Purpose-Driven Companies and the Regulation of the Fourth Sector in Ibero-America: Canada Jurisdictional Report

Abstract

This Canada jurisdictional case study is part of a series of reports which aim to support the development of “purposeful business models” and “fourth sector” entities in the Americas and around the world. The intent is to drive change in the private sector and, ultimately, to enhance the private sector’s contribution toward the realization of the United Nations Sustainable Development Goals (United Nations, 2015). These reports aim to contribute to wider discussions about the role of “purpose-driven” companies and “dual purpose” entities in efforts to address urgent problems of people and planet (see, for example, Mayer, 2018; British Academy, 2021). Broadly speaking, “fourth sector” entities pursue dual objectives of making a profit and directly contributing a benefit to society (Ibero-American General Secretariat [SEGIB], 2021). This jurisdictional case study provides an overview and contextual analysis of the diverse range of fourth sector companies and “purpose driven” entities that exist in Canada, including novel “hybrids,” such as community interest companies and community contribution companies. In hybrid business entities, primacy in decision making is not given to increasing value for investors; rather, the decision makers strive to contribute to a social benefit or to a community cause as an end in itself. Whereas the “enlightened shareholder” approach to decision making in for-profit corporations aims to draw instrumentally on the insights of stakeholder theory for the long-term benefit of shareholders (Jensen, 2010), the decision makers of hybrid companies consider the interests of non-shareholder stakeholders in their own right.