How B Corps Are Changing the World...and the World of Business
You’ve probably heard of the new kind of corporation that’s using business as a force for good. NPR, The New York Times, Entrepreneur Magazine, Fortune, the Atlantic Monthly and many other major media outlets have covered these Benefit (B) Corporations.
Yet, even with all of the media coverage, many consumers and even investors still wonder what sets B Corps apart from other businesses, how much difference B Corps make and whether it’s possible to make a profit while doing what’s right.
What Makes B Corps Different
B Corps are for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. Globally, there are more than 2500 Certified B Corps from 50 countries and over 130 industries working to redefine success in business.
Certified B Corps take a pledge that states, “We believe: That we must be the change we seek in the world. That all business ought to be conducted as if people and place mattered. That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all. To do so requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations.”
Adding verification to this pledge, Certified B Corps get audited by the nonprofit B Lab on numerous criteria “for social and environmental performance, accountability, and transparency,” B Lab explains. Certified B Corps must be incorporated as a Benefit Corporation or Public Benefit Corporation (not a C or S Corp) with the applicable government organization (the state level in the U.S.), which provides the company with the legal protection to consider all stakeholders, not just shareholders. This is critical, since traditional corporate structures compel companies to put shareholders ahead of other considerations, including social or environmental values.
Ultimately, what makes a B Corp different from and more impactful than a traditional corporation that’s trying to do good (by giving away some money every year, volunteering, etc.,) is that for B Corps, doing what’s right is the reason that they exist. It’s built into their legal structure, their mission, and their values. It’s why the investors bought into the company. It’s why employees and customers stick around. And it’s what’s required of B Corps during the B Lab annual audits.
Examples of B Corps and Their Positive Impacts
There are more than 2,500 Certified B Corps in the world, according to B Lab, all making a difference. Here are a few examples:
Facilities Management Services PBC (FMS) was one of the first B-Corps in Kentucky. Scott Koloms, President and owner of FMS, envisioned “a company that worked just as hard making the world the world a better place as it did being efficient and profitable. We want to show that positively affecting people’s lives beyond a pay check and positively affecting communities can lead to long-term financial success…for everyone.” FMS drives a number of social benefit programs including food-access initiatives, college-level educational opportunities, paid volunteer time and financial literacy assistance for its employees. Further, FMS works to create healthier, safer and cleaner neighborhoods where it does business. In the end, FMS enjoys lower turnover and consistent growth thanks to like-minded customers that believe in and share FMS’ values.
Australian company Gideon Shoes is another example of a company breaking the mold to do the right thing. Profits go to their nonprofit Street University, an educational facility for disadvantaged youth. And in order to do the right thing, the company makes the shoes in Australia because it could not find the right factories anywhere else. “It is just as pointless donating a pair of shoes to a person in need, whether a child or adult in the third world, if you’re creating suffering during the process of production. We believe that countries such as China, India and Africa are used as slave nations for the developed world. It’s something we, as the developed world, are largely ignorant about. It’s harsh but it’s true…. We challenge the idea that sweatshops are a natural part of the modern world, just as William Wilberforce rejected the notion that slavery was a part of the 18th century economy.”
B Corp Eminence Organic Skin Care makes skin care products free of parabens, animal by-products, propylene glycol, sodium lauryl sulfates, harmful colorants and fragrances, mineral oils, petroleum, and other harsh cosmetic chemicals. Its farmers follow crop rotation, companion planting, composting and other techniques to keep the soil and planet healthy. Additionally, as explained in its B Lab profile, the company gives back by working with nonprofit Trees For The Future to plant trees and create new food sources in developing countries, and has planted more than 10 million trees so far. The company also established the Eminence Kids Foundation to provide organic meals to sick children worldwide.
Thrive Impact Sourcing describes itself as an IT talent incubator delivering locally sourced IT solutions to clients. What sets this B Corp apart is that it partners with a non-profit to provide free training to unemployed and low-wage workers and then offers full-time positions with the company after successful training. “By engaging with us, clients contribute to growing a local talent pool of IT professionals to close the skills gap in our marketplace, while meeting critical business needs,” explains the company on its B Lab page.
B Corps and Profits
Doing the right thing wins employee and customer loyalty for B Corps, which, in turn, affects the company’s profits in a positive way.
Says Ben Reno-Weber, founder of Kentucky-based B Corp MobileServe: “I get super-heated by people who are like, ‘Well, you know, you reduce your profit margin.’ Bullsh*t. It [operating as a Certified B Corp] is not reducing my profit margin. I intend to absolutely have a 90-percent margin company selling a tech product that makes the world a better place — there's no trade-off there.”
Koloms says that FMS has an easier time with employee recruitment, lower employee turnover, and more engaged employees. The company’s turnover went from 120 percent to 69 percent in 2.5 years since implementing the B Corp mission — phenomenal compared to the industry’s average turnover of 250 percent. He also says companies have hired FMS specifically because of FMS’ B Corp status.
Numerous other B Corps are finding the same types of successes. As Ben Summons, Managing Director of B Corp Stone & Wood Brewing Company said at a B Lab gathering, “Shareholders are still an important part of the business. Unless you're profitable you can't fulfill your ultimate purpose.”
Make a Difference Yourself
A simple way for you to be the change you want to see in the world is to support B Corps with your business. “Buy from certified B Corps. You can find a list of Kentucky B Corporations on B Lab as well as a worldwide listing,” Koloms says. As of January, 2018, there were five Certified Benefit Corporations and six Public Benefit Corporations in Kentucky.
To leverage the power of do-good businesses, Koloms, Reno-Weber and others have worked to create Canopy, a nonprofit that supports socially responsible businesses in Kentucky by growing their impact through education, certification, and advocacy. Canopy is creating a strong network of socially-conscious and impact-driven businesses that work to make lives better in Kentucky. Koloms envisions working with the state of Kentucky to solve real social issues: “We know the list of social ills that we face in terms of poverty, education and addiction — all around our state.” He says that Canopy-Certified companies, will align “with the needs as identified by our governor and our mayors….to focus on social ills and measure the impacts of what we can do together as a team.”
If you would like to learn more about socially conscious business models consider becoming Canopy-Certified. Canopy can help you make the most impact through your business. Its mission is to create a one-stop shop with all of the resources you need, including access to mentors, nonprofit partners, social investors and Kentucky’s influencers.
Written by David Oetken