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B Corporation: A Way for “Good” Companies to Walk the Walk

Mary Catherine O'Connor | Friday April 17th, 2009 | 3 Comments

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A new report from TerraChoice Environmental Marketing finds that only 2 percent of products that profess some eco-cred on their labels are, in fact, green. This goes to prove something that most consumers already suspected: that just because a company calls itself green and clean, it’s not necessarily green and clean. The same is true, in a much broader sense, about all kinds of companies. What makes a company “good?” How can we define and designate a social enterprise – a triple bottom line company – such that it achieves legitimacy and legal protections as such an entity? Jay Coen Gilbert, Bart Houlahan, and Andrew Kassoy co-founded B Lab, say they’ve developed a way: The B Corporation certification.
This is the pledge that all B Corporations take:
“We envision a new sector of the economy which harnesses the power of private enterprise to create public benefit.
This sector is comprised of a new type of corporation the B Corporation
which is purpose-driven and creates benefit for all stakeholders, not just shareholders.
As members of this emerging sector and as entrepreneurs and investors in B Corporations,
We hold these truths to be self-evident:
– 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.”


And so far 170 different businesses have taken the pledge. But the process of becoming a certified B Corporation goes much further than that. Candidate companies must complete a comprehensive survey designed to assess its social and environmental performance. Companies that achieve a satisfactory outcome to the survey can then go onto the next step, wherein they agree to legally expand the responsibilities of their businesses to include consideration of stakeholder (not just shareholder) interests.
The legal ramifications of this agreement on the certified company’s operations are significant. It embeds the values and priorities of a B Corporation into the governance of the company, which is to remain in tact despite changes of ownership. And under the B Corporation standing, directors are not legally required to maximize shareholder value exclusively.
B Lab, the 501(c)(3) non-profit organization that administers the programs (and runs on fees collected by the participating companies) has convened a nine-person Standards Advisory Council (SAC) that provides an independent voice and oversees the certification ratings and auditing requirements for B Corporations.
Many of the companies that have obtained B Corporation status are also startups to watch, so look for more on B Corp companies in our Startup Fridays feature (and look here for a full index). And if you know of a startup of note that is focused on the triple bottom line, let us know: contact@triplepundit.com.

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  • http://www.lifeaftergrowth.com Scott G

    This is great. How long has the B-Corp idea been around? I wonder if part of entering into to legal obligation to stakeholders includes entering into voluntary/but binding carbon markets?
    While this, I think, is needed, I do occasionally worry about the public getting drowned in a swamp of various eco-labels. Would be nice to have a few that performed clear roles, and leave it at that.

  • mcoc

    Thanks for the note, Scott. I agree: too many labels/standards will muddle those with the best intentions. there need to be few, highly effective efforts. I don’t B Lab’s exact launch date but it’s been around since at least mid-2007.
    Here’s another piece 3P write on B Lab: http://www.triplepundit.com/pages/to-b-or-not-to.php

  • Frank

    I’m not a fan of the standard when a company like Fiji water could easily become a “B” company. A company can score real low on some metrics (i.e. environmental impact) and still achieve the seal. I believe they also only randomly audit – that’s not a standard….

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