“There is an awakening that has taken place in terms of citizens at large, realizing the role business plays and realizing ultimately that they can hold businesses accountable,” Mr. Turner says.
Noting that growing market pressure, some companies have made superficial efforts to brand themselves as responsible citizens without much in the way of substantive changes—a practice criticized as “greenwashing.” The flood of positive-impact marketing threatens to drown out the work of truly mission-driven companies. And that is precisely where B Lab’s efforts shine brightest.
B Lab and a group of B Corp certified companies took out a full-page ad in The New York Times with an open letter calling on the Business Roundtable CEOs to back up their new stance with real reform. Citing the positive impact of its certified companies, the letter points to continued resistance from investors, and says, “stakeholder governance builds trust and builds value. More importantly, it ensures that the purpose of capitalism is to work for everyone and for the long term. Let’s work together to make real change happen.”
To be certified as a B Corp, businesses complete a 200-question B Impact Assessment (BIA), designed to “measure and manage your company’s positive impact on your workers, community, customers and environment” over the previous 12 months. The assessment itself may suggest changes to operations and can take many months to complete.
As part of the process, companies also must commit to meeting the legal requirement of a benefit corporation or similar structure in their jurisdiction. This step is critical as it sends a message to shareholders that directors and officers are legally obligated to consider the interests of all stakeholders. Shareholders’ power isn’t diminished but redirected to serve the redefined goals of the company.
Most of the companies that have been certified as a B Corp have been small to mid-sized operations, with brands that appeal to what might be termed the “free-spirit” consumer: outdoor apparel retailer Patagonia, fashionable eyeglasses brand Warby Parker, natural body care brand Dr. Bronner’s Soaps, hydroponic produce supplier Archi’s Acres. But with the demand for ESG reporting only growing and multinationals jumping on board, this market niche could well be poised to turn mainstream.
“What we’re working toward is an inevitability,” says Chris Turner, Executive Director of B Lab UK. “We need to organize our system in a different way to ensure that business is providing a benefit for all of us, rather than just shareholders.
“It is a movement—a movement of leaders. One of the things I enjoy most about my job is that I get to talk to lots of really inspiring business leaders—true leaders who are thinking long term. Learning from them along the way is a great part of my job.”
Currently the world’s largest B Corp, Danone North America adopted the organizational structure and became certified in 2018. The company’s efforts were instrumental in the effort to scale B Lab’s procedures to accommodate and meaningfully measure the work of multinationals.
“It’s a huge, huge frontier,” Mr. Turner says. “Certification can be a multi-year process, and there are many of them now in that process. We’ve made leaps and bounds in the last couple of years as we’ve been working with Danone particularly. All of that stuff is being rolled out now in our work with other big multinationals.”
Deanna Bratter, the Senior Director of Public Benefit and Sustainable Development for Danone North America, was instrumental in guiding the company to its public benefit corporation legal status and subsequent B Corp certification. Ms. Bratter came to Danone as part of the company’s merger with WhiteWave Foods, where she had been Director of Sustainability, and she quickly found herself handling the certification process. The integration of those two businesses offered a window for the new company to align itself with B Corp standards, she says.
“I definitely wouldn’t say it was ‘easier,’” Ms. Bratter says. “It required a significant effort by more than 150 individuals across the organization, alignment from our leadership team, working with global counterparts. But going through an integration creates a lot of potential unsettlement, so to have this goal to rally around and to bring light to the corporate value and mission through this certification—it was definitely a unique opportunity to leverage a time of change, to leverage the moment.”