TO B OR NOT TO B...WHAT IT MEANS TO BE A PUBLIC-BENEFITS CORPORATION
Increasingly, corporate strategy and values are becoming intertwined. We are seeing a divergence from the traditional philosophy of creating shareholder value at any cost to an alternative model of enterprise that acknowledges the social and environmental implications of business. This shift stems from a change in not only what investors are looking for, but in the investor themselves as they shift to become more socially conscious.
Investors are no longer just talking with their wallets, but with their values, and at the top of this list are transparency, accountability, and purpose. Internal and external stakeholders are also looking for accountability with respect to these values.
While focusing on Environmental, Social, and Governance (ESG) strategies may be seen as only necessary to attract new investors’ hearts, it’s also good for a company’s bottom line. Research by Morningstar showed that funds incorporating ESG-driven companies saw their combined assets climb to $3.9 trillion at the end of September 2021. As a result, we are seeing the emergence of a new type of environmentally and socially conscious corporation, the Public Benefits Corporation.
A Public Benefit Corporation is a hybrid organization that bridges the for-profit and not-for-profit business models. It is a for-profit entity that has voluntarily committed to pursuing a general or specific public benefit by creating social and environmental outcomes, in addition to its responsibility to return profits to the shareholders. The company and its policies are self-governed, so it has an obligation to produce an annual report to assess and communicate its financial, social and environmental performance to its shareholders and stakeholders.
Picture taken from https://thefreshfactory.co
The Fresh Factory™ was structured as a Public Benefit Corporation since day one. Unlike the traditional corporation that gives priority only to financial profitability, The Fresh Factory is environmentally and socially-focused and driven to leave a lighter, greener mark on the environment while making a strong, positive impact on their communities and the food system as a whole. The Fresh Factory doesn’t exist solely to generate profits, but instead has adopted a hybrid mission that also incorporates ESG goals.
As a Public Benefit Corporation, The Fresh Factory set a goal to become a market leader in sustainability – incorporating practices like ensuring a fair wage for its farmers, sourcing locally, and purchasing produce seconds (food that is often thrown out) while operating a diverse and equitable company. This includes:
Composting 100% of its waste and buying directly from farmers (often local) whenever possible.
Donating 1% of sales from the Field + Farmer brand and sourcing produce seconds when available (more than 1.2M pounds in 2020 alone).
Buying locally whenever possible, with more than 40% of Field + Farmer’s ingredients coming from local farms (defined as within 500 miles of its facility).
Employing a diverse team with 42% identifying as women and 60% identifying as persons of color.
As The Fresh Factory’s values say, it’s about something bigger, and it has various initiatives underway to become even more sustainable. The Fresh Factory is a catalyst for social and environmental change, and as it continues to grow as a company, it will prioritize ESG goals to deliver an attractive bottom line and retain and gain new investors.
