B-Corps: A Better Way to Do Business

by Carole Gaudet. Published March 18, 2014

Jesse LaFlamme’s family has been farming since the late 1800s. About four decades ago, says Jesse, the farm was a small regional egg producer, struggling to survive in the face of industrialized agribusiness. “The world was changing around us,” says LaFlamme. “We were almost put out of business, and we needed a way to transform the company and keep farming.”

To do just that, LaFlamme’s father, Gerry, and his cousin, Pete Stanton, took some bold steps. They got rid of pesticides, fungicides, antibiotics, hormones and even cages, and made the farm organic and humane. LaFlamme joined the farm a few years later.

LaFlamme, together with a panel of other like-minded executives, spoke recently to students at Tuck about a new corporate form. The latest step in the farm’s evolution, he said, has been to become a certified “B-corp”. That means the company must meet or exceed a comprehensive set of standards that measure overall social and environmental performance. Certified B-corps commit to creating benefits for all stakeholders (workers, suppliers, customers, community, and the environment), and follow the guiding principles of social responsibility, sustainability and profitability in all the decisions they make as a company.

Panelist Jay Coen Gilbert, co-founder of the nonprofit organization “B Lab” which administers the B-corp certification, described the broader “benefit corporation” movement. Through the leadership of the growing B-corp community, 19 states have created laws for benefit corporations, which serve the needs of entrepreneurs, companies and others looking to use business as a force for good. “Benefit corporations,” says B Lab’s website, “give leaders legal protection to pursue a higher purpose than profit, and offer the public greater transparency to protect against pretenders.”

While the differences between certified B-corps and legal benefit corporations can be confusing, the commonalities are clear. Directors of both must consider the effect of decisions on all stakeholders. Both are required to report on their overall social and environmental performance against a third party standard.

“Today, there are over 900 certified B-corps,” Gilbert said. “It’s been six or seven years since this idea has existed, and now, we represent 60 to 70 different industries like consumer products, banking, venture capital and renewable energy. We’re in 30 different countries including Brazil, Mongolia and Tanzania.."

The power of B-corp certification lies in the measurement of a series of specific metrics, allowing certified companies to back up their claims. B Lab offers its members a customizable platform for benchmarking, measuring, and reporting on impact. The B-corp community is leveraging its leadership and making an impact even beyond companies that pursue the certification. Gilbert says that over 16,000 companies are using B Lab’s self-assessment tools, whether or not they want to become officially certified.

Panelist Bryan Welch, Publisher and Editorial Director of Ogden Publications, Inc, says that B-corps represent a new frontier in thinking about consumer behavior. His company publishes magazines for people interested in self-sufficiency and sustainability, such as Mother Earth News and Utne Reader. His readership cuts across all political spectrums, not just those traditionally associated with sustainability. For Welch, the certification offers an antidote to the general ambivalence that consumers often feel when faced with typical marketing messages.

“We desperately needed an outside certification agency to catalyze this conversation. Consumers view marketing – talking about ourselves – with high-level skepticism. The certification has done a lot to open up this new dialogue about conscientiousness. It’s the old fashioned way of doing business. You’re seen as a good person in the world. That makes people want to do biz with you.”

The solidly-established B Lab self-assessment helps King Arthur Flour, a 224 year-old company, make even their mission more sustainable. “That’s something you have to think about after your leader dies,” said panelist Steve Voigt T'86, King Arthur’s CEO. “For us, the choices aren’t a fixed pie. We’re not looking for tradeoffs. Rather, we’re doing things the right way. Our customers really value it.”

Voigt said the B-corp certification provides King Arthur with a road map to show the company what areas it should focus on next. “Before this, we were guiding ourselves. The other certifications, like organic, played a great role, but we loved the score card that B Lab came up with. It helps us integrate some of these goals into our yearly planning. We’re considering rolling them into our employee incentives.”

Pete and Gerry’s finds great value in communication with consumers, and in community with other certified B-corps. “Half of our business is with private labels like Costco, Trader Joe’s and Whole Foods. Having the certification demonstrates that our values are aligned with their mission and business practices. We communicate to consumers that we’re a mission-driven, values-driven company.”