How B Corporations Change The Way Entrepreneurs Think About Profit And Consumers
As leaders and world citizens what we chose to do in business can make a difference. When it comes to business structures, B Corporations are best for the world.
If you don’t believe me (and I wouldn’t blame you if you didn’t because it is a pretty bold statement to make), let B Lab enlighten you. The non-profit organization helps certify individuals using business as a force for good and recognizes companies creating exceptional social and environmental impact through yearly Best for the World lists created by B the Change Media.
More businesses are choosing to get certified as B Corporations. They posit that businesses do not have to focus on profit maximization alone. Businesses can strive to be a force for good as a B Corporation. They may be good for employees and shareholders, good for customers and communities, good for the world and the environment. Yogurt giant Danone passed their B Labs assessment this year, making the company the largest Certified B Corp in the world. In connection with this notable accomplishment, the company changed their name to Danone North America to align with their status as a B Corp. Brand transformation firm idgroup, based out of Pensacola, Florida, also earned certification as a B Corporation. They are one of 18 B Corps throughout Florida, but the first, and only, company to be recognized as a B Corp in Pensacola. Even universities are walking the walk as B Corporations, with Walden University in Minneapolis, Minnesota renewing their status as a B Corp.
Over 2,000 corporations are registered as B Corporations, spanning 130 industries and over 50 countries. They didn’t make that switch overnight either. Converting from one legal entity, like an LLC or sole proprietor, to a B Corporation is an investment of time, energy, and rigorous testing in order to meet performance and legal requirements established by B Lab.
Performance requirements are met by completing the B Impact Assessment test. This test assesses how the business is better for its workers, community, customers, and the environment. A minimum of 80 out of the total 200 points is required for a passing score. After you’re done taking the assessment, you’ll receive a snapshot report of your grade and the questions answered. This report highlights areas where your business excels and softer spots where it can use extra improvement. Then, you will also receive an impact report that provides a holistic view of how your score stands against 40,000 other businesses overall.
Once you pass the B Impact Assessment test, you’re halfway to proving your company is the best for the world. The next step in the process is to determine if you will need to adopt a benefit corporation status or amend governing documents. Doing this allows you to determine the path for your corporate structure and state of incorporation. If legal changes are required, they will need to be communicated with board members and legal counsel. Board approval of the planned amendment is needed along with shareholder approval of the board-approved amendment after certification.
Once the performance and legal requirements have been met, you will be able to sign the B Corp Declaration of Interdependence and Term Sheet. You’re officially a Certified B Corporation. You may now include the physical proof, such as the Certified B Corp logo, on your company website and in email signatures.
That physical proof speaks volumes to consumers, who take notice of B Corporations since the entity formation comes with higher expectations. For Danone North America, the conversation about social impact started as early as 1972 when the company’s founder called for the industry to be “placed at the service of people” in a speech. Subsidiaries of Danone North America in Spain and the United Kingdom are already certified as B Corporations. According to Deanna Bratter, Director of Sustainable Development at Danone North America, their need to become a Certified B Corp meant they wanted to do more than say to consumers they intended to work on sustainability. They were ready to prove it through their social and environment performance.
Other members of the B Corp community echo these sentiments. Stephanie Hepburn, founder of the ethical clothing company Good Cloth, wanted to disrupt the fashion industry through sustainable clothing. Hepburn knew that saying what she wanted to do would be nowhere near as effective as actually doing it, which pushed her towards certifying as an entity rooted in transparency. “When Good Cloth became a Certified B Corp, the certification gave consumers assurances that we do what we say. Going through the B Corp certification process may be rigorous, but it holds us to our word on our performance, transparency, and accountability. This is what consumers want, too. They need access to sustainably made products, sure, but they want to be confident that the companies making said products are following their mission.”
For Danone North America, that certification has allowed the company to cut back on its water usage and waste. Walden University has continued to hold their Scholars of Change video contest for students and graduates alongside a weeklong volunteer event called Global Days of Service while idgroup is a registered Benefit Corporation (which legally adheres to accountability, transparency, and purpose) in addition to being a Certified B Corp.
For B Corporations, money is not the exclusive goal for being in business. Rather, it’s the ability to use business as a force for good. We are fortunate to live in a world where we can choose to work in positions and start businesses that give us value, purpose, and pride. We may choose enrichment over wealth and environment over revenue. As the B Corporation community continues to impact society and grow, businesses across the United States will find ways to make a positive impact. The movement is about redefining success in business from the best in the world — generating the most revenue — to the best FOR the world.