Better Business

It seems these days like every company wants to be seen as “green,” but how can consumers and investors distinguish between businesses that are doing actual good from corporate poseurs with clever packaging and PR? Berwyn, Penn.-based non-profit B Lab offers a solution: a comprehensive B (Beneficial) Corporation certification program that measures companies’ impact on society, the environment, and a host of other real-world criteria. A relatively recent arrival on the business scene, the B Corporation is a sort of hybrid of the for-profit and non-profit sectors.

The concept’s originators hope this new designation will give companies incentive to make their highest values central to how they do business, and transform commerce into a driving force for progressive social change. High-powered entrepreneurs Jay Coen Gilbert, Bart Houlahan, and Andrew Kassoy co-founded B Lab in 2006 because they noticed exponential market growth in self-proclaimed “socially responsible” enterprises, but no rules to ensure that terms like “green” and “sustainable” would remain meaningful and not be specious marketing claims. Their innovative B Ratings System, designed in an open-source format with input from more than 600 business experts in diverse fields, may help fill that gap. B Lab also offers tools and resources to foster businesses’ social and environmental evolution. Consisting of a questionnaire weighted differently for the manufacturing, distribution, and service industries, B Lab’s survey rates companies based on everything from environmental practices and labor relations to philanthropic contributions, then translates the results into a numerical tally. The B Ratings System is flexible enough to credit companies for creating benefit in a variety of different ways. For instance, companies that produce vegetarian goods would earn points for using production methods that do not harm animals, and for making products that are healthier for people and the environment.

Among the 160 companies certified so far, some B Corporations, such as Seventh Generation and Method, are also certified by the Coalition for Consumer Information on Cosmetics’ Leaping Bunny Program. Having more animal-friendly criteria included in the rating system would make it easier for vegetarian companies to become certified as B Corporations, and for more mainstream companies to adopt humane practices. The potential to propel cruelty-free practices into standard operating procedures is important to many vegetarians, who view this as the first step toward creating a truly humane society.

B Corporations can also support vegetarian and animal-protection advocacy by donating a portion of their profits to non-profits—namely those that promote causes they believe in. Some, like office-supplies company Give Something Back, devote more than half of their profits to charitable causes, resulting in stellar B Ratings. Others—like Untours travel and Pura Vida fair-trade coffee—even create their own foundations, financed by profits that function as a non-profit arm of the company. Such “for-purpose” businesses have the potential to attract capital beyond the wildest dreams of non-profits, and could allow veg entrepreneurs to found advocacy organizations or animal sanctuaries that wouldn’t be dependent on fundraising for their operation. After passing the ratings test, companies have to do one more thing before graduating to B Corporation status: they must amend their corporate governing charters to legally institutionalize the companies’ commitment to serving not only the interests of shareholders, but all stakeholders—including employees, the community, and the environment. That means that the primary motivating factor behind corporate decision-making is not the value of company stock, but the value the company could add to the world. B Lab’s founders hope to make their certification the gold standard for socially and environmentally responsible companies.

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