Social entrepreneurship is evolving into a global movement, and it’s rendering the standard nonprofit/for-profit dichotomy obsolete. Now, new legal structures and certifications are being built to accommodate for businesses with embedded social missions. Leading the way in this movement is the B Corporation (B Corp), a new kind of certification created by the nonprofit B Lab that enables companies to “meet rigorous standards of social and environmental performance, accountability and transparency.”
(B Corp, it’s important to note, is different than Benefit Corporation, a legal incorporation that allows companies to consider non-financial, social outcomes-based motives when making decisions, a fact that is written into legal documents during incorporation.)
With more than 770 certified entities in 27 countries, the B Corp is giving “business as usual” a socially-focused and sustainable twist.
At the recent Ashoka Future Forum, we sat down with key leaders in this field to get a sense of exactly how B Corps are creating the corporation of the future.
“Businesses are legally obligated to be empathetic”
Jay Coen Gilbert could have gone on for hours about the mission, statistics and societal implications of B Corp and I don’t think anyone in the room would have minded. As co-founder of B Lab—the nonprofit that currently puts all potential B Corps through a rigorous financial and social analysis—Gilbert is full of insights on why this new certification is an important form of corporate branding.
“The last 20 years was about identifying good products through certifications like ‘organic’ or ‘fair trade’, but the next 20 years will be about identifying good companies,” he said. In other words, while capitalism in the 20th century was about maximizing shareholder value, capitalism in the 21st century is about maximizing “shared” value, a kind of collective value that is centered on empathy.
Greyston Bakery CEO Michael Brady explained the perspective shift B Corp has brought about. “We don’t hire people to bake brownies,” he said, “we bake brownies to hire people.” Greyston Bakery, through a partnership with Unilever, is the source of Ben and Jerry’s Chocolate Fudge Brownie—they make that perfect brownie batter ingredient.
Even better than the batter, Greyston creates jobs for people in low-income areas, who make up 80 percent of his staff. That impact is exactly what the B Corp status highlights to the rest of the world. The certification has redefined “social business” to mean that the entirety of the company is functioning with a bottom line of shared value: focusing on people, not just profits or products—in this case, brownies.
“Screw business as usual”
Michael Elsas is the president of the Cooperative Home Care Association, an organization that gives 85 cents of every dollar earned to its workers. “We care about the quality of the product but also about the quality of life of the worker,” he said, adding that CHCA has quadrupled in size in the last few years on tight margins. Businesses will grow when you care about the people that work for you. It’s as simple as that.
Millennial workers (who really think they can make a difference) make up half of the global workforce, so these “better business” efforts are not going unnoticed. Suddenly, there’s been an evolution in expectations in the marketplace—consumers have responded by setting higher standards through their purchasing preferences.
Greyston’s Michael Brady speculated that when consumer behavior change reaches a tipping point, the companies that are still trying to maximize profits will feel a loss of marketshare. Corporations will practically be forced to embed social values into the core of their models.
B Corp-certified companies have proven (and will continue to prove) that they can make a profit while creating meaningful social impact, which gives them a competitive advantage.
“We need to distill the chaos”
This is all fine and good, if it’s actually working. But there still seems to be a disconnect between consumer intent and actual consumer behavior.
As Ashoka Fellow Michelle “Mitch” Hedlund pointed out during the Future Forum session, consumers very much want to do the right thing, but getting the clear, correct information to guide split-second decision-making is the challenge. “We need to distill the chaos,” she said. “The part of the conversation that is missing is the information to allow people to act on their good intentions.” Hedlund, who herself works on demystifying information about “green” products, posits that this will influence real, long-term behavior change on a societal level.
Which states have passed B Corp legislation?
Grant Garrison, as the co-founder and director of GOOD/Corps—set to officially become a B Corp on July 1st—understands how to combat the disconnect between messaging and consumer action. GOOD/Corps, GOOD LLC’s media-for-change consultancy, was created to not only help companies drive meaningful campaigns and position themselves as corporate social responsibility mavens but also to help nonprofits and causes strengthen their relationships with corporations to create lasting impact.
With campaigns such as the Pepsi Refresh Project, Starbucks SBUX +0.01%‘ “Vote.Give.Grow.” and the Google GOOG -0.63% anti-piracy effort under his belt, Garrison has a unique lens into what actually influences consumer audiences.
“You have to do some gentle hand-holding and provide small amounts of guidance,” he said of directing customers through this cause-related chaos.
Consumers won’t act if pushed; they have to be presented with all the information in order to help them make incremental changes that will lead to new habitual preferences, which can shift profits ever so slightly to favor social outcomes.
Does it matter?
At the end of the day, we have to evaluate how much service and activism matter in our lives as consumers. If the brownie tastes the same, does it matter that it was made by workers who have been given a second chance and are also being treated well on the job? Well, here’s another way to put it: if the brownie is going to taste the same either way, and the price is comparable, why wouldn’t we choose to support a good cause?
The B Corp is “a tool among many tools, not the be-all, end-all of social branding,” Ashoka’s in-house legal counsel Jonathan Ng said. He feels that it’s about making informed choices as a consumer and using a variety of resources and methods to determine those choices. B Lab’s certification process is yet another helpful way to brand a for-profit company as having a triple bottom line, inside and out.
Be-all, end-all or not, it’s certainly becoming a powerful stamp of approval. Suffice it to say that the more companies that become B Corp-certified in the marketplace, the easier it will be to act on our good intentions.
Photo courtesy of Eugene Chan of Hub Bay Area