavals coming at us could well be swept aside by those that are.
BC Social Venture Partners co-founder Jim Fletcher echoes Joel Solomon’s optimism about this turning tide: “When we started supporting social enterprises a dozen years ago, we didn’t know what they were called. Now they are becoming mainstream. Hopefully they will have disappeared a dozen years from now – as all businesses adopt those core principles.”
