An Introduction to the Power and Promise of the B Corporation
By Dante’ A. Clemons
B Corporations are innovative entities that utilize the power of business to solve social and environmental problems. Simply stated, B Corporations merge the strategy of a sustainable business with a for-profit mission. Currently, there are over 255 B Corporations representing more than 54 industries. Corporations range from skateboard manufacturer Comet Skateboards to ‘cradle-to-cradle’ home-cleaning giant Method.
B Corporations are the product of an organization called the B Lab . Launched in Pennsylvania in 2006 by friends Jay Coen Gilbert, Bart Houlahan, and Andrew Kassoy, the B Lab is managed by multiple independent stakeholders . A nine person Standards Advisory Council (SAC) oversees the certification ratings for B Corporations. The SAC members are a composition of thought leaders, social entrepreneurs and professionals with expertise ranging from environmental sustainability to community engagement. B Corporations aren’t designated by the U.S. Federal Tax Code, although there are developments unfolding which may change that.
To receive B Corporation designation, a corporation must adhere to standards established by the B Rating System. Governed by the SAC, the B Rating System is similar to what Leadership in Energy and Environmental Design (LEED) is for the building industry. The B Ratings system more definitively evaluates a company’s mission and connects those values to corporate social responsibility and practice. The SAC requires the completion of an Impact Assessment test, which evaluates a company’s initial triple bottom line position. The survey result, called an Impact Report, delivers recommendations on how the company can improve its social and environmental performance. Questions and recommendations vary based on the organization’s industry and size.
Second, an organization must modify its corporate governing documents (Articles of Incorporation, Partnership Agreement etc.) to include the wellbeing of employees, the community and the environment. This is a critical component of the process to receive B Corporation designation. This one step ensures the company will continue to operate under sustainable principles even as leadership and ownership evolves. Lastly, the corporation must pay the appropriate fees and sign the Declaration of Interdependence as an outward symbol of their internal commitment to the cause.
There are several benefits of having a B Corporation designation. Foremost, it communicates to consumers, investors and competitors that a corporation’s sustainable values extend from its surface into its core. B Corporation designation separates companies that are responsible from those that pretend to be, helping to protect consumers from greenwashing. The B Corporation community is also an asset to entrepreneurs and investors, linking both hundred million dollar companies and start-ups united by the same pledge: “through their products, practices and profits, businesses should aspire to do no harm and benefit all.” Investors and consumers who are committed to supporting the sustainable business industry can utilize the B Corporation’s network of like-minded for profit entities. With estimations of reaching 5 to 7% of the U.S. Gross Domestic Product (the size of the current non-profit sector) in a generation, B Corporations are redefining what it means to be a successful triple bottom line entity in the 21st century.
