By Tess Alonge
The realm of business is changing across the world. Historically, the main focus of corporations has been maximizing shareholder value. Nowadays, many employees, investors, and consumers expect more from companies than just profit maximization. There is a movement of heightening expectations for businesses to increase their focus on social and environmental progress. Strong business ethics are becoming more important, and more corporations are adopting a triple-bottom line (profit, planet, & people) mindset.
These trends have effectively crafted the emergence of a new organizational structure. In 2007, B Lab, a global nonprofit organization, created a certification that recognizes companies for adopting this structure. A company may be certified as a “B Corporation” if it meets certain standards for social/environmental performance, accountability, and transparency. The number of companies seeking a “B Corp” certification is growing due to the benefits and ethical credibility this classification provides.
Today, there are nearly 2,500 B Corps – including Patagonia, Warby Parker, and Ben & Jerry’s – across more than 50 countries. Their vision is that one day, all companies will aim to be not only the best in the world, but also the best for the world. These businesses measure their progress by using the B Impact Assessment, a tool that evaluates a company’s overall positive social and environmental impact. The tool examines over 20 areas of impact using 200+ metrics appropriate to a company’s industry, size, and location. Studies show that, when compared to traditional businesses, B Corps are 68% more likely to donate >10% of profits to charity, and are 55% more likely to cover health insurance costs for employees. B Corps are committed to making a difference not only for their investors, but also for their communities and in the lives of all stakeholders.
Younger generations are becoming more acutely aware of the importance of environmental and social issues, and are committed to making positive change. For this reason, many millennials gravitate towards B Corps because they align with the company missions. Traditional corporations are increasingly feeling the pressure to adopt more virtuous company values or corporate social responsibility initiatives in order to better align with consumers. Yet many companies are deploying marketing strategies to appear socially and environmentally responsible, but do not actually have any legitimate impact. The B Corp label is a way to validate these claims and can set companies with authentic values apart from the rest.
This commitment will become especially important for future generations of consumers, investors, and employees. As millenials and Gen Z demand a higher standard of care for humankind and the environment, the growth in the B Corp sector gives hope that the private sector is committed to taking meaningful action. Provided that B Corps continue to challenge traditional business practices, this movement has potential to make remarkable societal and environmental change for years to come.