Al Gore backs B-Corps for purpose-led capitalism

Laura Joffre 3rd February 2021

Former US vice president Al Gore said he “highly recommended” B-Corps, speaking at the British Academy’s Future of the Corporation summit.

He was answering a question by the University of Bristol’s Martin Parker, who asked whether it was possible to move towards a world where corporations could be replaced by co-operatives or community ownership models that have a “baked-in” social purpose.

Gore said the need for companies to access higher capital in order to grow made the corporation model necessary. But the B-Corp (a certified business that meets high standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose) made it “much easier to integrate purpose” he added.

The former vice president is currently the chairman of Generation Investment Management, an investment management partnership dedicated to long-term investing and integrated sustainability research, which is itself a B-Corp.

Baroness Minouche Shafik, director of the London School of Economics, also speaking at the event, said while there was a long tradition of co-operatives and employee-shared ownership schemes that “have done very well”, they had rarely grown to a scale.

Research also showed that big firms tended to be more efficient and productive than small firms, she added. “I’m less interested in prescribing the organisational form of business, but more into designing a set of rules that would make whatever organisational form that exists fair and efficient and have social purpose.”

I’m less interested in prescribing the organisational form... but more into designing a set of rules that would make whatever organisational form that exists fair and efficient and have social purpose

Sea change

Gore, a long-time climate campaigner who created the documentary An Inconvenient Truth describing the causes and consequences of climate change in 2006, said he was seeing a real sea change in how governments and businesses were approaching sustainability, in particular on the environment issue, as many countries committed to ambitious targets.

“Governments, in cooperation with the private sector, can work to deliver the new investment we need, guided by the right policies,” he said.

The global sustainability revolution is the biggest investment opportunity in history

While it used to be said that investors and companies focussed on ESG were at risk of not meeting targets, that argument had been “turned on its head”, and those which did not follow sustainability goals were now the most likely to miss their objectives, he added.

“The global sustainability revolution is the biggest investment opportunity in history. Those that make the boldest and earliest commitments have the chance to see the biggest economical and environmental gains,” Gore said, adding that data showed that green investment consistently brings better returns on the long term.

“More businesses are realising the tremendous opportunities of the sustainability revolution,” he said.

Kodak Effect

Even oil and gas companies were now serious about energy transition, Arunma Oteh, executive-in-residence at Oxford University's Said Business School, and former treasurer and vice president of the World Bank, said at the conference.

That was in many cases an “existential issue”, she added, because of what she called the “Kodak effect”: companies were at risk of becoming obsolete if they did not move with the tide, just like Kodak – once synonymous of photography – sunk after the emergence of digital cameras.

But Shafik said relying on sole leadership, particularly in companies that are subject to shareholders and consumer pressure, was not enough and government involvement was needed.

The will to act is itself a renewable resource

“There’s been some fantastic corporate leaders that have stuck their heads above the parapet and taken risks and done a wonderful job. But I think we’ve now reached a point where it’s gone beyond voluntary... We need laws and regulations to make this stick.”

She called for a new social contract between corporations and workers as the basis for a fairer society, and said that governments had a role to play to drive this change through legislation. “Exhortation and goodwill are just not good enough,” she said. She advocated higher corporate tax, in exchange for which companies would not have to pay for workers’ benefits such as employment insurance, minimum pensions or parental leave which should be paid by general taxation.

Gore said that Covid-19 presented a chance to drive change but it was important to learn from the past – the 2008 crisis, for example, had been a missed opportunity.

“Rebuilding the economy after the pandemic will be a critical time for climate,” he said. “The will to act is itself a renewable resource.”

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