B Corporations to Expand “Business for Good” Initiative Globally

It was busy at the Clinton Global Initiative (CGI) last week.

Along with President Obama and Mitt Romney both speaking, as well as Hillary Clinton, the program kicked off with an endorsement of Smokey Robinson’s new social media site Smoke Alarm and CGI's global efforts in support of safe drinking water for children.

They also announced the expansion of B Lab’s Certified Benefit Corporation's (also known as a B Corporation) program into South America.

This exciting new trend in corporate governance ties a company’s mission and charter directly to the triple bottom line. According to B Lab’s website, “Benefit corporations are exactly the same as traditional corporations except for three little things that make them game-changers: higher standards of purpose, accountability, and transparency.”

It was developed as a mechanism for entrepreneurs and investors to codify their desire to use business as a tool for solving social and environmental problems.

According to The Economist, “To qualify as a B Corp, a firm must have an explicit social or environmental mission, and a legally binding fiduciary responsibility to take into account the interests of workers, the community and the environment as well as its shareholders. It must also publish independently verified reports on its social and environmental impact alongside its financial results. Other than that, it can go about business as usual.”

B Corps are often confused with Benefit Corporations - the former is the certification discussed here. The latter is a legal structure (currently enacted at the state level in 11 states) that incorporates a material positive impact on society and the environment into the company's bylaws.

B Corp certification is not mandatory, nor does it confer legal standing. However, it does offer the validation of an independent body acknowledging that the company has met a responsibility performance standard. It also offers a community and a set of helpful tools.  Says B Lab, “B Corp certification is to sustainable business what Fair Trade certification is to coffee or USDA Organic certification is to milk.”

The two approaches differ in the details of implementation, but their intentions are the same.

Now the certification program is spreading beyond the 50 states. At the CGI meeting last week, B Lab announced its commitment to certify 100 B Corporations outside the U.S. in 2013.

B Lab cofounder Andrew Kassoy said, “Impact requires scale and global reach; by extending the B Corp movement into emerging markets in South America, India, Asia, and Africa, the B Corp movement will have dramatic impact on the development of more inclusive and sustainable economies.”

B Lab announced a South American partnership with Sistema B to build the B Corp movement in South America. Together they will build a founding class of 100 B Corps by the end of 2013 in South America alone.  B Lab also committed to expanding into other regions of the world, with the goal of having B Corps in 20 countries on six continents, and of reaching a total of 750 Certified B Corps globally.

According to the Sacramento Bee, “B Lab will establish partnerships with organizations that have regional presence and expertise and leverage financial and technical support provided by the Inter American Development Bank, the Rockefeller Foundation, Halloran Philanthropies, Prudential Foundation, Linklaters, the Ford Foundation, the Avina Foundation, InnovaChile CORFO and Deloitte LLP.”

The B Corporation journey has thus far been characterized by pioneers like Yvon Chouinard, the iconoclastic CEO of Patagonia, who was the first CEO to sign on once B corps became recognized in California.

Chouinard has called prior laws governing corporations and charities too restrictive. He says that for-profit firms often face pressure to abandon social goals in favor of increased profits, while non-profits are overly restricted in their ability to raise capital when they need it to grow.

The B Corporation is another important step in the journey to build a new, more Earth-centered, more sustainable economy.  Perhaps something along the lines of what David Korten writes about in his latest book, Agenda for a New Economy, where he says, “to create an economic system that works for all, we need a different design grounded in different values and a different understanding of wealth, our human nature, and the sources of human happiness and well-being.”

Sometimes, in order to change the game, you need to make new rules.

 

RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining format. Now available on Kindle.

Follow RP Siegel on Twitter.