Corporations solve problems. Their solutions address human needs: A better running shoe, a faster search engine, a renewable way to produce energy. Sales—ultimately, profits—provide the primary measure for determining the success of these solutions.
But a corporation’s solutions (whether a product or service) do much more than simply produce profits. Sometimes for better and sometimes for worse, the activities of a corporation also significantly affect the environment and the lives of the people in the communities where the corporation operates.
Still, the metrics for corporate success remain financial. Companies that make money: Good. Companies that lose money: Bad.
Laws back up the financial metric. In states that include California and Delaware, when companies go up for sale, board members are required by law to consider what will bring the highest financial return. Issues like social good or environmental stewardship are simply not part of the equation.
Beyond the Financial P&L
The B Corporation movement emerged a few years ago as an effort to bring environmental and social considerations into the decision-making mix along with financial considerations (the B stands for public benefit). Those interested in learning how will find its 2008 annual report, included as a supplement in the November issue of Sustainable Industries Journal, due out today, satisfying reading.
The B Corp annual report provides an overview to the B Corp movement along with articles by industry experts, such as Triple Pundit contributor Amie Vacarro, on the effort to pass legislation in California that will create legal structure for a new corporate form with higher standards of purpose, accountability, and transparency; a new rating system to make it easier for equity investors and credit providers to assess companies; profiles of more than a dozen B Corporations; and a directory of B Corps.
Currently, the 205 registered B Corporations span 54 industries and are located in 28 states, with about $1 billion in combined sales. Companies that join take an extensive survey, the B Ratings System, amend their governing documents to incorporate stakeholder interests, and pay a membership fee.
Benefits of becoming a B Corp go beyond the warm fuzzies of participating in something you believe in and include discounts through service partners (such as credit card processing and Salesforce CRM) that can make up the cost of membership, according to members. “It will actual pay for itself through [the] discounting we can get in the B Corp community,” says Gary Gerber, CEO of Sun Light & Power, a B Corporation.
Promoting a Better Way of Doing Business
The deeper purpose of the B Corp, however, is to change how people do business, and how they think about it. This includes expanding corporate accountability and giving consumers a real choice for supporting companies that are trying to make responsible social and environmental choices.
“Most of these organizations have joined or supported the B Corp community because they want to advance systemic solutions to systemic problems,” write the report’s authors in the introduction. Following the breakdown of our banking system as a result of irresponsible lending—and with deepening environmental challenges—one can’t help but hope that the B Corp’s time has come.