Joel Solomon, a pioneer in social venture capital, is chairman of Renewal Funds, Canada’s largest organization in the sector.
With $98m in assets under management, Renewal Funds invests in organic food, responsibly made products and environmental innovations. Its portfolio includes Alter Eco, Aquatic Informatics, Elevation Brands, Sensible Organics, Seventh Generation and Sweet Earth, to name a few.
Solomon is also a founding member of Social Venture Network, Business for Social Responsibility and the Tides Canada Foundation, and is board chair of Hollyhock. We spoke with him recently about his views on the sector he’s spent his life inventing and supporting.
What’s the most important value a brand can exhibit to gain and maintain sustainability cred in the marketplace?
Brands must do substantive, consistent, understandable initiatives, take meaningful public policy stands, and generate authentic community goods, to win the confidence of their consumers. The public policy component will become increasingly important. It is about positive actions, speaking out for equitable taxation, supporting increased benefits and minimum wages for workers, and demonstrate they are treating employees well. It's equally important that companies inventory memberships and donations to lobby groups that work against those advances, and exit those relationships.
Full life cycle responsible progress for products, reduction in damaging packaging, toxicity, and waste — in the built environment, shipping practices — and other increasingly assumed basics will be important.
Would you cite an example or two from your own portfolio?
Many of our portfolio companies are going through the B Corp validation and annual measurements process:
- Alter Eco is leading a collaborative of organic food companies towards a truly biodegradable and compostable packaging. They are a leader in the Fair Trade certification program.
- Sensible Organics is one of the only USDA Certified Organic skin and beauty care companies.
- Sweet Earth is a rapidly growing, tasty meat alternative, serving the consumer segment consciously reducing meat consumption to reduce carbon impacts and environmentally consumptive foods.
What’s the incentive for companies to change their practices to a more sustainable model?
There are growing consumer preference rewards for companies that authentically embody sustainability values into their products and workplaces. It's best to be ahead of this curve, as the bar rises for real performance. Catch-up will become harder to play. The generational evolution is bringing forth waves of consumers who are better informed, have more established sustainability values, and will make buy decisions after both research and recommendations by trusted friends and information sources.
Your company was chosen in 2014, 2013 and 2011 as an Impact Assets 50 Manager. What’s the biggest change you’ve seen since 2011?
The emergence of more products in the financial industry that offer closer alignment of values and making money is growing and picking up momentum. Consumer demand in this sector is going to grow astronomically. It's been easy to see the rapid acceleration beginning. Millennial values are on the rise, and they include more aware consumers.
With investments in both Canada and the U.S., do you see any significant differences in companies in those two countries in their investment purview?
Canada has a smaller and less exuberant financing ecosystem for early-stage companies. This creates an advantage for Canadian investment, as valuations are more attractive for investors in Canadian companies. American companies are growing in a very heated investment environment. That can push entrepreneurs to move too fast, counting on investor appetite to pay for catch-up on core fundamentals. Canadian companies may need stronger depth in their business, due to a more selective investment palate.
Esquire magazine wrote: “B Corps might turn out to be like civil rights for blacks or voting rights for women — eccentric, unpopular ideas that took hold and changed the world." Can you speak to the current status of B Corps and the impact they’re having cross-industry?
JS: B Corps are a very important development. In the hands of very capable entrepreneurs, its timing is ideal, as validation of good practices is more important than ever. B Corps’ momentum is strong. The evolution of the standards tool is ever more sophisticated. The meaning of the affiliation is gaining value and recognition.
We strongly encourage our portfolio companies to go through the certification process. We know that any company that regularly self-reviews — with the comprehensive and probing questions one must answer for B certification — that our partners are regularly thinking about their practices.
Renewal gains a lot of comfort knowing that they are keeping attention on these vital elements of a responsible business. That makes our job easier, gives confidence to our investors, and builds momentum for others to engage in the process.
From where you sit, are you hopeful about the future?
My hope is fueled by seeing the vision and innovation of younger generations. They are better informed, have sustainability values more naturally and are clearly smarter in so many ways. They can turn around what my generation blindly led the world into. Despite the many signals of severe challenges emerging, I have a lot of hope that the human spirit will rise to the occasion, as science and information become more widely distributed.
We have all the wealth on the planet needed to solve climate change, poverty, lifestyle diseases and resource waste. The more companies and products that lead the way on comprehensive attention to every step of the business process, the better the odds are.