Sunday, January 10, 2010

B Corporations Brand Sustainable Business

To help consumers differentiate sustainable brands from green washers and cheap imitations, B Lab recently launched a certification system to rank sustainable companies. Companies certified as “B Corporations” must meet strict social and environmental standards, as well as agree to build stakeholder interests into their corporate governance. Companies must supply documentation to back their applications and are subject to third-party audits. The organization spends millions to make the B Corporation brand a “seal of approval” for responsible business. This way, skeptical consumers and investors can differentiate between truly sustainable companies and those who simply run good PR campaigns.

To be a truly valuable brand, B Corps will need to gain wider acceptance and recognition from consumers without diluting its image or loosening its strict sustainability requirements. The twenty one founding B Corporations include successful social enterprises such as Seventh Generation, New Leaf Paper, White Dog Café, Pura Vida Coffee, and Method. The B Corps seal of approval indicates that these companies are doing much more than meeting baseline sustainability standards. And B Lab is dedicated to building consumer awareness with backing from a broad range of businesses and a very compelling marketing campaign. B Corporations benefit from collective market presence and differentiation from less responsible competitors. Of course, the label will need to maintain its high standards and transparent process to earn and keep consumers’ trust which, according to BBMG, is at an all time low.

B Corporations even go so far as to make legally-binding changes to their corporate governing documents that require managers and execs to serve the interests of employees, the community, and the environment, in addition to shareholders. Lawyers are working to develop a toolkit and template to guide companies through this process while operating under current laws and tax regulations. They hope that these efforts will inspire changes in U.S policy to allow for new types of “for-benefit” entities and tax incentives toward building those businesses.

The British government recently created a new business structure called Community Interest Companies (CICS) that provide a legal mechanism for social enterprises that want to use their profits and assets for public good without being classified as non-profits or charities. Social enterprises are needed now more than ever, to rebuild our financial systems and global economy responsibly. Encouraging businesses to create a positive impact through tax breaks and other financial incentives will make business and society benefit us all.

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