Octopus Investments is in the first wave of financial services companies in the UK to meet the stringent criteria needed to certify as a B Corp™. But what does it mean exactly? Ruth Handcock, CEO of Octopus Investments, explains.
Earlier this year, my son had his first day at school.
If you’d asked me before I had kids what would worry me on this day, I’d probably have said it was that he worked hard in class.
As he left in his uniform – two sizes too big, naturally – all I actually wanted was for him to find friends who would be kind to him, and for him to be kind back to them.
It occurs to me that I’ve gone on a similar journey with how I feel about companies.
Let me explain.
New school
For a long time, the belief was that a company’s success or failure should be judged by the numbers on its P&L. The score on the exam paper, if you will.
I now believe there is far more to the picture.
To create and sustain long term value for shareholders, so much of success is about how you make people feel, and how you treat your environment.
People want to do business with companies that care. Companies they can trust to do the right thing.
We’re seeing this borne out in investors’ behaviour. Investors are recognising that backing sustainable companies does not require a trade-off with returns. On the contrary, evidence is growing that sustainability and outperformance go hand-in-hand.
It’s quite logical, really. Irresponsible companies that damage the environment, mistreat their employees or damage society have their value eroded over time. Responsible companies that understand their impact on the world will attract the best talent, mitigate risk and drive profitable growth. It’s these sustainable companies that are increasingly being favoured by shareholders too, giving those companies access to capital at a lower cost.
It shouldn’t just be end investments that are assessed on their sustainability. We need to go one step further. I believe investors should also care about the behaviour of the companies they select to manage their investments.
Certifying as a B Corporation
The B Corp certification is one way of measuring a company’s social and environmental performance. Certification requires a company to meet the highest standards of social and environmental consideration, transparency and accountability, to balance profit and the impact they have.
A company must regularly assess how its activities impact all its stakeholders. Employees, community, environment, customers and shareholders are given equal importance. And it requires companies to build stakeholder impact into their legal structure for the long term.
Strong values have been core to Octopus since day one. So we see our B Corp certification as a way to hold ourselves as an investment manager to ever higher standards. It’s also a mark of the values we share with other progressive companies, from Patagonia to Innocent Drinks, and marks us out as a company that not only cares about investing sustainably, but acts responsibly too.
What it means for advisers and their clients
The financial services industry is built on trust. It has to be. We bear the responsibility of looking after clients’ money, investing it responsibly and acting in their best interests.
Investors are increasingly concerned about the sustainability of their investments. It’s only a matter of time before they ask questions of investment managers too. Our B Corp certification therefore helps your business in three critical ways:
- Investors can be reassured their money is managed by a company worthy of their trust.
- Advisers are empowered to recommend an investment provider whose values align with their client’s own values.
- We are future oriented and set up to serve investors over the long term.
Being a B Corp is another step in giving our customers peace of mind that we are, and will always be, a good company.
We fully expect and welcome others in the industry to follow in our footsteps.
