subscribe

Once a day
Get Articles by e-mail:

Also
Get Today's Climate by e-mail:

Donate to SolveClimate News

Climate Science Links

U.S. Government

International

Academic, Non-Governmental

B Corporation, a New Way of Doing Business?

By Leslie Berliant

Jul 13, 2009

“We do very well in the employee area largely because we’re employee owned, but B Corp is also a tool for us to look at our lower scores and start to move the needle on those.” In the case of King Arthur Flour, that meant making improvements in terms of their environmental impact over the last 18 months. “Having B Corp as a tool is reinforcement to people internally as to why we are making these changes.”

Pull up , and you can see exactly how they are doing; where they excel – employees and leadership; and where they need work – environment, consumers and community.

Looking at all of these areas together is what differentiates B Corp, Houlahan says:

“There are plenty of deeply green or employee-centric certifications out there, but this is the only corporate certification we know of that is looking at the whole company and its impact on consumers, employees, the environment and the community.”

But becoming a B Corp really moves beyond that.

“Becoming a B Corporation intentionally interferes with a company’s obligation to maximize shareholder profits. That’s why we exist,” Houlahan says.

To find out how far the additional obligations to non-shareholder stakeholders goes, I asked Houlahan to speculate whether, if Burt’s Bees had been a B Corp, its sale to Clorox would have been prevented.

His answer was an emphatic no, but the way he sees it, being a B Corporation does give companies additional options at the point of sale.

“At the moment of liquidity when selling a company, the fiduciary duty of directors is heightened under current corporate law so that they must maximize shareholder value,” Houlahan explains. “Our legal framework changes that. Directors and executives have more options at the point of sale; they can consider the sales impact on other stakeholders, it isn’t only about maximizing shareholder value.”

As a B Corporation, the company can consider a lower offer if they feel it better maintains the integrity of the company vis a vis its stakeholders.

Houlahan also sees B Certification as a way to assure consumers that a company’s practices are still sound after acquisition.

“If you talk to Burt's Bees,” says Houlahan, “they would tell you that they are unequivocally not only maintaining their old practices but have enhanced them. But the problem is that consumers have no way of knowing or verifying that. B Certification is a way to answer that question for consumers.”

To get another perspective on whether B Certification is important, I talked to Paul Herman of , a company that provides indices and research for investors who seek to make money by doing good and consults to corporations looking to realize sustainable, profitable growth by having a positive impact. Herman was in the same analyst cohort 20 years ago at McKinsey as B Labs co-founder Jay Coen Gilbert.

Herman rattles off a number of companies that are moving toward sustainability without a change in their bylaws – Starbucks, GE, Cisco, Alcoa, Wal-Mart – all because they see customer needs shifting.

But he still sees value to the B Certification process.

“It’s significant in that it helps differentiate a company to be part of an association that has common interests and goals that may be different from traditional corporate goals,” says Herman. “For an investor, it’s a helpful indicator that the company is seeking a positive environmental or social outcome, but the company still has to pass a number of other tests; do they have a great management team, a growing market, and the ability to beat the competition. It’s one indicator of a company’s strategy, but it won’t tell you whether the investment will be a home run or not.”

Herman also sees it as a way to create a community of like-minded businesses but worries that becoming a B Corp may also place restrictions that stifle ingenuity.

“B Corp is very prescriptive about the practices of the certified companies, but American ingenuity is about innovation.”

sesli sohbet

thank  you

Oh man it's great to see

Oh man it's great to see that sustainability is becoming a real force in the marketplace, and this just confirms it! Even if it is a lot of "marketing" when a company becomes a B-corp, it still results in a positive impact overall, go green business!
Jerry Harrison - Owner - .

I've very glad that I found

I've very glad that I found this article. I am making choices on a daily basis the support the environment via recycling, using less pesticides, less water, etc., and I also make it a point to purchase fresh and locally grown products whenever possible. I think that in order for real change to occur it's up to each of us to be aware that where we purchase and from whom we purchase makes a difference. I will be looking for this B Corporation Certification from now on and will urge my friends and family to do the same. The only way corporate America is going to change it's thinking is if we make them, and this is a great start!

Cindy Johannes - Favorite

There are no doubts now,

There are no doubts now, sustainability is the way of the future so we'd better start getting used with the idea. Whether it's about it, civil engineering or even consulting we always have ways to improve in a eco-friendly and responsible perspective.
Reggis,

oninework

The Center for Media Research has released a study by Vertical Response that shows just where many of these ‘Main Street’ players are going with their online dollars. The big winners: e-mail and social media. With only 3.8% of small business folks NOT planning on using e-mail marketing and with social media carrying the perception of being free (which they so rudely discover it is far from free) this should make some in the banner and search crowd a little wary.

New Business

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Patricia

Nonsense

Given all the misrepresentations made here about a climate crisis that doesn't exist, I'm glad to be able to identify which corporations should be avoided.

BTW, we here in the Midwest invite Al Gore to visit so he can blow some of his hot global warming air on our record-setting cold temperatures.

Stupid guy or nice troll ?

I prefer thinking that you just want to launch a polemic :)
If not the I will pray for you very Hard :D

stupid

My god, are people still playing the denial game? Try reading some books and scholarly journals on climate change instead of regurgitating whatever you heard Rush babbling on the radio.

Hey "Nonsense"

How dies it feel to be a complete idiot?

Post new comment

The content of this field is kept private and will not be shown publicly.
  • Allowed HTML tags: <p> <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd> <img> <h1> <h2> <h3> <ul> <li> <ol> <b> <i> <p> <br>
  • Lines and paragraphs break automatically.
  • Youtube and google video links are automatically converted into embedded videos.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Images can be added to this post.

More information about formatting options