My guest today is B Lab co-founder, Jay Coen Gilbert. Welcome to OpEdNews, Jay. As they say in the song, let's start at the very beginning. Please tell our readers what B Lab is.
JCG: Government and nonprofits are necessary but insufficient to address today's most pressing problems, while business is the most powerful man-made force on the planet. That's why B Lab -- a 501(c)3 nonprofit -- serves a global movement of entrepreneurs using the power of business to solve social and environmental problems.
JB: Great concept! B Lab launched seven years ago. What did you and your co-founders expect you would have accomplished by now? Are you on target?
JCG: We believe in "big, hairy, audacious goals" so to say we are on target would be a failure :). We want to change the very way our society defines success in business. However, we have made incredible progress in the past few years.
We already have a strong community of nearly 800 Certified B Corporations from over 27 countries and 60 industries. These include well known brands such as Ben & Jerry's, Patagonia, Etsy, One PacificCoast Bank and Method Products. We also have some truly innovative, high impact companies serving the emerging market, like d.light solar and Roshan Connection.
Additionally, we are supporting what the Delaware Bar have called a "seismic shift in corporate law", passing benefit corporation legislation in 20 states. As of July, these states include Delaware, the legal home of most venture-backed businesses, the majority of publicly-traded companies, and nearly two-thirds of the Fortune 500 and therefore the most important state for businesses that seek access to venture capital, private equity, and public capital markets. Benefit corporations enjoy legal protection to create value for society, not just for shareholders, while meeting higher standards of accountability and transparency.
Finally, we are helping bring the impact investing marketing to scale, by providing B Analytics, a comprehensive and transparent system for assessing the social and environmental impact of companies and funds. With a ratings and analytics approach analogous to Morningstar investment rankings and Capital IQ financial analytics, we hope to enable investors to invest with a higher purpose and unlock the potential of this emerging asset class.
JB: Encouraging progress! I don't know where to begin! I'm glad about your legislative success but I don't fully understand why you needed the legislation. What can Benefit Corporations do now that they couldn't do before? Can you make this clearer for me and our readers?
JCG: Sure, Joan. The simple fact is traditional businesses are constrained by the need to put profits rather than the health of society first. Current law requires corporations to prioritize the financial interests of shareholders over the interests of workers, communities and the environment. That old conception of the role of business in society is at best limiting and, at worst, destructive.
Benefit Corps enjoy the freedom to pursue a broader set of objectives - they have the legal protection to create value for society, not just for shareholders, while meeting higher standards of accountability and transparency.
Benefit corporations are a new kind of corporation legally required to: 1) have a corporate purpose to create a material positive impact on society and the environment; 2) expand fiduciary duty to require consideration of the interests of workers, community and the environment; and 3) publicly report annually on its overall social and environmental performance using a comprehensive, credible, independent and transparent third party standard.
The benefit corporation legal structure functions as a new and useful tool for everyone. For policy makers and the public interest, it combats the plague of short termism. For business leaders, it helps attract the best talent and turn customers into evangelists. For customers, it offers greater transparency to protect against pretenders. For employees, it promises higher quality jobs where they can bring their whole selves to work every day. And for investors, it mitigates risk, reduces transaction costs, creates additional rights to hold management accountable, and accelerates the growth of a big market opportunity to meet the needs of people who want to invest to both make money and make a difference.
JB: Fabulous! Sounds like a win-win. In theory, why would anyone not want to do it? And, practically speaking, how do you get companies that are traditionally interested in/committed to bottom line profitability to expand their scope and vision to be socially and environmentally progressive? Despite all its pluses, isn't it simply a lot more work?
JCG: Consumers, employees and investors are beginning to demand more from companies. As businesses struggle to stay competitive, they are going to have to expand their definition of profitability and meet the market demand. However, people are trusting company statements less and less. That's where third party certifications and transparent data and metrics come in.
Measuring impact is an investment in the future - it supports long term profitability and sustainability and combats the short-termism that has been plaguing our marketplace. Additionally, while it does require a time commitment, it really isn't as difficult as many are concerned. We make our online B Impact Assessment available for free so that everyone can take the first step and see where they stand.