You’ve probably heard of the new kind of corporation that’s using business as a force for good. NPR, The New York Times, Entrepreneur Magazine, Fortune, the Atlantic Monthly and many other major media outlets have covered these Benefit (B) Corporations.
Yet, even with all of the media coverage, many consumers and even investors still wonder what sets B Corps apart from other businesses, how much difference B Corps make and whether it’s possible to make a profit while doing what’s right.
B Corps are for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. Globally, there are more than 2500 Certified B Corps from 50 countries and over 130 industries working to redefine success in business.
Adding verification to this pledge, Certified B Corps get audited by the nonprofit B Lab on numerous criteria “for social and environmental performance, accountability, and transparency,” B Lab explains. Certified B Corps must be incorporated as a Benefit Corporation or Public Benefit Corporation (not a C or S Corp) with the applicable government organization (the state level in the U.S.), which provides the company with the legal protection to consider all stakeholders, not just shareholders. This is critical, since traditional corporate structures compel companies to put shareholders ahead of other considerations, including social or environmental values.
Ultimately, what makes a B Corp different from and more impactful than a traditional corporation that’s trying to do good (by giving away some money every year, volunteering, etc.,) is that for B Corps, doing what’s right is the reason that they exist. It’s built into their legal structure, their mission, and their values. It’s why the investors bought into the company. It’s why employees and customers stick around. And it’s what’s required of B Corps during the B Lab annual audits.
Facilities Management Services PBC (FMS) was one of the first B-Corps in Kentucky. Scott Koloms, President and owner of FMS, envisioned “a company that worked just as hard making the world the world a better place as it did being efficient and profitable. We want to show that positively affecting people’s lives beyond a pay check and positively affecting communities can lead to long-term financial success…for everyone.” FMS drives a number of social benefit programs including food-access initiatives, college-level educational opportunities, paid volunteer time and financial literacy assistance for its employees. Further, FMS works to create healthier, safer and cleaner neighborhoods where it does business. In the end, FMS enjoys lower turnover and consistent growth thanks to like-minded customers that believe in and share FMS’ values.
B Corp Eminence Organic Skin Care makes skin care products free of parabens, animal by-products, propylene glycol, sodium lauryl sulfates, harmful colorants and fragrances, mineral oils, petroleum, and other harsh cosmetic chemicals. Its farmers follow crop rotation, companion planting, composting and other techniques to keep the soil and planet healthy. Additionally, as explained in its B Lab profile, the company gives back by working with nonprofit Trees For The Future to plant trees and create new food sources in developing countries, and has planted more than 10 million trees so far. The company also established the Eminence Kids Foundation to provide organic meals to sick children worldwide.
Thrive Impact Sourcing describes itself as an IT talent incubator delivering locally sourced IT solutions to clients. What sets this B Corp apart is that it partners with a non-profit to provide free training to unemployed and low-wage workers and then offers full-time positions with the company after successful training. “By engaging with us, clients contribute to growing a local talent pool of IT professionals to close the skills gap in our marketplace, while meeting critical business needs,” explains the company on its B Lab page.
Doing the right thing wins employee and customer loyalty for B Corps, which, in turn, affects the company’s profits in a positive way.
Koloms says that FMS has an easier time with employee recruitment, lower employee turnover, and more engaged employees. The company’s turnover went from 120 percent to 69 percent in 2.5 years since implementing the B Corp mission — phenomenal compared to the industry’s average turnover of 250 percent. He also says companies have hired FMS specifically because of FMS’ B Corp status.
A simple way for you to be the change you want to see in the world is to support B Corps with your business. “Buy from certified B Corps. You can find a list of Kentucky B Corporations on B Lab as well as a worldwide listing,” Koloms says. As of January, 2018, there were five Certified Benefit Corporations and six Public Benefit Corporations in Kentucky.
If you would like to learn more about socially conscious business models consider becoming Canopy-Certified. Canopy can help you make the most impact through your business. Its mission is to create a one-stop shop with all of the resources you need, including access to mentors, nonprofit partners, social investors and Kentucky’s influencers.
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