Impact Coming to a Stock Exchange Near You
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Note from the FWIW Team: Ahead of the 20th anniversary of the 9/11 terrorist attacks, our thoughts are with the victims and those they left behind. You can find a list of places still helping the affected families and first responders here. We will never forget.
Whether it’s questionable fashion trends, like low-rise jeans and bucket hats, or pop culture, the early 2000s are very cool right now. The IPO market is also in Y2K throwback mode with the total number of IPOs this year expected to reach 375, a record high since the frenzy of the internet bubble two decades ago.
The following mission-focused, impact firms are slated to go public soon:
- Rivian – Electric pickup manufacturer, potential Tesla rival
The Illinois-based firm is reportedly seeking a market value of $80 billion. That is more than what Ford (one of its backers) or General Motors is worth. FYI, Amazon has invested over $1 billion and ordered 100,000 delivery vans as part of their push to become carbon neutral by 2040. - Warby Parker – Eyeglass maker with “Buy a Pair, Give a Pair” promise (Certified B Corp)
While best known for their stylish glasses, every time Warby Parker sells a pair of eyeglasses, a pair is made available to someone in need, either very cheap or for free. In the 11 years since it was founded, 8 million pairs have been distributed this way. The regulatory filing mentions “impact” 182 times and “stakeholder” 22 times. - Allbirds – Sustainable footwear (Public Benefit Corp, Certified B Corp, Carbon Neutral, DiCaprio Approved)
Founded by a Kiwi footballer, this brand makes its shoes exclusively of materials found in nature, aka no plastic. It obsessively measures its carbon footprint all the way to the landfill, works on reducing it, and offsets emissions. It has filed to go public through the first ever “sustainable public equity offering.”
Private startups like these with social and environmental initiatives are increasingly testing retail investor appetite, and the list of other like-minded companies expected to go public this year continues to expand. Read on to learn about B Corps and keep watching this space for more developments in the IPO universe.
*As a reminder, we're sharing these companies as examples to keep you in the know, not providing investment advice.
B is for B Corp
Allbirds and Warby Parker have more in common than just their pending IPOs. They’re both certified B Corporations, a label first introduced in 2006 that is more and more of an asset in today’s ESG and sustainability focused world.
You may have noticed the “B” symbol on major clothing brands or in the dairy aisle (if not, you will now!). It’s not a legal or regulatory status, but a voluntary one: it means that within the last 3 years the company has been certified to meet a range of standards for what they do and how they do it (read: good for people, society, and the environment). The 3,500 certified businesses call themselves “B Corporations,” or “B Corps.”
B Corp status is something a company must apply for — and it’s not an easy B to get. In fact, a lot of businesses go through the B Lab’s Impact Assessment process not because they expect that golden B, but because the results show them where they’re crushing the stakeholder capitalism game and where they could improve. The assessment scores companies based on how they treat their employees, customers, communities, and the planet; if they get the 80 points (out of 200) required to pass, they can complete certification by changing their bylaws to bake the B into their business model. To keep their B, they need to re-certify every three years, a process that many B Corps use to boost their score with impactful changes, from shifting to low-carbon energy use to reducing the pay ratio between the CEO and the lowest-paid employee.
Because it signifies provable impact, going B can be a great way to attract conscious consumers. It’s less straightforward for attracting investors: most B Corps are private companies that can only accept capital from accredited investors. However, that is starting to change. There are now six publicly-traded B Corps, and three of them — Lemonade, Vital Farms, and AppHarvest — IPO’d within the last year with (as mentioned above) Warby Parker and Allbirds aiming to join the pack soon.
Gender lens investing coming into focus
As we wrote two weeks ago, the most visible feature of gender lens investing is putting money in companies led by women. For movie junkies, the CEO and board chair are the star and director of a biopic looking to be nominated for an Oscar. Now, let’s take a closer look at what that really means for investors.
Putting a woman at the center is not just a statement about women’s leadership; it makes good business sense as studies consistently show a positive correlation between financial performance and women in leadership. That’s one reason why the list of publicly-traded companies with women CEOs is growing, albeit slowly. The 2021 Fortune 500 list has a record 41 women, including the first woman CEO of a Wall Street bank (Citigroup’s Jane Fraser) and the highest-ever ranking for a woman CEO (CVS’ Karen Lynch, who clocked in at #4). The 2021 list also marks the first time two Black women CEOs appear simultaneously (TIAA’s Thasunda Brown Duckett and Walgreens’ Rosalind Brewer).
The other leadership metric? Board members. A wave of regulations mandating that publicly-traded companies have at least one woman on their board has helped quadruple the number of women on corporate boards in the last three years.
How can investors keep the positive momentum going? There are a growing number of mutual funds and Exchange Traded Funds (ETFs) that invest in companies that prioritize women’s leadership (Pax Ellevate, Fidelity, Barclays, and SSGA to name just a few). Not sure where your current ETF investments sit? Shareholder advocacy nonprofit As You Sow has a searchable database with gender parity information for more than 3,000 ETFs. On the private side, equity crowdfunding platforms like iFundWomen funnel capital directly to women entrepreneurs in the early stages of launching big ideas.
The C-suite is not the only place where investors can see a company’s commitment to gender equity. But it’s a focal point for zooming in on what else they do to advance gender equality.
Cheating on a low-carb(on) diet
In the run-up to the mid-century deadline for carbon neutrality set by the Paris Agreement, large companies are announcing their aim to reach “net-zero carbon.” This phrasing is key. Have you ever wondered why it’s not just simply “zero carbon”?
Targeting “zero carbon” would mean eliminating emissions throughout operations, and depending on the business, this may be impossible or prohibitively expensive. However, “net-zero carbon” or “carbon neutral” status can be achieved by anyone with deep enough pockets and access to the internet through a process called “carbon offsetting.” It involves funding projects that avoid emissions or remove carbon, like renewable energy production or tree-planting, in any part of the world in order to offset one’s own carbon footprint. In theory, at least, a company can continue to pollute the air and have it cancelled out.
Each carbon offset represents reduction of one metric ton of greenhouse gas emissions and there are two types, voluntary or compliance-related, depending on whether it’s part of a sustainability goal or a requirement to stay below government emission caps. The trading of emission credits is called the carbon market, and everyone from you to companies and traders can buy and sell carbon offsets from providers.
If this sounds too good to be true, you’re right. Unfortunately, nature doesn’t come with a giant ledger in the sky where all emissions and reductions can be recorded accurately and neatly cancel out each other. These calculations, with all their variables and comparisons, are incredibly complex, and we don’t have clear rules and standards to ensure the quality of offsets yet. For example, experts say almost 30% of offsets in California's forest program may be over-credited. The marketing of natural gas as carbon neutral is another head-scratcher.
While it’s hard to tell how much is greenwashing and how much is effective, carbon offsetting can still be part of the climate solution. It needs to be combined with strong company efforts to cut emissions directly, like reducing waste and using more renewable energy. Supporters are currently working to scale the carbon market and increase its integrity and oversight.
Before you go -
New York City is finally putting electric versions of its iconic yellow cabs on the road in a pilot program with nine EV models approved. Each yellow taxi in the city currently makes around 500 trips a month.
