**This post was written by Dave Wamsley founder at GravityEight and the Marin Startup Grind chapter director***
Governmental agencies and nonprofits are necessary, but operating alone they are insufficient to address society’s greatest challenges. Corporations, which wield undisputed power and influence, must do their part to create the change we now desperately need.
Imagine if, from their inception, high-tech startups were able to build into their “corporate DNA” the means to make a healthy profit for shareholders, but also to leave the world a better place as well. Sounds crazy, right? Well, no not really. In an interview with Piers Morgan, Starbucks CEO, Howard Schultz, made the simple but provocative proclamation that his company would no longer view “profit” as their number one business objective.
According to Schultz, businesses like Starbucks must do more to serve the communities in which they operate, even if sometimes it means making decisions that cost the company more in the short term. And he has backed up his words with action, by scuttling the company’s plan to build a massive plant in China and choosing instead to relocate to a small town in Georgia and hire American workers.
Although a gutsy pioneer, Schultz is not alone in this approach to business. A new type of corporation-- the “B Corporation” -- is emerging and its goal is to “be the change you seek in the world.” This new sector of the economy, which harnesses the power of private enterprise to create public benefit, is catching the eye of new Silicon Valley startups as well as older powerhouse companies like Patagonia---which just received a California B-Corp designation. Currently there are over 450 Certified B Corporations across 60 different industries in the US and the list is growing.
It takes more than a lofty goal and a PR spin to become a B Corporation however. To do so, companies must be certified by B Lab, a nonprofit organization that certifies B Corporations the same way TransFair certifies Fair Trade coffee or USGBC certifies LEED buildings. Unlike traditional businesses B Corps must:
- Meet comprehensive and transparent social and environmental performance standards
- Meet higher legal accountability standards
- Build business constituency for public policies that support sustainable business.
So why become a B Corporation? Current corporate law makes it difficult for businesses to take employee, community, and environmental interests into consideration when making decisions. Also a lack of transparent standards makes it difficult for consumers to tell the difference between a “good company” and just good marketing. To address these issues, B Corporations’ legal structure expands corporate accountability and its performance standards enable consumers to support businesses that align with their values.
Although at present a majority of corporate CEOs may think that focusing on social responsibility as well as corporate profits is impractical or even ridiculous, Schultz believes these “naysayers” may be forced to become believers in the future or find themselves left behind. In the meantime, the philosophy appears to be working for the Starbucks Corporation. Schultz says he received a “standing ovation” at his shareholders meeting. Perhaps this is an indication that while people want to do “well” they also want to do “good”, and one doesn’t necessarily cancel out the other. Hopefully other CEOs will take notice and follow Schultz’s lead.
Go here to learn more about becoming a B Corporation.