From Shareholder to Stakeholder Capitalism: B Corp-Certified Brands Use Their Business as a Force for Good
Posted: 3.16.18 Social Responsibility

From Shareholder to Stakeholder Capitalism: B Corp-Certified Brands Use Their Business as a Force for Good

By: Michael Senecal

The Crunch: As an engine for powering economic growth, capitalism has worked wonders — but it’s not a perfect system. Especially over the past few decades, globalization and financialization have increased economic insecurity and environmental pressure in many countries. As these negative consequences of capitalism have mounted, the traditional rationale for doing business — generating a profit for shareholders — has come into question. B Corp companies see a different way forward. Certified by the nonprofit B Lab as meeting rigorous standards of performance, accountability, and transparency, B Corp companies prioritize the impact of their actions on consumers, employees, communities, and the environment over short-term profit. In doing so, they extend the promise of capitalism to deliver a more equitable prosperity.

When Ben Cohen and Jerry Greenfield started making ice cream in Vermont in 1978, they wanted to create a company with a social conscience and a sense of humor. As Ben & Jerry’s grew into a national brand in the 1980s, it created a charitable foundation to engage its employees in philanthropy and social-change work, support communities in its home state, and work for social and environmental justice across the US.

The company also constructed a three-tiered corporate mission statement in which the goal of “making the world a better place” resided alongside goals for product quality and profitable growth. As its social mission grew, so did its customer base.

The founders of B Lab would argue that Ben & Jerry’s was at the forefront of a new movement. As the failure of modern capitalism to deliver a shared and durable prosperity became more evident in the late 20th century, a growing community of consumers and employees began to expect businesses to deliver not just value to shareholders but to social stakeholders as well. Those stakeholders desired equitable prosperity, security, environmental sustainability, and more.

Banner of B Corps logo and slogan

Founded in 2006, B Lab provides a framework for measuring the social accountability of businesses. The nonprofit organization has certified more than 2,100 B Corps across the globe as meeting rigorous standards of social and environmental performance, public transparency, and legal accountability.

When consumers see the B Corp certification displayed prominently on product packaging or in marketing materials, they know the business aspires to address social and environmental problems. Workers know their companies have pledged to support local communities and treat employees fairly. And financial stakeholders know that B Corps make decisions that impact more than the bottom line.

Rigorous Certification Process Considers Companywide Social & Environmental Commitments

B Corps must pass a B Impact Assessment that measures performance in five categories: environment, workers, customers, community, and governance. The assessment undergoes frequent revisions, and companies must recertify every two years.

For Indra Gardiner Bowers, Founder and Chief Executive Officer for the San Diego-based marketing firm i.d.e.a., B Corps benchmarks are useful precisely because they’re unambiguous.

“As a company, it’s easy to say you’re doing good things, but it’s hard to prove it,” she said. “Taking i.d.e.a. through the certification process, as we have several times now, means bringing in a third party to validate that we’re actually walking the talk.”

Photo of Indra Gardiner Bowers, left, and Amy Levine

Indra Gardiner Bowers, left, and Amy Levine spoke with us about the importance of becoming a B Corp.

Amy Levine, Director of Marketing at Vermont-based Cabot Creamery, agrees. “Our initial goal in going for B Corp certification was to create more authenticity around some of the things we were already doing,” she said. “Now it’s not just us talking about it; there’s some substance behind it.”

At Cabot, the assessment process provided a framework for thinking strategically about continuous improvement. “Among other things, B Lab has helped drive the improvements we’ve made around sustainability and creating a uniform standard we can all speak to within the company,” Amy said.

The same is true at i.d.e.a. “The things that we’ve implemented over the past few years have made i.d.e.a. a more responsible business,” Indra said.

In 2018, i.d.e.a. is implementing a family leave program and focusing on community-based wealth. “For family leave, we had been relying solely on what the state provided. Now we’re moving beyond that,” Indra said. “We’ve also learned that it’s important to keep our money in the community, so we’re transitioning to a local bank and looking at how much of our ordering can we do locally.”

While Cabot has earned praise for improving sustainability across its cow-to-creamery-to-customer supply chain, the B Corp process even gives marketing firms like i.d.e.a. opportunities to demonstrate their commitment to the environment.

“We do carbon offsets,” Indra said. “At the end of every year, we pull all our travel information and survey each employee’s commute. To compensate for the carbon we generate as a company, we invest in tree planting in the Pacific Northwest. That’s a big one for us.”

B Corp Labeling Communicates Value Beyond Greenwashed Products

Indra and Amy also see B Corp certification as a way to differentiate their firms from brands that use their marketing prowess to present an environmentally responsible public image without “walking the talk.” As consumer demand for environmentally friendly products grows, so does the phenomenon of greenwashing, in which a company concerns itself more with how it is perceived than what it actually does.

“These days, corporate social responsibility is just table stakes. Everybody says that now. B Corps offer consumers something much more substantive: a view into the entire business, beyond the pretty packaging and the sympathetic ads,” Indra said. “It looks at governance, workers, communities, the environment, and even whether a company’s products actually improve customers’ lives. It looks at every single piece and truly certifies that the business is improving what’s happening on the planet.”

“The B Corp certification mark tells consumers, ‘This is a company I can trust. They’ve gone through a vetting process. They’re not just saying it. And that means something.” —Indra Gardiner Bowers, Founder and Chief Executive Officer for the San Diego-based marketing firm i.d.e.a.

The rigorous process is not for the faint of heart, Amy contends. “Sometimes certifications are about paying your dues and going on your merry way,” she said. “This one demands that companies meet certain standards. It’s a big commitment on the part of any organization, large or small, to go through the process.”

Part of the challenge is that goods today potentially carry many different labels attesting to their virtues. Some are more significant than others, and whether some signify anything beneficial at all is open to debate. Even highly reputable Fair Trade and USDA Organic certifications shed light on only a portion of a company’s operations.

B Lab looks at businesses from top to bottom, from end to end. “The B Corp certification mark tells consumers, ‘This is a company I can trust. They’ve gone through a vetting process. They’re not just saying it,'” Indra said. “And that means something.”

New Marketing Helps Consumers Identify Brands Aligned with Beliefs

In 2012, the pioneering Ben & Jerry’s became a B Corp — apropos for a company that has always believed in what it calls “linked prosperity.” Like all B Corps, Ben & Jerry’s holds itself responsible not just to the stockholders who have invested in it but to all stakeholders who depend on its good faith.

Although the rate at which companies are earning B Corp certification is increasing, a broader effort to communicate the importance of the mark will encourage even more businesses to join the fold. Indra and Amy are part of a group within the B Corp community that is preparing a marketing campaign to accomplish that.

Screenshot of Ben & Jerry's B Corp certification announcement

“Our goal is to help consumers understand how and why B Corps make decisions about doing the right things,” Amy said. “And businesses — smaller business especially — need to see the value and the opportunity to leverage the certification and turn it into sales.”

The desired result is that Ben & Jerry’s becomes the norm, not the exception.

“Our research shows that the idea that business can be a force for good is resonating with people,” Amy said. “But it’s not just us. Consumers, employees, investors, and businesspeople themselves see the good things a business can do not just for sustainability and the environment but also in promoting equitable wages, access to jobs, diversity, economic security, and more.”

When consumers make a purchase, they’re casting a vote for the kind of world they want to live in. As the meaning and significance of the B Corp certification mark become more widely known, more consumers can cast votes that align with their values.