The B Corp movement is growing. There are now more than 2,000 certified B Corps in 54 countries, all united by the vision of using the power of the private sector to address social and environmental challenges. B Corp certification offers a refreshing alternative to the traditional corporate model, by requiring businesses to consider how they create value for society, not just shareholders.
Why aren’t there more publicly listed B Corps?
A handful of publicly listed companies such as Natura, Australian Ethical, and Etsy are certified B Corporations, but currently the vast majority of B Corps are small and privately owned. For the movement to have a global impact, it needs to scale up and involve companies of all shapes and sizes. So, what is stopping more of the big players from getting involved?
Our research has revealed three types of barriers:
1. Practical barriers - It takes much more time and resources to certify global companies with complex value chains than small, privately-owned companies.
2. Institutional barriers - Currently, public companies are required to meet similar legal, transparency and performance requirements as smaller companies. These standards are often disproportionately challenging for larger companies (e.g. performance metrics could be drawing from billions of data points)
3. Systemic barriers – The B Corp movement challenges a capitalist system that has become obsessed with short term financial results and shareholder returns. Companies face constraints that originate from both corporate law and cultural norms. Going against the status quo requires courage and support.
What’s in it for publicly listed companies?
Despite the challenges, B Corp certification remains a strategic opportunity for public companies. The stronger and more authentic a company’s social purpose is, the more it can generate competitive advantage. As Danone’s CEO explained in a recent investor conference, they are pursuing the ‘dual goal’ of profits and social benefits because employees today are looking for this and because consumers are increasingly requesting evidence that companies are behaving responsibly. (See more in The Value of Corporate Purpose).
What’s next for B Corps and public companies?
It’s great to see that solutions are in the pipeline. Recognising the opportunity at hand, a group of business leaders from companies including Unilever, Danone, Campbell’s Soup, Natura, Suncorp and Bancolombia (one of the largest banks in Latin America), have set up an advisory body to help develop a practical and meaningful certification process for public and multinational companies. Some have already been actively participating in the movement by acquiring B Corp subsidiaries, conducting test pilot certifications in different business units, and improving in-house capabilities for measuring and tracking performance. The group is expected to make publicly available recommendations by the end of 2017.
Changing the status quo requires leadership and determination. It’s encouraging to see companies taking the initiative to develop the B Corp model and make it accessible to all. The interest shown by global companies in the B Certification to date suggests that this is only the beginning. It’s illustrative of a broader shift in business thinking that is underway. Big business can, and must, be good for the world.
Read more in our special report - B Corps & Benefit Corporations: Understanding the Implications for Companies and Investors