Consumers are constantly bombarded with product claims, from USDA Certified Organic to Fair Trade Certified. But how do they measure the values of the company behind the product?
“Over the last 10 years, we’ve seen standards focused on good products,” said Jay Coen Gilbert, co-founder of B Lab, a nonprofit organization dedicated to harnessing the power of business to address the world’s most pressing challenges. “In the next decade, we’re going to focus on good companies.”
Gilbert examined “The Promise of the B Corporation in Georgia,” during a Feb. 8 talk at Emory University’s Goizueta Business School. His keynote address was the highlight of a two-day B Corp forum that convened leaders in the nonprofit, political, business, and academic communities. Sponsored by Social Enterprise @ Goizueta, Stites & Harbison, PLLC and Better World Books, a certified B Corp based in Alpharetta, the event examined the emerging influence of B Corps and the related corporate structure called benefit corporation, which look beyond the bottom line to help solve social and environmental problems.
CLICK HERE TO WATCH THE KEYNOTE VIDEO
“While the B Corp movement is still fledgling, it’s very encouraging to see this level of participation,” said attendee Ayesha Khanna, president of the Civic Incubator for the Points of Light Institute, which has developed a curriculum for nonprofit and for-profit companies to engage in social change.
Over the last five years, more than 500 B Corps representing nearly $3 billion in revenue have been certified from 60 industries across nearly 40 states, including six in Georgia. Seven states have passed related legislation recognizing benefit corporations as a distinct legal entity, and Georgia political leaders are expected to weigh similar changes in the 2013 legislative session. Energizing the movement are 60 million socially conscious consumers and 2.7 trillion dollars of socially responsible investment capital, Gilbert said.
Despite those gains, he disputed the use of the word “promise” to describe the opportunities presented by B Corps.
“Promises are two things for me — empty or broken,” he explained. “What I do think matters is performance. Performance can be measured and performance can be improved.”
B Lab has developed a rigorous 200-question B Impact Assessment, rewarding businesses for contracting with diverse suppliers, conserving energy, encouraging employee ownership and improving the quality of life in their communities. Companies garnering a score of at least 80 are eligible for certification, and those who are certified are subject to random audits of their performance. Ratings are available for public review at http://www.bcorporation.net.
Companies must also amend their bylaws to “consider the impact of decisions not only on shareholders, but on all stakeholders,” said Gilbert, who also co-founded AND 1, a $250 million basketball footwear and apparel company.
Currently, B Lab is the only organization to formally certify B Corps in sectors as varied as clean tech and microfinance. The company also works to accelerate B Corp growth by advocating for supportive legislation and connecting entrepreneurs with venture capital.
Gilbert noted that traditional capitalism is focused on maximizing shareholder gains, while corporate law actively works against companies that promote sustainability and social impact.
“The rules of the game are starting to change not through regulation but through the marketplace,” he said, adding that B Corps often rely on other B Corps for services at a discounted rate.
Business must take the lead in responding to systemic social and environmental issues, because governmental and nongovernmental organizations are ill-equipped, said participant Lane Moore, executive chairman of Rubicon Global. The Atlanta waste management company is in the process of applying for B Corp certification.
“Society is not demanding perfection today,” Moore added. “Consumers just want companies to do more than they were doing yesterday.”
Gilbert offered several examples of “high growth, high impact” companies that are able to turn a profit and compete on price, quality and service.
He cited Revolution Foods, an Oakland, Calif. food service company that has grown exponentially since its founding in 2006. Revolution provides healthy lunches for schoolchildren, offering a nutritionally superior product at 10 percent below the federal reimbursement rate, Gilbert said.
Other highlights from the B Corp forum:
- Gilbert led a roundtable discussion with eight MBAs and Laney Graduate School students, examining the B Corp as a viable business model.
- Investment managers explored the uncertain yet exciting future of the impact investing movement.
Social Enterprise @ Goizueta seeks to lead discussions about potential market-based solutions such as B Corps to address society’s biggest challenges. For more information on Social Enterprise @ Goizueta, visit http://socialenterprise.emory.edu/.
– Margie Fishman