Why We Need B Corps Now More Than Ever
The B Corp movement has shaped my career in hugely positive ways, and in turn, I hope I have helped to shape the movement. As a founder and former CEO of one of the earliest Certified B Corps and more recently a Global Ambassador for B Lab and co-founder of the B Corp Climate Collective, I’ve always believed in the promise of the B Corp movement, that it could move companies — and even whole economies — towards being a force for good.
But what does the future hold for it?
An article in last week’s Financial Times (The struggle for the soul of the B Corp movement | Financial Times) highlighted concerns of early adopter SME leaders who perceive that newly B Corp-certified multinationals might be just “less bad” rather than transformationally “good.” It also drew attention to the revisions that B Corp is making to its certification standards. While the title of the article was a bit sensationalist, overall it was a very fair and balanced piece and raised some important, even existential, questions for B Lab (the global non-profit behind the B Corp certification) and the B Corp movement:
- Should multinationals be aspiring (or even allowed) to be B Corps?
- Do the B Corp standards measure up to the dire circumstances our society and planet face today?
The truth is that B Lab and the B Corp community have been actively wrestling with both questions for years.
The answer to the second question is far more important, in my opinion, and the answer to it drives how I might answer the first.
When the company I co-founded first certified as a B Corp in 2008, there were less than 150 B Corps worldwide. There are now over 6,000. Then, and now, the vast majority of B Corps are mission-driven SMEs. As far as for-profit companies go, most of these companies have purpose deeply baked into how they operate, and I can say truthfully that in my experience and knowledge of them, they are earnestly striving with integrity and transparency, to build businesses that do good in the world, not just do less harm.
From my very first encounter with the B Corp movement, meeting co-founder, Bart Houlahan, at the Outdoor Retailer Trade Show in 2006, I have been smitten. The B Corp model drew me in.
During our meeting, Bart shared a vision for a new economy where companies like the one I had co-founded could break trail for others in the forging of a new and better way to do business and an economy where people and planet truly mattered, as much or more than profit. I loved that the B Corp standard looked holistically at a company, not just superficially at its recycling policies or employee volunteerism, however important those are.
I’d been trained at the high altar of traditional shareholder capitalism, but even when I was a starry-eyed Harvard MBA candidate, I knew there had to be a better way. I always believed that a truly “good” company understood its broader role in this world, not just to make money but to care for its key stakeholders. In the B Corp standard, at last I saw it all brought together under one banner, the B. We became one of the first Certified B Corps in 2008.
It wasn’t just the B Corp-inspired operational improvements that changed us, it was also that we became part of a vibrant global movement of leaders with a deep belief in the power of business to change the world for the better.
The B Corp Standard
The B Impact Assessment (BIA), the backbone of the B Corp certification, is a holistic and objective measure of a business’s positive impact on society and the environment. It’s available through a free, confidential, online, easy-to-use platform available for anyone at bimpactassessment.net, and it is the most commonly used impact measurement tool in existence with over 150,000 companies globally using it to measure their impacts.
Through our years as a B Corp, my company took the B Impact Assessment many times and each time we learned something new; we found practices and policies that could be instituted to make us better as a business in terms of how we treated our workers, our community, our suppliers, and the environment. The B Impact Assessment (BIA) asks a battery of over 250 questions across different operational areas of the business, and many of them require substantive measurement and change management to be able to provide the level of performance, verification, and transparency the standard requires.
The questions asked in the BIA are best-in-class in terms of the broadest set of practices required if a company is committed to corporate social and environmental responsibility. It’s also a standard oriented around a long-term learning and improvement journey. No “one and done” here, the standard has gotten more difficult to meet as new and improved versions have been released every two years.
Amidst the myriad of “good, better, best” questions, however, there was no requirement that a company meet baseline practices on critical issues such as climate action or fair wages. The BIA’s flexible approach was valuable in the early years as the standard got off the ground to help normalize the practices across size, geography and sector and to give companies the ability to achieve B Corp status with some flexibility around what impact areas they chose to emphasize. Comprehensiveness and flexibility, but at what expense?
To become certified and to maintain that certification often took months of my time and other people’s time on my team. That’s a lot to ask of any company, let alone an SME often in a struggle to compete and stay financially viable. It’s also reasonable to argue that B Corp certification has been awarding companies with a credible trust mark for doing lots of little “good” things instead of what’s most critically needed in the world. To put it more plainly, any standard that requires a business to jump through resource-sapping hoops in the name of “good” while drawing attention away from the most critical performance issues is at best a distraction and at worst an insidious kind of greenwashing.
Understandably, the B Corp standard has begun in recent years to be scrutinized, with many critics arguing that the standard is bloated and overly broad while not doing enough to address issues like climate change or economic inequality. Other critics have argued that the standards are too focused on individual company practices, rather than broader systemic changes. Both critiques are valid.
