The B Corporation A New Kind of Company

For a New Sector of the Economy

A Conversation withACG Philadelphia

February 18, 2010

3 Co-Founders with successful 15 year private sector careers as Entrepreneurs, Operators, Investors

Quick Background

$250 MM Brand

MSD Capital, L.P.

$13B Private Equity

B Lab - Overview

501(c)3 non-profit which certifies and supports B Corporations

Objective 1: Expand corporate accountability

through new legal framework

Objective 2: Drive social and environmental impact

through standards

What is a B Corporation?

The B Corporation is a new kind of company which uses the power of

business to solve social and environmental problems

- Meets higher standards* of social and environmental

performance, accountability, and transparency

- Amplifies voice for a diverse marketplace

through the power of the unifying B Corporation brand

- B stands for Benefit

* B Lab is the nonprofit which certifies and supports B Corporations.

B Impact Rating System

Free web-based tool for impact assessment and improvement

• Comprehensive• Transparent• Dynamic• Independent

• 5,000+ users

• 80 out of 200 points for certification

B Corporation – Performance Standards

B Corporation – Legal Standards

B Corp Legal Framework

• Amend Articles of Incorporation requiring companies to

consider of the impact of decisions not only on shareholders, but also stakeholders

• Benefits- protection for Directors to consider non-financial interests- accountability to shareholders to uphold new standard of conduct- survives new management, capital and ownership- no additional liability from non-shareholders

Diverse and growing community of leaders

Financial Services Consumer Products Business Services Energy/Tech.

Companies

Significant Momentum - Companies

Receiving fair share of pressMedia

Significant Momentum – Media

• Benefit Corporation legislation

new corporate form with higher standards of corporate purpose, accountability, transparency

2010 : VT, MD, NY and PA possible

2011: CO, NC, OR

• Incentives for certified sustainable businesses

2009: Philadelphia B Corp tax break passed ($500k/25 companies/5 years)

2010: Respond to inquiries from cities and Champions

Objective 1 – New Legal Framework

Policy Makers Infrastructure and incentives for a New Economy

Benefit Corp Legislation – Major Provisions

Objective 1 – New Legal Framework

Purpose• shall create general public benefit• shall have right to name specific public benefit purposes

(e.g. 50% profits to charity, carbon neutral, 100% local sourcing, serve the poor)

Accountability• directors and officers shall consider effect of decisions on stakeholders• shall have an independent Benefit Director• shareholders and directors have right of action (no third parties)

Transparency• shall publish annual Benefit Report in accordance with recognized standards for defining, reporting, and assessing social and environmental performance

Objective 2 – Drive Impact through Standards

What is Impact Investing (SRI 2.0)

• Generate both financial return and social and/or environmental value

- Includes community development finance (CDFI’s), microfinance, Cleantech, and other triple bottom line businesses in industrialized and developing world

- New investment grew by average of 35% over past 5 years

- Sector has grown to over $50B in total assets

- Projected to grow to 1% of total managed assets in 10 years, or $500B of capital flows to social and environmental impact

Driving capital beyond SRI to ImpactCapital Markets

Objective 2 – Drive Impact through Standards

GIIRS (Global Impact Investing Rating System )

- Indpnt ratings agency based on B Ratings System (S&P analog)- Fund Ratings and Company Ratings- Including companies in developing world

Objective 2 – Drive Impact through Standards

Global Impact Investing Ratings System

- Assess the social and environmental impact of private companies and funds using a ratings approach - analogous to Morningstar investment ratings or S&P credit risk rating

- Allow for comparable measurement of positive impact across- investment products - developing and advanced economies, - industries, company size, and impact focus

- Used by both institutional investors and investment intermediaries to- evaluate, screen, manage, and communicate the social impact of

their sustainable private equity and debt investments

Investors

Objective 2 – Drive Impact through Standards

To create social impact through business and transform

corporate accountability

- Chorus of prominent voices- Gates, Creative Capitalism- Yunus, Social Business- Blood&Gore, Friedman, Sustainable Economy

- Financial crisis

-

Historic Opportunity

Seizing the Opportunity

Private Equity

Building a new sector of the economy

Contractors

Consulting

Wealth Managemt Home Apparel Education

Building Industry Retail Architecture Arts

Telecom Developing World

Restaurant

Personal Care

FoodClean Tech

B2B

Real EstateBanks

Hospitality

Renewable Energy

B2CBiotechnology

IT

Legal

Media

Footwear

Pharmaceuticals

Marketing

CommPR

• Creates economic opportunity

• Strengthens communities

• Restores environment

• Alleviates poverty

Thank you

For your time

For your leadership and support