Changing Business to Change the World
By Andrew Kassoy, Co-founder, B Lab
Business accounts for over 75% of our nation’s GDP— this provides businesses with a tremendous opportunity to create results beyond financial return.
We are living in an era of rapid change, with the incredible resources of inspiring entrepreneurs and businesses addressing major social problems. One great example is Southern Energy Management, which offers an array of services, from solar system design to energy audits, in an effort to curb greenhouse gas emissions. Another inspiring business is Hydrovolts. They have created turbines which generate renewable energy from canals and water channels. This organization has the power to bring electricity to some of the poorest villages in the world without having a large environmental impact. These are only a couple examples from a community of businesses who are leading the way into a new future.
At B Lab, the nonprofit organization that works with and certifies B Corporations, we are seeing a trend of businesses wanting to be better. Our mission is enormous and must be addressed in a comprehensive and systematic way, so with this in mind, B Lab has chosen a three-pronged approach to systems change:
- Build a community of Certified B Corporations that meet high performance and accountability standards to help us all tell the difference between good companies and just good marketing
- Help Certified B Corporations and the larger community of good businesses access capital markets so that they can grow and increase their impact
- Develop public policies that legally recognize B Corporations and provide tax and procurement preferences for beneficial businesses
In our work, we have identified a need to drive capital to businesses that will provide a return on a triple bottom line performance basis. In response, we developed the Global Impact Investment Rating System (GIIRS), which acts as an independent, third party assessment of the social and environmental impact of companies and funds. This ratings approach is similar to Morningstar investment rankings or S&P credit risk ratings. Using this method, it will be possible to drive investment towards positive enterprise and strengthen this new segment of our economy.
To progress in this area, we must educate investors and businesses alike that there is more to business than financial profit. B Corporations see profit as a good thing (no mission, no margin), but not the only thing. Profit is an important piece of a more complex dynamic. We must take this opportunity to grow and strengthen this new sector of the economy. Each of us, in all of our roles in life—as entrepreneurs, investors, consumers, workers, members of a community, and citizens—have a responsibility to support a transformation in the role of business in society. It is time to take a stand and demand a more comprehensive approach to profit. We have so much talent and resources available, it is imperative to use them for a better tomorrow.
There have been many advancements on the public policy front. Maryland and Vermont have passed legislation to recognize Benefit Corporations. Distinct from B Corporations, Benefit Corporation legislation expands fiduciary duty by requiring a company to create a material, positive impact on society and the environment, and meet higher stands of accountability and transparency. By 2011, seven other states may follow. Another large step forward is the first tax break for certified sustainable businesses in the city of Philadelphia. It is our hope that this policy will spread to other cities and eventually reach the federal level.
Despite these great accomplishments, there is still work to be done. It is our ultimate vision that B Corporations will be recognized by all states, receive tax preferences from the IRS, and be valued above all others by investors and consumers alike.
By harnessing the scale and talent of our business community and looking beyond short-term profit, we can rebuild local, living economies, restore the environment, alleviate poverty, and create better working environments. Corporations which are purpose-driven and benefit all stakeholders, not just shareholders, are the key to a better, more sustainable future.
Learn more about B Lab.