As small, socially responsible businesses gain attention, some large corporations start to take notice, and in some cases take over (See, for example, Ben & Jerry’s, Tom’s of Maine and Burt’s Bees.)
To help companies maintain their morals in the face of corporate takeovers, and to attract socially responsible investors and consumers, a nonprofit called B Lab has created B Corporation, where the 'B' stands for beneficial (to the business, public and environment).
B Corporation is a certification for business that are “purpose-driven” and that want to create benefits for all stakeholders (employees, the community, the environment, ect.), not just shareholders. And in a time when every business wants to at least look like they’re going green, this certification could be essential for socially responsible investors and consumers who are trying to differentiate “good companies” from “good marketing.”
The certification was created to help companies interested in the triple bottom line have the best of both –profit worlds. As a “for-purpose” business, B Corporations can reach beyond the capital limitations of the nonprofit world, and also the constraints of having to appease shareholders or investors as a for-profits.
In the words of B Corporation’s co-creator Jay Coen Gilbert:
"We are witnessing the birth of a new sector of the economy between the private sector and the nonprofit sector," Coen Gilbert told the SF Chronicle. "Our grandchildren will be talking about this new sector the way we talk about the nonprofit sector. ... Eventually it will be 5, 7, 10 percent of GDP. And unlike nonprofits, it will have the ability to scale up from there because it can attract capital. There will be a social stock exchange, lower capital gains taxes for investing in these companies, and government procurement preferences. All of that is going to happen - but for it to happen, we need to create some standards.”
And what he means by creating standards is their certification system, which allows businesses to prove their intentions to operate in socially and environmentally responsible ways to investors and consumers.
“As a B Corporation, you differentiate your business from the growing barrage of green- and cause-marketing campaigns and stand out as a leader in the market, creating a clear path for others to follow,” states the organization. “You also embed your values into your corporate governing documents so they can survive new investors, new management and even new ownership.”
To become a certified B Corporation, applicants must score above 80 points on a 200 point test, and must amend their articles of incorporation to say that managers must consider the interests of employees, the community, and the environment instead of worrying solely about shareholders.
The SF Chronicle reports:
Method filled out B Lab's scorecard and received a grade of 128.7 out of 200, well over the passing score of 80.Similarly, Numi Tea - which sells organic, fair trade teas from more than 25 countries - scored a 101.2 and became a B corporation.
Companies like Numi, Method and Give Something Back say they were attracted to the B corporation idea partly because of its potential to help them attract investment capital without jeopardizing their ideals.
Some are comparing the certification system to the LEED certification for green buildings or TransFair's certification of fair-trade businesses.
It will be interesting to watch as this certification gains popularity -- more than 100 businesses currently have B Corporations status, such as New Leaf Paper, Comet Skateboards and Dansko.
Will other organizations start labeling efforts? Will corporations try to gain certification for less than purpose-driven reasons (As this Inc.com article points out, corporations could score higher in social areas and lower in environmental stewardship and still make the cut.)? Will their amendments hold up in court?
As businesses continue to evolve to fit our demands for more social responsibility, only time will tell.
