B-Corps: Building Better Businesses
By Rob Persons
March 4, 2017
What is ice cream’s carbon footprint? From the materials used in creating containers to the fuel necessary to transport the final products to stores, ice cream, like every other product, has an ecological impact. Companies are often unwilling to disclose the unsavory aspects of their supply chain. This lack of transparency allows for worker mistreatment to go unnoticed, and ecological detriment to be overlooked. Consumers are kept unaware, so even the most environmentally conscious people can be misled.
If global ecological health is to improve, business practices must change. Leaders in politics and industry assume that markets will correct themselves in accordance with current social and environmental conditions. This mentality has often led to inequality and resource exploitation. Businesses must make decisions with the benefit of both humans and the environment in mind - a concept called corporate social responsibility (CSR) - if they are to stop toxic corporate practices.
B-Corporations (B-Corps) are for-profit entities that seek to improve social and environmental conditions while still generating profit. In 2006, the nonprofit B-Lab was created with the vision of updating the business as usual mindset to include social and environmental stewardship goals, along with the bottom line of profit. Today, there are 2,064 certified B-Corporations across fifty countries, which includes iconic brands such as Etsy, Cabot, and Patagonia. As a third party non-profit organization, B-Lab offers B-Corp certification to companies that score at least 80 out of 200 on the B-Corp Assessment, which focuses on transparency, social and environmental impacts, and the corporate structure of the company. B-Lab also mandates that the language of a company’s corporate governing documents is amended to ensure that responsible initiatives are not abandoned after a socially-minded executive leaves the company. B-Lab’s standards are vital to ensure that companies pursue activities aligned with their rhetoric.
Benefit corporations offer another framework for sustainable business practices. Although both are for-profit entities, benefit corporations differ from B-Corps in that they offer a legal framework for companies to pursue environmental and social considerations. The legal classification of benefit corporation prevents shareholders from firing an executive who sacrifices potential profit for social or environmental causes, protecting business leaders who choose safer practices over cheaper ones. In 2010, Maryland became the first state to pass legislation permitting the establishment of benefit corporations. Today, 30 states and Washington D.C. have similar statutes. Although many benefit corporations use the B-Corp assessment, they are not held to the same rigorous independent standards.
The B-Corporation and benefit corporation certification models offer promising outlets for social and environmental empowerment. Comparing other corporate models, an article in the William and Mary Law Review argued that “the benefit corporation most effectively blends profit with social and environmental goals, and accountability with flexibility.”
Nobel Prize-winning economist Milton Friedman once detracted proponents of corporate social responsibility for “attempting to undermine the basis of a free society.” Friedman describes any requirement of a private corporate entity to consider the public good as a form of “pure, unadulterated socialism.” He notes that corporate executives are the employees of company stockholders, so their actions should work only to forward stockholders’ interests. Reflecting Friedman’s theories, only a few companies have chosen to adopt either CSR model.
Contrary to these concerns, some large companies are adopting corporate social responsibility goals, along with benefit and B-Corp certification. In 2015, Ben & Jerry’s, the world’s fourth best-selling ice cream company, earned $1.23 billion in global sales as a B-Corporation. In accordance with B-Lab’s emphasis on transparency, Ben & Jerry’s publishes a life cycle analysis where the consumer can see the actual impacts of their products. “The life cycle analysis was more of a behind-the-scenes study in 2014, which was Ben & Jerry’s checking itself to see what amount of carbon was being produced at each stage of the process,” said Jeremy Hulsey, manager of Ben & Jerry’s at the University of Vermont.
Ben & Jerry’s found that one pint of their ice cream emits two pounds of carbon dioxide from conception to consumption, the equivalent of driving a car for two miles. In addition to examining their carbon footprint, the company has also launched an initiative to transition from synthetic refrigerants, which contribute to stratospheric ozone depletion, to more efficient hydrocarbons. As a B-Corp, Ben & Jerry’s is not afraid to show the consequences of their business practices, and is still able to make billions of dollars in profit.
The life cycle analysis demonstrates that Ben & Jerry’s is not perfect. While the company still emits more carbon than they offset and relies on conventional agricultural practices, Ben & Jerry’s, unlike many other companies, acknowledges their impacts. By enhancing transparency and working towards environmentally beneficial goals, Ben & Jerry’s educates consumers about the impacts of business that are most often swept under the rug. Increasing consumer awareness may inspire future investment in more sustainable business practices.
But environmental activist Bill McKibben has shown little optimism about voluntary corporate social responsibility practices. He points to BP’s failure to take action after signing the World Business Council on Sustainable Development’s manifesto in 2004. The BP Deepwater Horizon spill, the largest corporate oil spill in history, occurred only six years after the company had committed to promote sustainability. McKibben argues that business can, in theory, be a true force of good. If adoption of benefit and B-Corp practices remain voluntary, there is question as to how corporate social responsibility standards will become mainstream.
As of now, companies like Ben & Jerry’s are rarities. Voluntary corporate social responsibility is impossible without visionary business leaders. Still, Ben & Jerry’s adherence to the B-Corp model could encourage more responsible corporate behavior. Once consumers know the carbon footprint of their ice cream, they may challenge other companies to make similar disclosures and expand their efforts to mitigate environmental harm.
