Does Social Good Make for Good Business?

More than 2,600 companies are certified as B Corporations. What does the certification signify — and how might it impact business?

From familiar brands such as Patagonia and Ben & Jerry’s to start-ups including Young Innovator–led food producer Back to the Roots and 2018 FedEx Small Business Grant Contest winner Rumi Spice, more and more companies are identifying social responsibility as a business priority. And a certification that aims to make such efforts official — and built right into a company’s legal structure — is gaining traction, with more than 2,600 companies in 60 countries now called Certified B Corporations. Put simply, it’s akin to designations of food as kosher or organic, or of buildings as LEED-certified.

What exactly does the “B” mean? It’s an extension of nonprofit organization B Lab’s work to recognize business as a key player in creating an economy that “creates a shared prosperity for all,” the organization states. In certifying a company, B Lab measures social and environmental performance across several categories, from supply chain practices to charitable giving to employee benefits. The idea is that businesses — not only government agencies and nonprofit organizations — can act as a force for good. “When you see the Certified B logo, you know that company is walking its talk and meeting the highest standards of social and environmental performance,” says Jay Coen Gilbert, co-founder of B Lab.

Although the B Corporation certification dates back to 2007 — when 19 companies were certified — participation in recent years has skyrocketed, and the movement has gained increasing media attention. Recognition of social good as being good for business may be the reason, according to research. In a 2018 report from The Economist Intelligence Unit, sponsored by FedEx, researchers found that 70 percent of Young Innovators believe it’s more important to be socially responsible now than it was five years ago, and that 64 percent say social responsibility is essential to business success.

Certified companies must amend their legal governing documents to require their boards of directors to balance profit and purpose. But Gilbert doesn’t expect he’ll ever see a day when all companies are certified. “Our goal isn’t to have everyone be a B Corp.,” he says. “But it is to have everyone behave like a B Corp., so that one day all companies compete to not only be the best in the world but best for the world.”

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