The Shareholder Commons Supports B Lab Policy Convening
On March 9, B Lab held a policy convening (over Zoom, of course), funded by the Hewlett Foundation and hosted by the Ford Foundation. Roughly 70 participants came together to consider a draft White Paper outlining a series of policy recommendations that would fix our financial system in order to redirect business from an excessive focus on profit to creation of a resilient, just and healthy society. TSC is serving as a consultant on the project and is a primary drafter of the White Paper.
The project is a critical element of TSC’s policy initiative. An extensive process of interviews with stakeholders leading up to the convening helped to shape the thesis underlying the project: the beneficiaries who participate in the stock market through institutions like pension and mutual funds are ordinary citizens with interests far beyond the financial return of individual companies. Accordingly, the laws that govern the financial system should reflect this broad array of interests, rather than being designed to measure the success of each company by the profits it creates without regard to the myriad other impacts it has on shareholders and other stakeholders.
At the convening, participants discussed the implications of this perspective. In the first instance, it means clarifying that institutional investors must think more broadly about what it means to serve their beneficiaries — delivering a large retirement fund that can only be spent in a world of inequality and environmental degradation served up by the companies earning those profits can no longer be considered a job well done.
But one of the panels addressed important second order implications as well: the laws should be designed to give institutional investors and other asset owners the tools to protect their beneficiaries’ full spectrum of interests. One important tool is benefit corporation governance, discussed in the main article in this newsletter: in order to enable pension and mutual funds to address questions of social and environmental impact, the governance of the companies they own must allow the managers of those portfolio companies to put impact before profit. There are other important policy levers to help citizen shareholders: for example, disclosure laws must be expanded to include information relevant to all the interests shareholders might have, and not just information about the financial performance of the reporting company.
TSC is continuing to partner with B Lab to create a public draft of the White Paper; watch this space to find out when it is released. In the meantime, if you have thoughts or questions about this project, please contact us.
