The future is here: How B Corps are transforming corporate social responsibility
At BDC, we’ve struck gold: We’ve found a movement of public-minded entrepreneurs whose companies have precisely the kind of transformative power the traditional sustainability movement needs. These entrepreneurs think and act differently. The business certification they use—B Corp—is different from and more powerful than all others.
What defines these entrepreneurs is their belief that the purpose of a company is inclusive, environmentally sustainable prosperity. They gravitate to the B Corp certification (the “B” is for “beneficial”) because it’s the only one that clarifies and protects this central purpose.
These people really are gold: They create companies whose purpose benefits society and they incorporate this purpose into their business model and activities. They’re also highly transparent and accountable.
Reinventing corporate social responsibility
Their tweak of business purpose is key. Despite some praiseworthy successes, mainstream sustainability practices have failed to make the systemic change that our society and ecosystem need. The fundamental problem is that the pressure to create shareholder value almost always overwhelms the positive impact made possible by traditional “see-how-I-reduced-my-harm-or-risk” reporting.
Of the big picture, McGill University Management Studies Professor Henry Mintzberg says it well: “Successful corporate social responsibility initiatives will never match or remedy the effects of corporate social irresponsibility.”
By rewiring a company’s purpose, B Corp entrepreneurs sidestep the Achilles heel of the traditional approach. To have a firm certified as a B Corp, the entrepreneur must enshrine this broader societal purpose in the company’s articles of incorporation. He or she must also pass a rigorous assessment that grades the company’s accountability and transparency; its impact on its employees, the community and the environment; and the beneficial impact of its product or service. Finally, he or she must recertify the company every two years.
There are now close to 300 B Corps in Canada, in a wide range of economic sectors and all regions.
A community of cutting-edge innovators
This movement of people using business as a force for good has exploded since the certification was launched a decade ago. There are now more than 3,100 B Corps in more than 50 countries. An iconic example is American ice cream company Ben & Jerry’s, but there are plenty of exciting Canadian examples: Fairware promotional products in Vancouver, Chandos Construction in Edmonton, Beau’s Brewing outside Ottawa and commercial real estate company Gestion Immobilière Quo Vadis in Montreal.
My strong hunch is that for every public-minded entrepreneur who’s achieved B Corp certification, there are several more who haven’t but whose companies would be prime candidates. One example is Zita Cobb of Fogo, Newfoundland, whose famed Fogo Island Inn is widely admired and the centrepiece of the several ways she works to create sustainable livelihoods in her home town. Hence, we are focusing on supporting people defined by their belief in the purpose of a company, rather than on promoting the generic business case for sustainability. We’re betting on more entrepreneurs like Zita.
B Corps: What we bankers see
When we look at these entrepreneurs’ companies, we see many things. First, we see innovation. They’ve taken a proven model—the corporation—and tweaked it to solve a stubborn problem: prosperity that doesn’t include enough people and that isn’t always environmentally sustainable.
Two, we see rigour. The B Corp certification assessment is comprehensive and bracing. A poorly managed company won’t pass. B Corp companies are well-managed companies.
Three, we see success. We see that B Corp companies are as profitable and resilient as traditional companies. Repeat: They’re as solid as traditional companies.
Finally, we see that becoming a B Corp brings advantages: brand identity differentiation, powerful social media appeal, line-ups of potential millennial employees and membership in a club whose members seek to do business with each other.
Helping grow the B Corp movement
For all these reasons, we’ve provided roughly $80 million in financing for B Corps and other social purpose companies, and we’re confident it’s money well placed. We’ve also invested $1.5 million in grassroots organizations and initiatives that support social purpose entrepreneurs across Canada, from Le Salon 1861 in Montreal to RADIUS at Simon Fraser University.
We work with B Lab, the body that certifies B Corps, to make a short and simple version of the B Corp assessment available for free online. It allows entrepreneurs to quickly and easily benchmark their companies against B Corp standards—as well as against their peers around the world.
And, we work to raise awareness of the certification and the movement. We host these entrepreneurs and their peers at events across Canada. Last year, we attracted some 5,500 of them to more than 100 events. We also talk a lot about B Corps on social media—where, strikingly, it is BDC’s most popular topic.
BDC: The only Canadian B Corp bank
I’m excited to be part of this movement and happy to have led the small team at BDC that spearheaded these initiatives.
Because BDC is dedicated to entrepreneurs, convincing colleagues to support those that are public-minded or B Corps was a straightforward affair. I’m especially proud that our efforts led BDC to become the first Canadian financial institution to certify as a B Corp. We did so because we want these entrepreneurs to know we’re here to support them. We also sought certification to enhance our credibility—we have to prove we mean what we say.
Cultivating a new force for sustainability
I believe that our team’s biggest impact has been convincing a bank to innovate in a way that helps better support social purpose and B Corp entrepreneurs—a new force for sustainability in Canada. However, the bigger hurdles lie ahead.
Recall that our aim is to help grow the B Corp movement. It’s hard to attract the many entrepreneurs who are public- and society-minded but who’ve never heard of the certification. A related and perhaps bigger challenge involves wrestling people’s minds away from the conventional thinking that using a company as a force for good will decrease or delay the firm’s success—because the company is also creating social or environmental benefits. B Corps have proven this idea wrong.
Second, a network is not enough. We need a robust community. This is critical. We want the current network of B Corp and B Corp-ish entrepreneurs—who occasionally meet and see each other’s names on lists—to grow into a community of people who know, talk with, help and do more business with each other. There’s work to do!
I believe Canada needs a robust community of entrepreneurs who use their companies to create inclusive prosperity in an environmentally sustainable way. So my goal is to help spread the powerful idea that a company’s purpose is societal, not just focused on shareholders.
How will we know we’ve succeeded? When the B Corps of this world are unremarkable!