The B Corp premium - could doing good also increase value?

The long term benefits of ‘positive equity'

Given my own personal immersion in the overlapping, but discrete worlds of political science and business journalism, forgive me for characterising business as having a left wing and a right wing.

Crudely, a business that pursues profit and growth at all costs, regards regulation as a barrier to that and constantly seeks loopholes and short cuts, would be right wing. 

Companies that embrace sustainability, co-operative values and who share the benefits of the surpluses generated with their workforce might be considered of the left. Or virtue signalling greenwashing wokery, depending on your standard starting point.

So imagine my surprise when I learned that Palatine, a homegrown private equity business formed in Manchester to invest in mid-market industrial businesses, had successfully achieved B Corp status in 2022.

B Corp is a certification process by which companies subject themselves to a rigorous process to assess how they measure on a complex set of criteria.

They sign up to a pledge called “the state of interdependence” where they “envision a global economy that uses business as a force for good.” 

It goes on to describe an economy led by “a new type of corporation - the B Corporation - which is purpose-driven and creates benefit for all stakeholders, not just shareholders. As B Corporations and leaders of this emerging economy”.

Further, they believe: “That we must be the change we seek in the world. That all business ought to be conducted as if people and place matter. That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all. To do so requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations.”

Probably the best known brands in the world that are active B Corps, would be outdoor clothing icon Patagonia, and much beloved of Silicon Valley tech bros, and Ben and Jerry’s, the ice cream brand owned by Unilever and trendy London-based folding bike maker Brompton Bikes, who’s chairman is Luke Johnson, who generally doesn’t hold with any of this agenda.

But as well as Palatine, in this space, ECI Ventures also became a B Corp in 2023.

It’s an intriguing, and surprising development. Often, limited partnerships actively seek ESG compliant funds that have a powerful societal impact, but a commitment to B Corp is different gravy.

But in time, the question I’ve started pondering is when these assets change hands - and let’s face it, private equity investors love a bit of pass-the-parcel - would an investee portfolio company with B Corp status see its multiple tick up as a result?