There is an increasing trend among companies toward being more socially and environmentally responsible. These companies, called social innovation ventures, often look beyond traditional financial success when measuring performance. Instead, they often evaluate themselves based on a Triple Bottom Line (TBL).
The TBL is a quantitative evaluation that examines a company’s social, environmental and financial success/failure.
The three areas of measurement for the TBL are commonly referred to as the three Ps: people, planet, and profit. In measuring their TBL performance companies shift their priorities to ensuring that their business activates align with their personal values.
Which Companies are B Corps?
One of the leaders in developing and implementing TBL metrics is B-Lab, a nonprofit that evaluates and grants companies "B-Corp Certification”. This certification is similar to the way the US Green Building Council grants LEED Certification approval and is seen by many as “the highest standard for socially responsible businesses".
Like LEED, B Corp certification has seen a surge in popularity. Since it’s founding in 2007 B Lab has issued B Corp Certification to several well known brands such as Ben & Jerry’s, Warby Parker, Etsy, Method, New Belgium Brewery, and Patagonia.
These companies are just a few of the more than 1,100 Certified B Corporations, who pledge to achieve social and/or environmental goals in addition to their business ones.
One big thing to note is that as a Certified B Corp you are NOT legally required to pursue social and/or environmental goals over the pursuit of profit. This is different from companies that incorporate themselves as a “benefit corporation”, a new legal designation available is many, but not all, US States, which empowers company directors to pursue their company’s social and/or environmental mission at the cost of profit without fear of being sued for violating their fiduciary duty, as they would be in a traditional corporate structure.
So while not legally binding, like incorporating as a ‘benefit corporation’, B-Corp Certification creates a public statement of commitment to pursuing triple-bottom line goals, which if this commitment was broken would damage the reputation of the company.
Why Should I Incorporate as a B-Corp?
The trend of more companies pursuing B-Corp Certification only looks to be getting stronger as it increasingly becomes an advantage in two key areas:
1. Attracting talent and engaging employees
According to The 2015 Deloitte Millennial Survey, 60% of millennials said a sense of purpose is part of the reason they chose to work for their current employer. Becoming a Certified B Corporation can unleash this incoming leadership generation’s passion, initiative, and imagination by connecting them with the larger purpose behind their work.
2. Increasing consumer trust
Consumers are increasingly voting with their dollars that they do not want to buy from a company that has a poor overall social and environmental record, with over 71% of Americans making the environmental impact of their purchase a key factor in their decision making on whether to buy or not an item. Buyers want to know what kind of company stands behind the product or service they are considering purchasing.
The shift in the United States population's perspective toward putting greater emphasis on the social and/or environmental responsibility of a business is a marked shift from the dominant ideology, that increased profits are the only social responsibility of business.
This shift in perspective is allowing TBL focused companies to not only achieve the altruistic goals they set, but also outcompete their more profit driven competitors, prompting Economics Nobel laureate, Robert Shiller to postulate that “B Corporations will make more profits that other types of companies.”
How Do I Set Up a B Corporation?
Like any entrepreneurial activity, social ventures require creative ideas, meticulous planning, focused execution, and the flexibility to withstand unanticipated challenges and competitive responses.
However, as explained above, unlike a typical business start-up, a social venture will consider positive social and environmental impacts to be at least as important as financial returns.
If you think creating a social venture is something you might be interested in I’ve included some additional resources below and I will also be releasing part two next week, which will help provide you with all the tools and resources you’d need to develop and pitch a social venture idea.