The New B Corp Standard
In December 2020, B Lab announced a review of the B Corp Certification performance requirements. The aim was to understand whether more specific and mandatory performance requirements on specific topics could ensure that B Corp Certification could continue to differentiate leading companies that are using business as a force for good.
Thankfully, the draft of the new standards B Lab recently released emphasizes and further develops 10 topics (that are already touched on in the existing standards) that are universally applicable and relevant towards achieving an inclusive, equitable, and regenerative economy. The new standards will still offer access to a comprehensive set of good/better/best practices that enable a company to take a holistic approach to using its business for good, but importantly it also has also defined a set of non-negotiable requirements for achieving certification — including taking concrete climate action, paying workers a living wage, and using the business’ brand voice and power for collective action and advocacy.
The new B Corp standards are expected to go live in 2024. In my view, the changeover cannot happen fast enough. These changes to B Corp performance requirements were needed long ago, and their arrival may just save the B Corp movement from irrelevance in the next decade.
I applaud these changes, and I’m impatient for them to go live. There are many leaders whom I deeply respect who say that these changes don’t go far enough fast enough, or that they’re still too complicated and fail to see that the most important thing companies should be doing is aggressive climate policy advocacy and public activism. Auden Schendler, for example, who leads sustainability efforts at Aspen Skiing Company, believes that most corporate CSR and sustainability efforts are not only fundamentally flawed strategy (akin to moving deckchairs) but are also complicit in propping up the fossil fuel industry and a broken capitalist system. But that’s a topic for another article….
Progress over Perfection
Let me be totally frank: despite all of the corporate progress (and hullabaloo) these past two+ decades, there is not a single truly sustainable company on the planet — yet.
Sustainability is a complex and multifaceted concept. While many companies have made strides in recent years towards improving their sustainability practices, no company is completely sustainable across all aspects of its operations. Sure, lots of great companies (most of them B Corps) are working hard on it — and many are excelling in certain areas (patagonia and their vital work using their brand to advocate for policy change, Dr. Bronner's pioneering work on regenerative organic agriculture, @Greyston Bakery and their amazing work in open hiring, @Natura and their deep work with indigenous Amazon communities towards a bioeconomy, and so many more examples). But literally NONE is perfect. And none have figured out full spectrum, long-term sustainability, let alone regenerative (net positive) models.
In other words, no company operating today is perfect. Why hold the notion of perfection out there when what we really need is demonstrable progress?
Perfection is an impossible bar — and is the enemy of progress.
Shaming and exclusion of companies seeking to be and do better, whether Nespresso or any other company, is not helping.
How can we achieve the future we know our kids deserve if we shame and exclude those companies we most need doing the heavy lifting of decarbonizing the economy and fixing the inequities of our broken economic system? It’s one thing for well-meaning SMEs to do their part. It’s an entirely other thing for large multinationals — with their high emissions and enormous employee bases — to do the right thing.
Don’t get me wrong: it is not only legitimate but necessary for us to criticize a business when it harms people or the planet. But let’s do it in a way that keeps them at the table making progress, and then applaud them when they get things right.
Every Minute Counts
Most climate scientists agree on how urgent the situation is, and that every minute counts, literally, in terms of the changes business must be making now across every sector to make measurable dents in our greenhouse gas emissions. @John Doerr’s book “Speed & Scale: An Action Plan for Solving Our Climate Crisis Now” makes clear how the climate crisis is the biggest challenge facing humanity, and it requires urgent action on a massive scale. The consequences of inaction are severe, and we need to act now to avoid the worst outcomes. The solutions to the climate crisis already exist, but we need to scale them up rapidly. This requires a coordinated effort from governments, businesses, and individuals.
There is a time value of carbon, and every change we make now can bend the curve to help us get faster to the point of atmospheric “drawdown”. This is the point at which levels of greenhouse gasses in the atmosphere stop climbing and start to steadily decline, thereby halting catastrophic climate change impacts — and consequential devastating impacts that would mean for all life on the planet.
Perfectionism is the enemy of progress. It’s also the enemy of speed and scale.
Large Companies Must Be a Part of the B Corp Movement
When we combine the planetary need for concrete progress delivered at speed and scale, it becomes clear that we need companies of ALL sizes, sectors and geographies doing their part individually and collectively to solve the many crises we face. Tapping into the scale of innovation that’s needed to convert our economy to a just, equitable, and regenerative one is the definition of an “all hands on deck” moment. And it requires that the largest companies on the planet play an essential role in that transformation.
