Why Fifth Wall Decided to Become a B Corp
A few weeks ago, we announced that Fifth Wall had become a Certified B Corporation. Fifth Wall is now one of the largest venture firms to achieve this accreditation, and it’s something about which we’re really proud.
Since that announcement, we’ve received an overwhelming show of support from the venture community, from entrepreneurs in our sector, and from those limited partners (LPs) knowledgeable about the significance of B Corp certification.
But I’ve come to realize that not everyone is familiar with what it means to become a B Corp — or why Fifth Wall decided to undertake this effort — so I wanted to shed some light on the decision-making process and what it means, practically, for Fifth Wall going forward.
Why Fifth Wall Decided To Become A B Corp
Over the past year or so, as a number of our corporate partners have asked Fifth Wall to help them evaluate technologies that could support their in-house sustainability programs and improve their Environmental, Social, Governance (ESG) standards, we felt it was important that we not only be competent in advising on these initiatives (“talking the talk”), but that we also served as an embodiment of best practices (“walking the walk”).
We are avid subscribers to the notion that you can’t manage what you can’t measure, and we felt that the B Corp certification process provided us with the best framework through which we could audit Fifth Wall’s internal processes and continuously measure our efforts to facilitate an equitable and inclusive work environment, build stronger communities, and deliver stakeholder value while committing to sustainable practices.
Why Now? Because Real Estate And Sustainability Are Converging
As one of the largest investors in the Built World, we believe that it is our responsibility to address the real estate sector’s glaring contribution to global carbon emissions and the Climate Crisis. It might surprise you to learn that the global real estate industry:
- Accounts for 40% of the world’s consumption of energy;
- Emits 30% of total global greenhouse gasses; and
- Uses 40% of the world’s raw materials.
Real estate has historically been one of the worst offenders with respect to sustainability, and has historically under-invested in sustainability technologies that could have mitigated its negative effects. Moreover, regulators are beginning to demand cleaner buildings — to combat climate change, the industry will need to reduce its carbon emissions from 9 gigatons to zero by 2050, a goal that we believe will only be achieved through significant advancement and investment in technology.
While there are some real estate firms that have launched sustainability and ESG programs and teams, the real estate industry has not been a significant investor in the sustainability or climate technology that will be required for them to achieve the decarbonization goals that regulators, capital markets, and the public have set. We believe that has to change. If the real estate industry doesn’t dramatically increase its investments in sustainability technologies, we believe it will fall well short of the ambitious decarbonization goals being set by regulators, capital markets, and the public. We believe that now is the time that every participant in the global real estate industry must begin investing in the science and technology to responsibly decarbonize real estate.
That is why earlier this year, we announced our intention to launch a Fifth Wall Carbon Impact Fund to help build a global consortium of climate-forward real estate companies brought together to heed the call for climate action in real estate, and reduce the industry’s carbon emissions by investing into sustainability technologies being developed with the real estate industry in mind.
Alongside this commitment to increase the industry’s investment in sustainability tech through our intended launch of the Carbon Impact Fund, we ourselves have now formalized our commitment to sustainability via the B Corp certification process.
What Does It Mean For Fifth Wall’s Day-To-Day Operations?
As a VC firm, we will continue to focus on financial returns, and we do not expect this certification to impact Fifth Wall’s ability to deliver financial success and strategic value to our corporate partners. We have simply formalized our commitment to mindfulness — mindfulness of the way we treat our employees, mindfulness of the impact generated by our portfolio companies, and mindfulness of the way in which we engage with our local community. We are not an “impact investor,” but that doesn’t mean that our investments and investment strategy cannot have a positive impact.
While the day-to-day operations of our firm won’t change materially, B Corp-certified companies look to increase accountability and transparency across five categories:
- Governance (e.g., financial controls, mission / value setting);
- Workers (e.g., employee wellness, workplace code of ethics, etc.);
- Customers (e.g., delivering value-add services to our partners);
- Community (e.g., community service, charitable donations, purchasing policies, etc.); and
- The Environment (e.g., workplace energy efficiency, sustainable supply chain practices, etc.).
If you are interested in learning more about how your company can participate in Fifth Wall’s ambitious sustainability goals and the Carbon Impact Fund, I encourage you to reach out to Tyson Woeste (tyson@fifthwall.com), the partner leading our sustainability initiatives internally. For more on our B Corporation certification, please reach out to Michael New (michael@fifthwall.com), our Chief of Staff.
We are at the beginning of this journey, and we look forward to continuing to advance the real estate industry’s sustainability initiatives. We hope that you will join us.
This post is presented for informational purposes only, is not intended to recommend any investment, and is not an offer to sell or the solicitation of an offer to purchase an interest in any current or future investment vehicle managed or sponsored by Fifth Wall Ventures Management, LLC or its affiliates (collectively, “Fifth Wall”; any such investment vehicle, a “Fund”). Any such solicitation of an offer to purchase an interest will be made by a definitive private placement memorandum or other offering document.
Forward-looking statements and opinions as to carbon reduction initiatives and real estate markets or any other matters, as expressed in this presentation, are those of the individual presenters, but are not necessarily the views of Fifth Wall as a firm, and cannot constitute a guarantee of future success or profitable results. As a result, investors should not rely on such forward-looking statements and/or opinions, or on anything else contained in this post, in making their investment decisions. Moreover, certain information contained herein may have been obtained from published and non-published sources prepared by other parties and may not have been updated through the date hereof. While such information is believed to be reliable for the purposes for which it is used herein, Fifth Wall does not assume any responsibility for the accuracy or completeness of such information, and such information has not been independently verified by Fifth Wall. This presentation speaks as of its publication date, and Fifth Wall undertakes no obligation to update any of the information herein.
In addition, in considering any prior performance information contained in this post, prospective investors should bear in mind that past results are not necessarily indicative of future results, and there can be no assurance that any Fund will achieve results comparable to those of any prior or existing Fund or portfolio investment of Fifth Wall.
None of the information contained herein has been filed with the United States Securities and Exchange Commission, any securities administrator under any state securities laws or any other domestic or foreign governmental or self-regulatory authority. No such governmental or self-regulatory authority has passed or will pass on the merits of the offering of interests in any Fund or the adequacy of the information contained herein. Any representation to the contrary is unlawful.
This communication is intended only for persons resident in jurisdictions where the distribution or availability of this communication would not be contrary to applicable laws or regulations. Any products mentioned in this post may not be eligible for sale in some states or countries. Prospective investors should inform themselves as to the legal requirements and tax consequences of an investment in a Fund within the countries of their citizenship, residence, domicile and place of business.
No assurances can be given that any of the carbon reduction initiatives or other initiatives described in this presentation will be implemented or, if implemented, will be successful in effecting carbon reductions or any other initiatives. Further, no assurances can be given that any Fifth Wall fund or investment vehicle will ultimately be established to invest in these technologies or that such fund or investment vehicle, if established, will successfully identify and execute on investments that meet its stated objectives. Investments targeting carbon emission reductions involve substantial risks and may not ultimately meet Fifth Wall’s stated investment objectives. Investors should consult their own financial, tax, legal and other advisors in connection with any proposed investment and should carefully review all disclosures and descriptions of risk factors that are contained in relevant offering materials.
