B Corp.: Making Socially Responsible Companies a Reality
The economist Milton Friedman set a precedent for business in the 1970’s that is often heard today: the sole responsibility of a business is to increase shareholder profit; any other objectives of the company makes it less competitive. Recently, at the Natural Products Expo West, I had the opportunity to speak with Andy Fyfe, a representative of B Lab. B Lab is redefining what a successful business looks like and expanding the idea of shareholders to include local communities, workers and the environment.
B Lab certifies corporations as ‘B Corps’ much in the same way Fair Trade is a non-profit that awards their label to certain products. To receive B Corp certification a company must meet social and environmental requirements set forth by B Lab. This often means changing a company’s charter to reflect its commitment to social welfare. Companies are subject to periodic audits from B Lab to ensure they continue to meet these standards. Just as shareholders can sue executives for not meeting fiduciary duties, shareholders of a B Corp. can take the company to court for not meeting its social objectives.
In talking with Andy I learned that one benefit of becoming certified is the networking opportunities. One example includes the companies Method and United by Blue. United by Blue, a B Corp. apparel company, removes one pound of trash from the ocean for every product sold. Method, a B Corp. natural soap company, decided to incorporate ocean plastic into the production of its plastic bottles. The two companies met through B Lab and United by Blue is now sending a portion of the plastic it removes from the ocean to Method to be transformed into plastic soap bottles.
Companies that spend more time and money claiming to be environmentally and socially conscious are ubiquitous. B Corp. certification adds a layer of transparency and accountability to ensure companies incorporate these ethics into their day-to-day operations. B Corps present an alternative to Milton Friedman’s vision of capitalism, an alternative people are looking to embrace.