2022 Sparks Opportunity for AgTech Certified B Corps with Environmental, Social and Corporate Governance (ESG) Objectives | Arent fox

The 2019 Business Roundtable statement can be found here, and Bloomberg Intelligence’s prediction can be found here.

AgTech and ESG

Agricultural technology (AgTech) companies present a relatively new but rapidly growing market opportunity for ESG-focused investors. Supply chain pressures and increasingly volatile weather events highlight the importance of maximizing crop yields and reducing the climate impact of agriculture. Demonstrating the growing importance of these issues and the industry’s ability to address them, a record $7.8 billion was paid out by investors to AgTech companies in 2021. Increased focus on ESG by investors can lead AgTech companies to seek business forms that allow them to better align their corporate purpose with ESG objectives.

In a previous alert, we discussed how AgTech companies could benefit from mainstream ESG trends by incorporating or converting to a public benefit corporation (PBC). In this Alert, we explore another way for AgTech companies to capitalize on the ESG trend: by becoming a Certified B Company (B Corp).

Certified B companies

Created in 2006, the B Corp certification fits perfectly into the ESG space. Similar to PBCs but not a form of statutory business, B Corps balance profit and purpose, while achieving certain goals of social and environmental performance, public transparency, and legal accountability. To be certified as a B Corp, a company must complete the B Impact Assessment with B Lab, a non-profit organization, which produces a report that examines the company’s impact on its workers, community , its environment and its customers. Impact Assessment B also examines a company’s governance structure and accountability. The assessment generates a score that is compared to the average scores of other companies that have also passed the assessment. To be eligible for certification, a company must meet or exceed a threshold of 80 points out of 200 in its assessment.

More than 3,700 companies worldwide have achieved Certified B Corp status, including well-known consumer brands like Danone North America, Ben & Jerry’s, Patagonia and The Body Shop. In its IPO in November 2021, the durable shoemaker and B Corp Allbirds raised more than $300 million to give the company a valuation of $4.1 billion. Lemonade, an online B Corp insurance company, raised more than $300 million in its IPO in July 2020, giving the company a valuation of $1.6 billion. The Special Purpose Acquisition Company (SPAC) Sustainable Development Acquisition I Corp., a PBC that held its IPO in February 2021, is in the process of obtaining its B Corp certification (for more information on SPACs in the AgTech industry, see our previous Alert).

Opportunities for AgTech companies

AgTech companies can greatly benefit from obtaining B Corp certification. Certification as a B Corp can help an AgTech(A) company earn public trust through accountability and transparency; (B) attract and retain top industry talent seeking work in a mission-driven organization; and/or (C) leverage impact investments and strategic partnerships with like-minded companies. With increasing pressure on global food supply chains, health concerns and nutritional demands of a growing global population, and new regulations to address climate change and water management, businesses can achieve ESG objectives while efficiently supplying large quantities of raw materials to multinational food and beverage companies. businesses will benefit immensely. For example, unlike non-B Corps, B Corps can more easily comply with sustainable sourcing programs and supplier codes of conduct increasingly mandated by multinational food, beverage and other corporations. companies that are key players in the value chain.

Similarly, AgTech B Corps can make attractive funding and investment targets, particularly for ESG investors and companies seeking to achieve their own ESG goals. According to AgFunder Network, companies that provide opportunities for B Corps include The Coca-Cola Company, Anheuser-Busch, General Mills, The Kellogg Company and Nestlé, along with nineteen other companies belonging to the “One Planet Business for Biodiversity”. (among them Google, Microsoft and Walmart). AgTech companies that become B Corps certified can more easily benefit from partnerships like these with multinational food and beverage companies and the growing focus on ESG factors among investors than non-B Corps.

Impact

With an increasing focus on sustainability and promoting ESG, AgTech companies are naturally well placed to benefit from increased investment. Achieving a B Corp certification can turn an AgTech company into an even more attractive target for potential investors or business partners looking to bolster their ESG credentials.