As part of my work with Leaders’ Quest, I have the privilege of working closely with a wide range of large multinational and public companies. What I’ve observed in working with each of them is that there’s a deep-seated desire among their leadership to do the right thing. They are committed despite regular pressure and criticism they face from all directions, from angry shareholders hurling rocks at what they decry as “woke capitalism” to activists calling them out for not doing enough fast enough — or getting some things wrong.
It’s a difficult position to be in. But what I see is them just working harder. Even when it’s an uphill battle, and typically without a clear roadmap for an entity of their complexity or sector, to go from degenerative to sustainable to regenerative.
That is why we need credible social and environmental benchmarks for multinational and public companies now more than ever, even imperfect ones. We cannot expect to solve the problems that are caused by business when the companies most committed to doing the right thing don’t have guidance or pathways. The B Impact Assessment is such a roadmap.
Despite my criticism of the standard noted above, the B Impact Assessment is the closest thing that exists today as a roadmap for businesses of any size to transition to a regenerative business model. B Lab has even gone one step further and offered more specific guidance and a pathway for multinationals and other large enterprises to make the best use of the B Corp standards. And with the upcoming changes to the standard, the BIA will become even more essential for businesses as they strive to figure out how to be net positive contributors in the turbulent times ahead.
This week, I had a multinational company ask me whether the B Corp path is something they should still pursue in light of the Financial Times article. My answer was an unequivocal yes.
The B Corp Legacy
It’s sometimes hard to believe that B Corps have been around for less than 20 years, but this powerful, albeit relatively small, community of businesses has had an outsized positive impact on business and society as a whole.
B Corp Certification and the B Impact Assessment tool have helped tens of thousands of businesses adopt better practices that prioritize social and environmental responsibility. Studies have shown that B Corps are more likely to pay a living wage, provide benefits to employees, and use environmentally sustainable practices. They are also more likely to donate a percentage of their profits to charitable causes.
B Lab and the B Corp community have increased global awareness about the importance of sustainable business practices and the positive impact that businesses can have on society and the environment. B Lab and the B Corp community have helped shift the narrative around business from one that prioritizes profit above all else to one that values shared value for all stakeholders.
But that’s just the start of their impact — which goes far beyond the standards and the certification.
They’ve advanced a global community of like-minded businesses that share knowledge, resources, and best practices — and that is acting collectively on new approaches to solving social and environmental challenges through collaborations like the @B Corp Climate Collective, @Desafio 10x, @ WeTheChange, @Cities Can B, and many more. They’ve helped many mainstream investors understand and start to prioritize social and environmental returns along with financial returns. They’ve even inspired stodgy old institutions like the Business Roundtable to refine their definition of the true purpose of business — that it is no longer to uphold shareholder primacy (as its mission statement has declared for decades) and instead to prioritize and care for all stakeholders. When that declaration was made, the B Corp community went one step further and challenged member companies of the Roundtable in a globally-coordinated campaign to ask Business Roundtable CEOs to “get to work” putting their words into action.
B Lab and B Corp leaders around the world are the single most responsible for the movement to upend shareholder primacy in favor of stakeholder governance-based business models. Their policy work around the world is shifting entire economies. In 2010, thanks to B Lab’s advocacy, the first benefit corporation law in the United States was passed in the state of Maryland. Today, 51 jurisdictions around the world including Italy, Colombia, France, Peru, Rwanda, Uruguay, Ecuador, British Columbia, and Canada, as well as 44 U.S. states, Puerto Rico, and the District of Columbia (Washington, D.C.) have stakeholder governance statutes. Stakeholder governance ensures we have better businesses that are accountable to people and planet.
That’s quite a legacy.
What Do We Need from the B Corp Movement Now?
It’s clear that the B Corp community is at an inflection point. What do we need from B Corps and the B Corp community now?
You could say we just need more of the same — more companies doing more good things. That would be partly true, but it’s not enough.
On a planetary scale, we are facing multiple interconnected crises. We have the knowledge, technology, and resources to fix them and to create a more sustainable and just world.
As has been true since the first B Corp achieved certification, we need B Corps to show that it’s possible for a company to make substantive and rapid progress towards a just, equitable, net zero future while building a healthy, sustainable enterprise for the long-term.
We need every B Corp to step up to the challenge ahead, to fully embrace, even surpass the mandates of the new B Corp performance requirements, to show the entire global business community that it’s possible for individual businesses to play vital roles in transforming our economy. We need every B Corp to be the lighthouses and pace-setters they’ve always been, just even moreso. I know they will do it.
We need B Corps now more than ever. We need more of them, and we need them in ALL shapes and sizes, acting with clear vision, courage, and urgency and achieving real change at speed and scale.
What are your thoughts? What do we need from the B Corp community now?
Does big business have a role to play in the B Corp movement?
What do you think of the new B Corp standards? Do they go far enough, fast enough?
