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B Corporations: Businesses As a Force of Good

Updated: Aug 25, 2021

When discussing corporate governance of for-profit organizations, their strategies are mostly linked with the optimum level of return for shareholders. However, since the origins of modern Development Economics (after WWII) – emerged a branch of economics that considers factors such as health, education, working conditions, domestic and international policies, and market conditions with a focus on improving conditions in the world's poorest countries ⁠– showing growing interest for the consideration of other stakeholders values, in particular their social and environmental concerns. This is why concepts such as Corporate Social Responsibility (CSR), triple bottom line (TBL), sustainability, eco-friendly, ethically-made, philanthropy have gained popularity in the past decade. However, verifying these claims is usually ineffective, too broad, too generic, or with no clear framework, usually because the certification process is done by the companies themselves. Because of this, CSR has even been considered as the companies' effort to greenwash their products, services, supply chain, and/or their entire brand. In 2006, a non-profit organization called B Lab was founded in Pennsylvania with the objective to award a social and environmental performance certificate to companies, based on how they create value for non-shareholding stakeholders. The B Impact Assessment takes into consideration five Areas: Governance, Workers, Community, Environment, and Customers. The assessment is customized to a company's size, sector, and geographic market.

To issue maintain this certification, companies must receive a minimum score of 80 in their Social Impact Assessment (SIA) and incorporate the interests of all stakeholders into the duties of directors and officers. Each company’s B Impact Report is accessible online so that consumers can verify the credibility of their sustainability claims.

According to the B Corporation website:

B-certified businesses meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose... B Corp Certification is the only certification that measures a company’s entire social and environmental performance.


The first B Corporations were certified in 2007 and were less than 30 back then. At the moment this article is being written, there are 3796 B Corps across 75 countries. The implications that this rapidly growing movement can have towards the fight against Climate Change can be many, but one of the most notorious is the fact that Certified B Corporations are among the companies leading the private sector's fight against Global Warming.

According to Neil Sutton, Global Deals Leader, Consumer Markets, "The volume of companies considering whether to become a B Corp grew significantly in 2018". Since more companies are considering becoming a B Corp, their efforts to mitigate their environmental impact will increase for them to meet the minimum requirements of the assessment.

Additionally, within the B Corp community, there is a collaborative environment that has led to an unprecedented cross-sector collaboration, corporate action, and sharing of best practices. In December 2019, at the UN Climate Change Conference (COP25) over 500 B Corps committed to accelerate the reduction of their greenhouse gas emissions and to achieve Net-Zero by 2030. The number of B Corps has grown to more than 900 (1300 when non-B Corps are included) and they have partnered with the United Nations Framework Convention on Climate Change (UNFCC) to create the B Corp Climate Collective.

B Corps are setting a new standard for good sustainable business, inspiring a movement of traceable and credible long-lasting positive changes, and creating legal structures and precedents that are used around the world.

"The B Corp movement is one of the most important of our lifetime, built on the simple fact that business impacts and serves more than just shareholders -- it has an equal responsibility to the community and to the planet." Rose Marcario, CEO Patagonia Works

 

Mariangela Lopez