'Benefit Corp' Status Incorporates Doing Good into Business Basics
Any business that is able to give back to its community knows how much it is appreciated. But what if “doing good” were actually a built-in part of your for-profit business model? Enter the "B Corp" movement, a trend that is allowing businesses to make a significant social or environmental impact and make money from it.
The Benefit Corporation movement was founded in 2007 by 81 companies seeking an alternative to the profit-only way of doing business. Like any other type of corporation, a B Corp does, of course, focus on its financial returns, but unlike traditional businesses, it is equally focused on making a positive difference in the world around it. B Corps acknowledge a responsibility to multiple stakeholders — not only their employees, but also their communities and the environment, and they can legally state this as their objective.
These companies are known for their efforts to make their business practices more transparent by answering to higher legal, social, and environmental standards of performance and accountability. Any business can say that it donates to charities or has a reduced carbon footprint, but with a B Corp, you get the assurance that it truly practices what it preaches: to legally become a Benefit Corporation, a business must go through a rigorous assessment process by a third-party nonprofit organization, B Lab, which uses a survey to rate a companyâs environmental practices , employee treatment, activism within its community and other factors. Businesses that surpass a certain score are certified by B Lab, which then audits them from time to time to ensure that they are living up to the movement’s standards.
[Read our weekly roundup on The Business of Good: News for Socially Minded Entrepreneurs]
B Lab certification "is like a Good Housekeeping seal of approval,” said David Murphy, CEO of one of the founding B Corporations, Better World Books. “If your company is a certified B Corporation, that really says something: You’re there to serve all those stakeholders, and you’re willing to prove it.”
Walking the talk
Murphy’s company is an excellent example of what the B Corp movement is all about. Better World Books, an online bookseller founded in 2002, states on its website that social and environmental responsibility is at the core of its business; it is not simply an “add-on component.” Better World Books operates using what it calls a triple bottom-line business model, the three bottom lines being financial, social, and environmental.
The company makes its profit by selling new and used books, but it gives a percentage of its funds and unsold books to literacy foundations across the globe, including Books for Africa, Invisible Children, the National Center for Family Literacy, Room to Read, and Worldfund. If a book is unable to be sold or donated, Murphy adds, Better World Books ensures that it is properly recycled.
The company has saved over 60 million pounds of books from landfills by working with college campuses and libraries to collect their unwanted titles, he says.
The success of Better World Books is due in part to its self-declared mission to support literacy and green initiatives, but ultimately lies on its efforts to ensure a great consumer experience with a wide selection, reasonable price, and efficient customer service.
“You have to get the basics right,” Murphy told BusinessNewsDaily. “If you mess that up, at that point your mission doesn’t mean a lot.”
Making a difference
The over 400 companies of the B Corp movement certainly are making their communities a better place, but looking like a superhero of the business world isn’t the only perk of being a Benefit Corporation. Murphy notes that B Lab is often able to arrange special deals for B Corps, giving them nonprofit rates on things like annual software licensing fees, which can save companies up to 90 percent. Additionally, a national branded advertising campaign for B Corps was recently launched, giving the companies major exposure for a minimal cost.
Up until now, becoming a Benefit Corporation has been an unofficial status for previously existing types of companies, but legislation has been passed in four states (Maryland, New Jersey, Vermont and Virginia) to make the B Corp a legally recognized corporate structure . Murphy sees the movement growing tremendously in the next several years.
“More and more people are finding out about it and they like what they see,” he says.