Business and Markets

Redefining Success in Business

July 28, 2015  • Keosha Varela

As corporate executives focus on growing their companies’ profit margins, still others are joining a small but powerful movement working to make it part of their corporation’s mission to help solve the world’s most pressing issues such as poverty, global health disparities, and access to education. Described as the business version of Fair Trade coffee, B Lab offers a “B Corps” certification, also known as “best for the world” certification, to companies upholding higher social responsibility standards than their corporate counterparts. At the 2015 Aspen Action Forum, B Lab co-founder and Henry Crown Fellow Andrew Kassoy touched on the Forum’s theme of collaborative leadership by sharing the story of how B Lab came to be.

Kassoy explained that the idea for B Lab did not come through “an epiphany;” what started out as a Henry Crown Fellowship project idea turned into a joint effort between Henry Crown Fellows Jay Coen GilbertBart Houlahan, and Kassoy several years later. “We’d all come from the private sector, and we’d all had this idea that business ought to be used as a force for good,” Kassoy said. “The idea was really the evolution of capitalism, from a model that’s all about building wealth for shareholders to one that’s all about creating value for society.”

Since its founding nine years ago, more than 1,300 companies in 41 countries have been B Corps certified — including Warby Parker, Etsy, and Method — and more than 30 Aspen Global Leadership Network Fellows have been involved in the initiative.

Above, watch the opening lunch of the 2015 Aspen Action Forum, featuring a conversation about B Lab.

B Corp Certification: The Fair Trade of Businesses

A company that earns the B Corp stamp, “meets higher standards of social and environmental performance, accountability, and transparency,” Kassoy said. “And they do that by actually measuring their impact on all of their stakeholders in a transparent way for everyone to see. They also do it by actually changing their legal accountability so that they are accountable not just to their shareholders but also to their stakeholders.”

New Laws Add ‘Benefit Corporations’ into Corporate Sector

Corporate law in many states — and outside of the US — does not allow businesses to prioritize anything above maximizing profit for shareholders, Kassoy said. “That made us realize there’s a systemic problem here, and the only way to change a systemic problem is to change the system,” he said. B Lab met with several attornies to create benefit corporations, which operate like traditional corporations but that have “higher standards of fiduciary duty to consider all stakeholders.” B Lab then worked with Aspen Global Leadership Network Fellows, such as former Massachusetts Gov. Deval Patrick and Delaware Gov. Jack Markell, and others to pass laws in 31 states recognizing this new distinction.

Forty percent of B Corps certified companies are outside of the US, and that number is steadily growing, with Asia expected to be the next frontier for B Lab. “In Asia, we have big problems,” said AGLN Fellow Watanan Petersik. “And they’re the type of problems that, unless we have collaborative leadership on a grand scale, they’re not going to get solved.”

But Asian governments are starting to recognize the benefits of implementing corporate standards for social good, according to Petersik. “In Indonesia, two percent of natural resource companies have to be somehow expended on social causes, and a similar law was recently passed in India for companies above a certain size,” said Petersik.

While laws like this can be abused, “the role of an independent rating agency, which provides a framework for assessing what really constitutes a socially responsible or sustainable activity is very, very important,” in mitigating that issue, said Petersik.