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B Corporations: Giving business a soul
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There are some new kids on the block and they're called B Corporations.B Corporations are radically different from traditional companies because they allow socially motivated entrepreneurs to embed social responsibility into the DNA of their business.
By requiring directors to at least consider the impact of their decisions not only on shareholders, but also on employees, suppliers, community and the environment, social entrepreneurs can structure their business model to minimize their carbon footprint and maximize their investment.
If it sounds too good to be true, it isn't. Someone is actually taking the big environmental picture and breaking it down into bite size pieces, at least where business is concerned.
The effect is profound. The B structure helps companies maintain their social mission on a day-to-day basis as well as when they go through management changes and investment offers.
Let's face it: business drives the economy and the quality of our communities. The current economic crisis is proof that 'business as usual' is dead. Old methods of conducting business must change if we are going to rebuild our economy, which means there is a gigantic opportunity to create new methods of doing business. It's a new day and we need a new economic standard.
Enter B Corporations.
B Corporations are the brainchild of founders Jay Coen Gilbert, Bart Houlahan and Andrew Kassoy. It's part of an ambitious effort designed to use the power of business to solve social and environmental problems. And Kassoy knows a thing or two about the power of business - in his past professional life, he helped manage billions of dollars for computer magnate Michael Dell.
According to co-founder Bart Houlahan, B Corporations stand on a three-legged stool. Leg one is standards. Leg two is legal. Leg three is the brand.
B Corp certification is managed by B Lab - a nonprofit headquartered in Berwyn, Pennsylvania. In order to earn the right to use the certified B Corp Seal, first a business has to score 80 points on the 200-point B Ratings System, which relates to the company's social and environmental performance. Second, they have to agree to amend their corporate governing documents to hold directors accountable to stakeholders.
Certification is online; it's transparent; and anyone can do it.
Hardik Savalia, one of B Lab's associates, says that B Corp Certification differentiates companies 'walking the talk' from companies claiming to be green or socially responsible. This isn't just good news for consumers, but also investors and policymakers who want to support 'responsible businesses' but don't know how to identify them.
"Our space has done some great work in the past thirty years to set product specific standards and reporting principles. And we now have an opportunity to create common standards and ratings looking at the whole business," said Savalia.
Currently, B Corp Certification is just that: certification. But their work is more of an infrastructure play than anything else. Already, B Lab is laying the foundation for states such as California to say: we need to legally recognize and support these mission-driven corporations.According to Savalia, there are three states actively pursuing legislation for a new corporate form: California, Colorado and Vermont. Four other states have begun similar conversations: Delaware, New York, Pennsylvania and Washington.
As far as nonprofit organizations, B Corporations can provide a way for nonprofits to live out the values they believe in. Case in point: Greyston Bakery.
The Greyston Bakery is a $6.5 million for-profit enterprise started and owned by the non-profit Greyston Foundation that has been producing brownies, cakes and tarts for twenty-five years. (They produce all the brownies for Ben & Jerry's line of ice cream.)
The bakery hires and trains men and women who have little or no credentialed work experience, many of whom have come to Greyston with backgrounds that include homelessness, incarceration, substance abuse, welfare dependence, domestic violence and illiteracy. All of its profits go to The Greyston Foundation, which operates several intensive self-sufficiency programs in Yonkers, New York.
So who else is a B Corp? Presently, there are 215 B corporations in the U.S. & Canada, 65 of which are operating in California, and eight of which are based in Los Angeles.
If you cruise over to the B Corporation website, you'll find a B Community and Find a B directory. Just plug in your city or other keywords and certified B companies will pop up.
If the economic crisis has shown us anything, it's that business needs a soul. At B Lab, the question becomes how do we help entrepreneurs maintain the soul of their companies over time.
For more info: B Lab, 8 Walnut Ave., Berwyn, PA 19312, Phone (610) 296-8283
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Socially Motivated Business
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