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By Paul Phair
 
About a year ago I sat down with a bright, talented group of young people who are working to continually improve the community in South Bend.  The main topic of conversation at the gathering was B-Corporations.  As you will see in greater detail below, B-Corporations are a new way of doing business, or I should say ‘using’ business.  This is a new philosophy of using the power of commerce to implement or influence positive social and environmental impacts.
 
Besides the very positive characteristics of this approach to business on the face of this concept, I am intrigued by the B-Corp model for an underlying purpose that affects this and many other rust-belt communities who are looking to reinvent themselves.  That purpose is the attraction of young and creative people with the ability to implement positive social change through ‘out-of-the-box’ thinking.  This may be very difficult to prove, but I believe that a community that would embrace the B-Corp concept would send a strong message to the outside world that they are serious about innovation and social improvement.  This is meant to be a long-term strategy and will not change things overnight, so we should not abandon traditional ways of doing business.  However, there are two points (please see below) that stand out to me as it relates to B-Corps.  This is not just feel good, it does also make sense from a business perspective:
 
  • B-Corps have made up 31% of Business Week’s ‘America’s Most Promising Social Entrepreneurs’ since the list began in 2009
  • A  JP Morgan research report (11/2010) labeled impact investments as an “emerging asset class” with the profit potential in the hundreds of billions of dollars over the next decade

Below is a brief description of the who, what, when, where, and how of B-Corps:

What are certified B Corporations?

  • Certified B “Benefit” Corporations are a new type of corporation which uses the power of business to solve social and environmental problems.  B Corps are unlike traditional businesses because they:
    • Meet comprehensive and transparent social and environmental performance standards
    • Meet higher legal accountability standards
    • Build business constituency for good business

How do you become a certified B Corporation?

  • To become a certified B Corporation you have to do three things:
    • Take and pass the B Impact Ratings System.  This sets a benchmark for social and environmental impact for good companies.
    • Adopt the B Corporation Legal Framework to solidify the mission of the company in its legal DNA.
    • Sign a Term Sheet that makes your certification official.

Who is the Certifying Body?

  • B Corps are certified and supported by a non-profit known as B Lab.  B Lab is a nonprofit organization dedicated to use the power of business to solve social and environmental problems.  B Lab has three main initiatives to support the growing ecosystem of companies  creating good:
    • Build a community of certified B Corporations to make it easier for all consumers to tell the difference between “good companies” and just good marketing.
    • Development of the Global Impact Investment Ratings System (GIIRS) in order to drive institutional investment to high impact global private equity investments.
    • To advance public policy and incentives for sustainable business.
  • The B Lab’s five measured impact areas are: Accountability, Employees, Consumers, Community, Environment

What is the status of the B Corp movement?

  • 650 certified B Corps in the United States, and 18 other countries around the world
  • 2.18 billion in annual revenues
  • 60 industries (financial/investment; manufacturing; insurance; agriculture; etc.)
  • 37 out of 50 States have at least one certified B Corp (Indiana technically does not, sorry BWB!)
  • California is the leader with 120 certified B Corps

Is there “Benefit” Corporation Legislation?

  • Yes, currently there are ten states, Hawaii, Virginia, Maryland, Vermont, New Jersey, California, New York, Louisiana, Illinois, South Carolina who have passed Benefit Corporation Legislation in their states, and there are several more states that have proposed legislation and are working through the approval process
  • Philadelphia is the only City that has passed a resolution for tax incentives to certified B corporations

Miscellaneous B Corp positives

  • On average, certified B-Corps have grown 50% annually from 2008 – 2012
  • A National Ad Campaign began in 2010 reaching approximately 17 million values driven consumers
  • Discounts from over 80 partner companies (ex. Salesforce) save B Corps $5,000,000 annually in services
  •  Made up 31% of Business Week’s ‘America’s Most Promising Social Entrepreneurs’ since the list began in 2009
  • A  JP Morgan research report (11/2010) labeled impact investments as an “emerging asset class” with the profit potential in the hundreds of billions of dollars over the next decade

For more information about B-Corps, visit http://www.bcorporation.net/

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