The New “Brand” for Socially Responsible Business?

As more businesses claim to be “green,” “sustainable,” and “socially responsible,” will true social entrepreneurs find it difficult to stand out in the marketplace? An organization called B Lab has recently launched a new ratings system to help skeptical consumers and investors to distinguish between truly responsible companies and those who simply run good PR campaigns. Companies who are certified as “B Corporations” must meet comprehensive social and environmental standards as well as agree to build stakeholder interests into their corporate governing documents. Companies must supply documentation to support their applications and are subject to random third-party audits. The organization plans to spend millions of dollars each year to promote the B Corporation brand as a trustworthy “seal of approval” for responsible businesses.
In recent years, a number of certifications and ratings systems have been developed by associations, independent consumer groups, and socially responsible investing firms. Could B Corporation be the one that breaks through to wide acceptance and recognition? A few things seem to make it uniquely positioned for success…

First, the initiative appears to have strong support from some well-respected socially responsible business pioneers. The twenty-one founding B Corporations include Seventh Generation, New Leaf Paper, White Dog Cafe, Pura Vida Coffee, Method, and Give Something Back. Many of these founders appeared together for a panel discussion at the recent BALLE conference in Berkeley, CA. Their obvious enthusiasm will no doubt boost its chances for wider adoption, particularly if they help to evangelize the concept to fellow entrepreneurs.
Second, the B Corporation “seal” will indicate that a company is doing more than just meeting behavioral and performance standards. B Corporations must actually make legally-binding changes to their corporate governing documents that require managers and directors to serve the interests of employees, the community, and the environment, in addition to those of shareholders. A team of legal advisors is working to create a toolkit and templates to help companies do this while still operating under the prevailing laws and tax regulations. One hopes that this effort will help to inspire eventual changes in U.S. laws to allow for new types of “for-benefit” corporations. Interestingly, the U.K. government has recently created a new business structure called Community Interest Companies (CICS), designed to provide a legal form for social enterprises that want to use their profits and assets for the public good, without being classified as “charities” (non-profits). I’ll write more on this in a later post, but I encourage you to check out the website that describes CICs.
Finally, B Lab seems very committed to building consumer awareness of the B Corporation “brand.” The marketing materials they have put together so far are well-designed and compelling. If their multi-million dollar campaign is backed up by strong participation from a broad range of businesses, they may succeed in creating a widely recognized socially responsible business label. Of course, the system must maintain high standards to earn and keep consumers’ trust. If even a few companies rated as B Corporations are revealed to be less than authentic in their claims, public perception could quickly turn sour.
Have you encountered any other ratings systems that seem to hold promise for gaining wide acceptance? Email me or post comments here.

6 responses

  1. I attended the BALLE conference where the B-Corp was announced, and the founder’s commitment to these principles seems very real and was exciting to witness. They’re in this for the long-haul many, many smart and succesful people are working closely together to make sure there are no mi-steps. Go B Lab!

  2. It depends on just what the standards are. And even if they are judged ‘good’ today, what’s to keep those standards high after the public has been sold on the standard’s brand and starts to look for it?

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