Last week, Laureate Education, a Certified B Corp, became the first benefit corporation to complete an initial public offering. While 4,500 benefit corporations have now been created, each of them was privately held until last week’s IPO. This signals a huge shift in investing for impact. Laureate has asked the public to invest in an entity specifically designed to treat customers, employees and communities as the shareholders’ partners, rather than as tools to be exploited for maximum financial gain.
While government action often dominates discussions of social and environmental policy, their private allocation of financial capital is a critical factor for fighting major issues. Fighting disease, climate change, resource scarcity, and addressing inequality are some of their major goals. The future is likely to be decided more by the open market, and not by heads of state.
The Laureate IPO proceeds will be invested in for-profit higher education. Even though these types of institutions are sometimes very controversial, Laureate and its new shareholders address these concerns. They choose a business form that requires balancing profits with the interests of students and the communities in which they live. Traditional corporate structures are based on positive outcomes from optimizing profit and maximizing value. The issue is that all this burdens the systems that support business activity. This damage threatens long term investors to an extent that individual maximizing cannot make up for.
This breakthrough means that mainstream investors have now bought into the new paradigm . Good health at a fair price could become a primary corporate goal for healthcare companies, and not a convenient outcome. Energy companies could have a duty to balance the effect of their decisions on the planet with the return they provide to shareholders. Hopefully, the rules for global capitalism have fundamentally changed for the better.