Redefining Success in Business
Certified B Corporations Generate Profit & Provide Solutions to Social & Environmental Problems
Interview by Mishelle Oun with Katie Kerr
Issue 11 Winter 2012
Executive Summary
Our economy is structured in such a way that companies are encouraged to engage in business that first and foremost maximizes shareholder value. This often translates into practices intended to maximize short-term profits and growth with minimal regard for the long-term impact. Today, we suffer the consequences of this way of doing business, which has created a volatile economy, and has contributed to environmental degradation at the expense of the people and communities who consume the products and services.
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Introduction
Certified B Corporations operate with a new business structure that aims to generate profits while providing solutions to social and environmental problems. More commonly known as B Corps, they are driven by the belief that “all business ought to be conducted as if people and place mattered.” Well-known brands such as Patagonia and Etsy are on the list of over 550 Certified B Corporations across 60 different industries, all unified by a vision of redefining success in business. B Lab certifies B Corps through a process of assessment, qualification, and commitment to meeting rigorous standards, similar to the way that the United States Green Building Council (USGBC) certifies buildings with its Leadership in Energy and Environmental Design (LEED) program, or the way TransFair certifies Fair Trade coffee. In addition, Certified B Corps incorporate their missions and accountability standards into the legal framework of their articles of incorporation. B Corps meet higher legal accountability standards than traditional business, and provide transparency about their profitability as well as social and environmental performance. They match actions with words, discerning good companies from those with good marketing. Certified B Corps are leading a movement to not only curtail the shortsighted business practices of the status quo, but also to create a new sector of the economy with life-centered intent, in which profit, planet, and people all benefit.Catalyst SDR’s Executive Editor, Mishelle Oun sat down with Katie Kerr of B Lab to gain some insight about the role Certified B Corporations play in civilizing the economy.
Catalyst:Traditionally, the value and success of business in our economy is based primarily (if not solely) on financial profits. How are Certified B Corporations positioned to change this, and why is this important?
KK: B Lab aims to redefine success in business. Business is the most powerful man-made force and every action has a big impact on our environment. While government entities and nonprofit organizations are great, we need to get everybody involved in making a better world and that is where B Corporations come in. We are excited about the strong impact that these businesses have had in making the world a better place.
Catalyst:Catalyst Strategic Design Review advocates a ‘triple bottom line by design’ approach to business where societal, environmental, and financial profitability considerations are designed into a company’s business strategy. Does B Lab advocate the same approach?
KK: Yes, the whole point of B Lab’s B Corporation certification program is to incorporate these considerations into the very DNA of the company. We do not believe that financial profitability and consideration of people and planet are mutually exclusive. In our Annual Report, we highlight some of the “Rockstar” companies succeeding by the traditional definition as well as a more holistic, triple bottom line approach. B Corps demonstrate that we can create a both/and economy, not an either/or economy.
Catalyst: What types of businesses tend to become Certified B Corporations?
KK: We have over 550 companies, all across the map. We currently have more service than manufacturing or wholesale, for example, but the mix is constantly changing. We have lawyers, consumer products companies, business consultants, and industrial manufacturers among others. We would love to see more of everything. We want to represent the entire economy in order to create a new sector; diversity is important to that. So, the more, the merrier! B Lab would love to see larger companies taking this step. It is important to measure what matters, and our free B Impact Assessment and B Corp Certification helps with that.
“All business ought to be conducted as if people and place mattered.”
Catalyst: What are some of the tools that B Lab provides to help companies maintain standards of social and environmental performance while making profit?
KK: It starts with the B Impact Assessment, which any company can use as a tool to measure their social and environmental performance regardless of whether they pursue B Corp certification or not. The B Impact Assessment is based on company type and size, and measures a company’s impact in various categories related to transparency, corporate accountability, work environment, benefits and compensation to name a few. Each Certified B Corporation’s B Impact Assessment report and company profile can be viewed by the public on our website.
The assessment helps companies set benchmarks for their performance, and allows any company to track their progress and set goals to improve for the future. Some companies incorporate this into their Corporate Social Responsibility report or even use it as one. To truly create change, a company must measure what matters. B Lab works to facilitate that.
Catalyst: How do you promote awareness of B Corps to expand the reach of the movement? Will a tipping point be created by B Corps or by consumers?
KK: Every B Corp is increasing awareness of the vision of redefining business. Some tools they use include showing the B Corp seal on their packaging, communicating the B Corp message through blogs and email blasts and advertising with our B Corp community ad campaign. These companies also receive press coverage. As part of B Lab’s Communications team, it is my job to create awareness in the community-at-large through our own blogging, press relations and publications.
As far as creating a tipping point, there is no way to separate the two; it is really driven by both dedicated businesses and consumers. The business practices, products, and services that B Corps offer are something that consumers want. There are numerous studies about how consumers do not trust companies and are demanding more responsibility, transparency and third party certifications. People want this but have concerns about greenwashing. This is where B Lab likes to come in. We make sure that companies are maintaining transparency and practice in what they preach. There are companies taking risks and believing that this way of doing business is the right way. We need the companies that people can support but we also need consumers to be vocal and to shop with their values.
“We do not believe that financial profitability and consideration of people and planet are mutually exclusive.”
B Lab wants to increase awareness among companies and consumers that there is a better way to do business. There are certain companies that are walking the talk but we need everyone if we are going to create a global movement.
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CATALYST INSIGHT:
Business is the most powerful man-made force and every action has a big impact on our environment.
STRATEGIES IN ACTION:
Harness strategic design methods to encourage innovation through organizations.
Provide consumers with better choices for their purchases.
Create give freedom for the voice of the community to inform innovation.
Redefine success in business.
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Bio:
Katie Kerr works in communications at B Lab and blogs about B Corporations for care2.com and the change we seek. She is a graduate of Georgetown University, living and working in Berwyn, Pennsylvania.