B Corporations are taking center stage as the future of what sustainable, thriving companies can look like. Standing for “beneficial,” B Corporations (or B Corps) have high levels of social and environmental engagement, transparent practices, and legal accountability. They meet certain legal and performance requirements set up by B Lab, a global nonprofit organization.
Currently over 2,000 in number, companies such as Warby Parker, Cabot Creamery, and Patagonia have all taken the steps to become B Corps, and with good reason. A Harvard Business Review article stated that, “identifying as a B Corporation is a way to publicly claim an identity as an organization interested in both shareholder and stakeholder success.” The Sierra Club named it one of the most trustworthy “eco logos” on the market. As customers become more interested in sustainability and the sourcing of the products they buy, becoming a B Corp shows that a company’s social and environmental commitments are authentic.
B Corps are audited and certified, and the process to become a B Corp is rigorous. B Lab employs a 200-point scoring system to measure several aspects of a company, including its impact on employees through compensation, benefits and safety; impact on consumers, such as whether the product/service promotes a public benefit or targets underserved populations; accountability, including governance and customer engagement; and community, which examines whether the company uses locally-sourced materials and whether or not they give back to the communities they operate in through donations or service projects.
Further proof of the momentum B Corps are creating is ICIC’s Inner City 100 list, which has seen an increase in B Corps over the last several years and featured six in 2016. Inner City 100 companies are ranked by their 5-year growth rate, and so, by definition, are exemplary models of business growth and success in America’s inner cities. Imajine That, one of the B Corps on the 2016 list, is an early education company that started in Lawrence, Massachusetts and came in at #45 on the list with a 282% five-year growth rate. Richmond, Virginia’s Impact Makers, #23 on the list with a 461% five-year growth rate, donates all of its profits to charity. Another winner, Raining Rose, was spotlighted in Fortune for its B Corp status, high levels of employee loyalty, and $38 million in sales. Gelfand Partners Architects, Oaklandish, and AE Works Ltd. have also achieved B Corp status and have collectively generated $20 million in revenue. The success of these companies proves business owners do not have to make a choice between profit and public benefit; B Corps can operate sustainably, treat employees fairly, and remain transparent to the public while still experiencing rapid growth and healthy sales.
Earlier this year, B Lab announced that Laureate Education, a Certified B Corp, became the first benefit corporation to complete an Initial Public Offering. Laureate’s IPO shows that investors are becoming more aware of where they’re putting their money, and that they’re willing to invest in a company that eschews a traditional corporate model in favor of one that represents all stakeholders. The B Corp model provides a way for companies to have purpose beyond maximizing profits, which provides inner city companies another outlet to give back to the communities where they grow. As shown by the Inner City 100 winners, investing in employees, practices, and people can drive sustained growth. The financial success of businesses like Imajine that, Oaklandish, and Raining Rose, plus the newly-public Laureate Education, proves that investing in values upheld by B Corps will pay dividends for all.