CSR Matters: To "B" or Not to "B"... A Better Way to Do Business

04/20/2017 05:52 pm ET Updated Apr 21, 2017
<a rel="nofollow" href="https://www.bcorporation.net/" target="_blank">B Lab</a>

Here’s a challenge for you: ask five close friends or associates in your social network to list five ideal places to work if someone you know were trying to work for an organization committed to environmental justice and social well-being. For most of you, chances are that for-profit businesses would not score very high on your lists. What if I were to tell you that there’s a growing movement of socially-conscious businesses attempting to change that?

Recently, I attended an inspiring panel discussion in Washington, DC on Certified B Corporations® sponsored by Net Impact and B Local Mid-Atlantic. Certified B Corps are for-profit companies certified by the nonprofit B Lab® to meet rigorous standards of social and environmental performance, accountability, and transparency.

Featured on the panel were Mark Frieden, President, Crossbow Strategies; Carly Khanna, Chief Marketing Officer, AE Works; George Chmael, Founder and CEO, Council Fire; and Todd Wegner, Program Manager for B Corp Program, Laureate Education.

If you believe that combining corporate self-interest with support for social and environmental issues is nothing more than a costly distraction, I can assure you that these aren’t the people for you. Of course, I’d also tell you that your head is currently stuck in the sand!

As I’ve previously written, “Consumers are demanding more from the brands they buy —and increasingly are rewarding companies whose services and products are both good for them and good for society.”

To mark the occasion, Raffa -- an award-winning certified B Corporation in its own right -- produced a short video. Click here to watch.

Throughout the event, the panelists provided a thorough overview of B Corporations and the various benefits, opportunities, and challenges associated with this approach.

“At AE Works, we want to create a world where everyone is relevant by designing beautiful, functional and safe spaces for everyone,” noted Khanna. “In our approach to business and the services we provide, we consider both the environmental and social impact of our projects. Profits are a byproduct. What a wonderful world this would be if this was the norm.”

Added Chmael, Founder and CEO of Council Fire, which has been designated and honored as a “Best For The World” company three times: “Our higher purpose at Council Fire is to redefine profit and success in business by helping organizations 'operationalize' sustainability and apply innovative solutions to the most pressing economic, environmental, and social issues of our time.”

Chmael also pointed to a July 2016 report Council Fire prepared in collaboration with the Abell Foundation entitled “Bringing the B to Baltimore: Using B Corporations as a New Tool for Economic Development.” The report profiles five leading B Corps and makes the case for how economic developers, politicians, and policy-makers can stabilize and enhance local economies by investing in the growth and success of B Corps and benefit corporations in their business sector.

Added Frieden, “My consulting practice helps for-profit businesses increase their value, as well as their positive impact on the community and the environment. I’ve always been interested in the triple bottom line, which is why the B Corp certification resonated with me. Certified B Corp companies are held accountable to what they say they're doing in terms of treating their employees and customers well, respecting the environment, sourcing from responsible suppliers, and giving back to their communities.”

Raffa, P.C.
Raffa, P.C.

Wegner also brought up an important point about his desire to find work that’s meaningful, mission-driven, and in alignment with his values, which is a trait he shares with many in the space. Wegner noted, “When I first started grad school, I envisioned myself working for an organization whose mission and values aligned with my own, thinking I would most likely only find this at a non-profit organization. However, I started to learn more about the ethos and values of the growing B Corp community and started to see the positive impact that for-profit companies can have, filling voids that government and NGOs may not be able to fill. When I started the job search, one of the reasons I was attracted to Laureate was because of its B Corp Certification and Public Benefit Corporation (PBC) status.”

B Corp and Benefit Corporation are not synonymous terms

​Though the terms are often used interchangeably, there is an important distinction between B Corps and benefit corporations. A B Corp is a business that has successfully completed the B Lab’s independently-administered certification process. This is achieved by scoring at least 80 points out of a possible 200 in its Assessment (53 is the median score for a typical business). A benefit corporation is a for-profit company required by law to create general benefit, such as reducing carbon emissions, for society, as well as for employees and shareholders. In 2010, Maryland became the first state in the US to pass a statute creating “benefit corporations" as a result of legislation introduced by then-Senator Jamie Raskin (who's featured in the Raffa video). Groups such as B Lab and the American Sustainable Business Council have been instrumental in championing legislation for benefit corporations in 30 states as well as the District of Columbia.

Chmael reflected on whether he sees this as a trend, noting, “With growing attention being paid to longer term sustainability and strengthening local economies, I think more and more organizations will turn to this format. Programs like B Corps certifications and benefit corporations put definition and meaning to what sustainability is in the context of changing an organization’s operations. The more definition, the more momentum, the more recognition and attention we’ll see being paid, and in turn, organizations like ours will be able to demonstrate more tangibly why it’s in everyone's best interest to go in this direction.”

I couldn’t agree more with Chmael. I salute him and the others for being rock stars of a global movement of people using business as a force for good by adopting practices that positively impact their customers, their employees, the environment, and their communities at large.

If the fallout from the Wells Fargo fake accounts scandal, the trail of bad behavior by Uber, the demise of Theranos, and the video documenting United Airlines’ brutal treatment of a passenger is any guide, then the public has had just about enough of companies putting short-term profits ahead of people and principles.

Here is a list of “Five Reasons B Corporations Matter.”

  1. As B Corps, companies differentiate themselves from the competition by showing they "walk the walk" of social responsibility. A Global Strategy Group study found that “81% of Americans believe that corporations should take action to address important issues facing society; 88% believe corporations have the power to influence social change.”
  2. B Corps meet the highest standards of verified social and environmental performance, public transparency, and legal accountability. 90% of Americans say that “companies must not only say their product or service is beneficial but also prove it" (Cone Communications). 66% of global consumers will pay more to support companies that are committed to making a social and environmental impact (Nielsen Global Corporate Sustainability Report). As corporate executive Richard Stammer noted in the Harvard Business Review, “While consumers are clearly rewarding values-based businesses, there’s a very big catch: consumers are not accepting brands’ social and environmental claims at face value.” This means that companies must take steps to convince consumers that they “authentically demonstrate commitment to social and environmental impact in order to build consumer trust and business value,” according to the Nielsen study.
  3. B Corps lead a global movement to redefine success in business. According to the B Corporation site, more than 2,000 B Corps in 50 countries representing more than 130 industries have been certified. Becoming a B Corp lets companies join the ranks of those, such as Patagonia, Ben & Jerry's, and Kickstarter, that are also doing great things.
  4. B Corps have a leg up when it comes to attracting, engaging, and retaining talent. 93% of employees want to work for a company that "cares about them as individuals," and 74% say their job is more fulfilling when they are provided with opportunities to make a positive impact on social and environmental issues (Cone Communications).
  5. B Corps appeal to Millennials who care about more than a single bottom line. Millennials will soon make up 50 percent of the workforce and will account for 75% of the workforce by 2025. According to Cone Communications, 76% consider a company’s social and environmental commitments when deciding where to work (as opposed to 58% of all American workers). 75% would choose to work for a socially responsible company even when the salary is lower than at other companies (as opposed to 55% of all American workers).

Follow Ryan Rudominer on Twitter: www.twitter.com/rrudominer

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