On benefit corporations

On Tuesday night I attended the second CSR Meetup in Amsterdam which would be about the phenomenon of benefit corporations. A term I had never heard of before, so I was interested to learn more as it’s one part of social entrepreneurship.

I like the idea of social entrepreneurship where a social issue becomes central and contributing to a change on this issue is taken up as a business venture. This also seems to be an increasing phenomenon.

Taking on a social issue as a business, or at least making social issues central to how you do business, also means taking into account the concerns of all stakeholders. And not just the shareholder whose main objective is likely to be making the most profit. In the Netherlands this idea isn’t new at all: Dutch corporate law determines that a company needs to make the best decision for the company based on the interests of all stakeholders. However, in the US this is not the case. According to corporate law there the wishes of the shareholders – i.e. maximizing profit – are leading for company decisions. A more legal discussion on these differences can be read in this article by Sjoerd Kamerbeek.

The non-profit organisation B-Lab is working with businesses in the US to change this and it wants to introduce legislation that will make it legally binding to take all stakeholders into account and report on this for these types of corporations. Eleven states have so far passed this legislation which makes the legal environment for social enterprises much more secure.

B-Lab is doing a lot more than just this policy work which was the main topic of the CSR Meetup where the organisation gave an overview of their main activity: certifying companies for the B-Corp standards.

B-Corp is a certification scheme which aims to ‘shine the light’ on these companies with that community mission. It isn’t just about a product – for which there are many standards already – but looks at the whole of the company and whether it lives up to this premise and reports on it accordingly. So far, over 600 companies (one well-known example of which is Patagonia) have been certified, mainly in the US. Interest is this scheme is increasing in other countries and the organization is exploring which other countries would be interesting to expand to.

What I find most interesting about B-Corp is that it seems to turn around the premise of doing business and assesses a company on that. Many other certification & reporting schemes (GRI, ISO26000, MVO Prestatieladder, to name just a few that I know of) work with the idea that a company’s main concern is making a profit but they should do this responsibly – and this is where these certifications come in. B-Corp looks at it the other way around: a company is in it for the good of society and it’s, happily, making money doing so. How well does it live up to that premise, and, what is a company’s social impact, are the questions that B-Corp tries to answer.

The ideas behind B-Corp are interesting and it’s good to see it growing, though I can’t help wondering if there would also be a place for yet another certification scheme in the Netherlands. Consumers are already getting lost in the masses of eco- and sustainability labels on products: would one that is not about the product but about the company behind it be any less confusing or any more transparent? I also see that it is becoming more difficult for, especially, SME’s to figure out if CSR certification will be useful to them and if so, which scheme to use. Adding another option to the mix might only be counterproductive.

I haven’t made up my mind yet, despite an interesting evening of presentations and discussion. I am curious though to see what progress B-Lab will make in further positioning this scheme in the US and abroad. And most of all, how companies will respond.

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