Australia’s QIC: Public Benefit Corporations Could Be ‘Game-Changing’

For ESG investors, the corporate structure might be an attractive investment theme.

Brisbane, Queensland, Australia (Tammy Law/Bloomberg)

Brisbane, Queensland, Australia

(Tammy Law/Bloomberg)

Investing in public benefit corporations could be a “potentially game-changing” way for asset owners to incorporate ESG into their portfolios, according to the Queensland Investment Corporation’s Helen McNamee.

Public benefit corporations — or PBCs — are companies structured in the United States to serve both shareholders and stakeholders. The extra reporting requirements involved, McNamee said, could make it easier on allocators seeking ESG information early in the investment process.

In November, Generate Capital, a sustainable infrastructure investing and operating company, announced its conversion to a PBC after seven years of operation. QIC is one of Generate’s largest investors and led the firm’s $2 billion fundraise announced in July 2021.

“As an investor, we see many benefits to converting to a PBC,” McNamee said. “It delivers a clear message that the company is delivering on its mission.” According to McNamee, although QIC needed to sign off on the decision to transition to a PBC, there are no other changes to the organization as a shareholder, and Generate will likely operate as is, too.

Setting up a PBC is a relatively new way to structure a company — the law has only been on the books in Delaware since 2013. Companies that operate as PBCs are for-profit entities, but they are required to balance the needs of shareholders and folks who are directly affected by their business practices.


Practically, this means that a PBC must identify in its charter the public benefit it promotes. Its board is obligated to balance the interests of stock- and stakeholders, as well as to ensure that it’s actually carrying out the public benefits defined in its charter.

PBCs are also subject to more stringent reporting standards. These firms are required to provide stockholders with biennial reports that detail how they’re meeting these public benefits. For ESG-focused investors, this third requirement could be huge.

“If a company we were thinking about investing in was already structured as a PBC, the ESG screening process would be much easier in terms of passing committee,” McNamee said. She added that the company would have likely already collected sustainability performance metrics like details on emissions and waste diversion, so providing those biennial reports to investors wouldn’t be an issue.

While Generate is the only public benefit corporation in QIC’s infrastructure portfolio right now, the fund is open to investing in others. And QIC isn’t the only one taking note of these companies. Research recently published in the Harvard Business Law Review showed that traditional, for-profit venture capital investors are investing in PBCs at stages similar to those of their “purely profit-seeking peers.” The investment size is slightly smaller, but it has grown over the years.

The research was undertaken by Michael Dorff, a professor at Southwestern Law School; James Hicks, an academic fellow at the University of California, Berkeley; and Steven Davidoff Solomon, a professor at UC Berkeley. It shows that overall, venture firms have invested more than $2.5 billion across 295 PBCS. In 2019, public benefit corporations received $870 million in investment from venture firms.

“It’s a nascent but growing trend that’s picking up,” McNamee said.