"B Corps" - for-benefit corporations (rather than only for-profit) - are proving their worth


The UK has established a strong tradition in “social” enterprise over the last two decades. The official Government definition is:

Businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.

The radical theorists Hardt and Negri recently confessed that they nearly called their latest book, Assembly, by a different title: Enterprise. Since the days of Thatcherite advocacy, the word has returned to a more secular, less ideological definition - something more akin to the notion of an (ad)venture, by means of an organisation that is flexible and adaptive in its structure. We have covered social enterprise in many forms at A/UK.

It wouldn’t quite be right to talk about the American “B Corp” movement as their belated catch-up with social enterprise in the UK - Bill Drayton coined the term “social enterpreneur” in 1980, while founding the Ashoka Foundation. But B Corps - meaning for-benefit rather than for-profit corporations - has become a very powerful recent movement, in the home of capitalism, encouraging the primacy of “stakeholder” over “shareholder” value. As they define themselves:

Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.

Society’s most challenging problems cannot be solved by government and nonprofits alone. By harnessing the power of business, B Corps use profits and growth as a means to a greater end: positive impact for their employees, communities, and the environment. The B Corp community works toward reduced inequality, lower levels of poverty, a healthier environment, stronger communities, and the creation of more high quality jobs with dignity and purpose.

B Corps form a community of leaders and drive a global movement of people using business as a force for good. The values and aspirations of the B Corp community are embedded in the B Corp Declaration of Interdependence.

Can there be a “capitalist reformation”, as some argue for in this field (like the co-founder of B Corp, Jay Coen Gilbert), which can redefine business away from being defined by the values of “homo economicus”? One significant voice who gives this qualified support is Anand Giridharadas, whose book "Winners Take All" is a scathing critique of the way elites treat philanthropy.

In this Business Insider interview , he addresses B-Corps directly:

Giridharadas: I think the B Corp example is fascinating, and I think that Elizabeth Warren proposal next to it is a great development. [Elizabeth Warren, a Presidential candidate for 2020, has suggested that B Corp principles be introduced into company law in the US]

The B Lab thing on its own is part of this feeling that's very influential in our time, which is, as Andrew Kassoy explained to me in the book, "making good easier." A lot of CSR, corporate social responsibility, impact this and that, it's all about let's create more mechanisms and modalities and even just social praise for companies to get more approval when they do good.

And I think that's great and I think there's a powerful demonstration effect, but I think again, what you need in the moment that we happen to be in, it behooves us just as much if not more on making it harder to do something bad.

It seems to me that making 5,000 or 10,000, or even 20,000 companies do good, better, or certify themselves as doing better, pales in comparison to the effect that you'd have making it illegal to ruin the climate, making it illegal to employ people in ways that drive them into hunger when they work 40-hour weeks. 

Feloni: Is there a way, though, that you could see an initiative in the private sphere as a positive development if it even brings an issue into the conversation, so that public action can then take place? 

Giridharadas: I think what has happened with B Lab is actually the ideal case that I advocate for, which is a small, private experiment not remaining private, but they have fought to change laws at the state level, to first just making it possible to be good and then Elizabeth Warren can take that and run with it.

This is exactly what I would hope would happen. I actually wish that more things would follow that model of something that where you really start with something that's private that filters into public policy.

For more on B Corps, read from their main UK site. And see these regular updates on Medium.