Becoming a conscious company

| 7th November 2018
Bruce Davis and the Abundance team
Abundance
Can greater shareholder democracy change small businesses for good?

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The idea of the conscious consumer - or prosumer - has been explored at length - but much less attention has been given to the 'conscious company'.

Would you shop more in your local community if you held shares in your local farm or pub? Would you care more about the carbon intensity of your electricity if you had invested in your energy company?

Would you support improvements in your local infrastructure - even if they didn’t benefit you directly - if you could invest in the projects themselves?

Building relationships

Would you change the way you ran your business if your customers and local community were co-invested as your shareholders? 

Abundance took the major step of offering shares to our customers (and other small investors) this month. More than 500 have signed up so far and we are well on the way to our target of raising £1.2m.

We now understand what it means to build a relationship with our customers based on shared interests as co-investors, as well as providing the means for people to invest for their future.

It feels both emotional and enlightening, as our own motivations are dissected and discussed by our investors – the ‘so-called’ crowd (although I prefer ‘peers’).

The best way I can describe the experience is to imagine BBC Question Time where the audience has actual money riding on your ability to respond to their questions. 

Patient capital

Small businesses (according to the Department for BEIS and the Federation of Small Businesses) account for more than 60 percent of private sector employment in the UK and 51 percent (£1.9 trillion) of private sector companies’ turnover.

The way they are run and managed (including how they invest in productivity and sustainability) matters if you care about creating not only a more sustainable world but also a more equal one. 

SMEs often claim they need the support of their communities against the threat of global corporations. Yet only a tiny proportion consider raising “patient capital” (i.e. selling shares) that addresses the very long-term objectives which are important to communities.

Small businesses also find it harder to make the long-term investments which would boost their productivity leading to both higher wages and profits.

This underinvestment, endemic to small businesses, is a major disadvantage for the UK compared with other countries in terms of business investment. 

Conscious investors

After six years, having helped ordinary people to invest over £77 million in 34 different sustainable and social infrastructure projects– ranging from wind turbines to social housing – the management team at Abundance decided we needed a step change to grow our business.

That meant bringing our customers in as investors and stakeholders to raise the long-term capital we need to achieve our long-term objectives.

Dragon’s Den and The Apprentice have a lot to answer for! They reinforce a view of equity investors as selfish and short term in their pursuit of profits and “exits” driven by financial markets rather than socially-conscious motivations (Deborah Meaden being the exception…).

But if shareholders are the customers and community the business aims to serve, that changes the relationship between the company and its public.

As conscious investors, our capital should help the business community to grow a stronger conscience of its own.

Social purpose

There are a few misconceptions to clear up first. There is often confusion about what it means for a company to “go public”.  It’s no longer the realm of sharp-suited stockbrokers and numbers flashing on a screen.

Since 2012 in the UK it has been possible for any company to go public directly with their customers and investors, with offers of shares or bonds from just £5. 

There is also a strange distinction between a “social enterprise” and a “normal” one. Large corporations with a strong social, environmental and governance record outperform those without.  This can and should apply to small and medium companies too.

It’s axiomatic that any normal business will suffer if its profit and purpose become disconnected from the society within which it operates. For the most part, businesses profit by providing something of value to their local community. If purpose and function are aligned with the needs of that community they are more likely to succeed. 

Then there’s the idea that somehow making a profit and doing good are exclusive outcomes. The best a profitable business can do is “don’t be evil” (Google’s unofficial motto until recently).  

But Abundance’s experience - and of our investors who also use our company to invest in projects with a social or environmental purpose - is that it is good business to serve the greater good. 

This Author 

Bruce Davis is managing director of Abundance Investment, which advertises with The Ecologist. Any investment is a risk and can result in financial loss. The Ecologist does not make any recommendations with regard to investments. 

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