B Lab Uses Businesses as Forces for Good

The Sept. 1, 2017 passage of HB3488 adds Texas to the list of 33 states with official benefit corporation legislation. B Lab, a nonprofit that certifies for-profit corporations as B (beneficial) Corporations, lobbies states to change regulations surrounding company profits. Successful passage of this newest legislation signifies the growing strength of the B Corporation movement.

B Lab aims to create beneficial social change through for-profit businesses. The nonprofit provides B Corporation certifications to businesses that pass a rigorous assessment that asks about everything from environmental impact to employee benefits. Companies that score high enough on the assessment then must amend their articles of incorporation to consider the interests of employees, the community and the environment.

As of 2014, over 1,000 companies spanning over 30 countries and 60 industries are B Certified. Some of the larger companies to become B Corporations are Etsy, Ben & Jerry’s and Patagonia.

The certification allows businesses to market themselves as socially responsible to customers and investors. B Lab still works to drive profits at B Corporations — the aim of the initiative is to show that beneficial corporations can be just as profitable as their competitors. B Certificates separate companies that actually do good from companies that simply market themselves as socially conscious.

B Lab has created the Global Impact Investment Rating System (GIIRS) to assess the relative social impact of corporations worldwide. The rating system is overseen by an independent board of experts and regulators to maintain neutrality.

In the U.S., B Lab has encountered some difficulty expanding B Certifications to all states. Laws pertaining to corporate profits vary from state to state. Some states rule that corporations are obligated to prioritize profits over all else in order to maximize revenue earned by shareholders. This rule means B Corporations cannot operate in these states, since B Lab requires companies to change their articles of incorporation to equally prioritize social responsibility and profit. Therefore, B Lab campaigns for changes to corporate laws on the state level. Currently, 33 states allow B Corporations and an additional six have pending legislation.

B Lab’s influence extends past U.S. borders. Roshan, a cellphone service provider in Afghanistan with 6.5 million subscribers, is an example of a B Corporation that benefits a developing country. The company challenges Afghanistan’s gender norms — 20% of the corporation’s labor force and 17% of its senior management team are women.

Additionally, Roshan has invested $700 million in infrastructure and additional millions in community development projects like well-building and the formation of computer learning centers. Through these investments, Roshan has created 30,000 jobs in Afghanistan.

Roshan’s focus on community development is not purely altruistic. The company’s investments add to its customer base by creating revenue sources for more citizens. For example, Roshan initiated a program to teach women how to fix mobile phones. Today, the proliferation of secondhand mobile phones has expanded Roshan’s customer base.

B Lab’s mobilization of businesses as forces for good has the potential to positively impact impoverished communities. By utilizing the private sector as a vehicle for social change, B Lab proves that corporate profits and community wealth are not mutually exclusive.

Katherine Parks

Photo: Flickr