I had never heard of a B Corporation until my first semester in Antioch New England’s Green MBA program, but the idea of it immediately resonated with me.
During much of my 30 years of working for large corporations, I focused on where the interests of the business and environment overlapped. Improving upon wasteful business processes lessened the companies’ environmental impact while also improving bottom-line profits. But that only went so far.
Most of the progress made was largely the result of technical improvements, but after a certain point, further progress was constrained by more fundamental systemic problems. Sustainability was all well and good as long as it helped the bottom-line continue to grow, but growing profits and maximizing shareholder returns would always be the top priorities. In fact, management has the legal obligation to treat them as such.
That’s why I think the B (benefit) Corporation is such an exciting and important development. Last year, Maryland and Vermont passed B Corporation legislation creating a new corporate form in which fiduciary responsibility has been redefined to include non-financial interests in decision-making. In fact, companies are held accountable for creating a material positive impact on society and the environment according to an independent, transparent third party standard. The interests of shareholders are no longer held above those of the environment, workers and the community.
Working to achieve both financial and social returns, I view the B Corporation structure as one way to reconcile the polarities of self-interested traditional corporations and altruistic non-profits. While many corporations have ambitious and well-publicized CSR and sustainability programs, the transparent standards of a B Corporation will help consumers and business partners distinguish good companies from good marketing.
There are now more than 370 B Corps from more than 60 industries, and 9 more states are in the process of following Maryland and Vermont’s lead later this year. The day that Maryland passed the first B Corp legislation, Jay Coen Gilbert of the B Lab said: “Today marks an inflection point in the evolution of capitalism”……I hope he proves to be right.