2/2: B-Corp Changing CSR's Rules, Literally

This is part two of a series on B-Corp, which is both a company and a social movement. Find part 1 here, and read it first. As a company, B-Corp acts like a trade group for other B-Corps, which are social enterprises certified as B-Corps by sub-organization/ nonprofit B-Lab.

B-Corps: trading stakeholder for shareholder primacy

B-Corps are companies that create a corporate framework in their founding legal documents that explicitly recognize stakeholders. This recognition works to put shareholders on notice of the organizations' social intentions and creates a legal means for managers to openly make stakeholder-friendly decisions. C-Corps, on the other hand, face a theoretical risk of lawsuit if they make business-unfriendly decisions through various corporate law theories. Post coming on that next … but read B-Corp founder Jay Coen Gilbert's comments on my original post for detail.

B-Corp a trade group for B-Corps

In the meantime, B-Corp acts like a trade group for the companies it certifies as B-Corps. B-Corp the company provides an array of CSR metrics, criteria and requirements (detailed on their website) by which they judge B-Corp applicants. The standards are strong; applicants need to be quite transparent and socially oriented to qualify. If applicants meet this criteria and pay a progressive fee based on net income, they join the B-Corp family. B-Corp then provides backend marketing support for its member B-Corps, discounts for services from the businesses within the B-Corp pool, relationships with major financiers and lobbying to have "benefit corporation" recognized by states and federal tax law.

This model is attractive for the same reason any trade group is- collective power that trumps companies acting individually. However, unlike other trade groups, B-Corp offers a specific benefits to consumers as well: transparent standards for triple bottom line enterprises. This set of 'best practices' for sustainability and business ethics provides a much needed baseline in the amorphous world of social enterprise. As more and more companies adopt faux social concern where convenient for marketing purposes, companies certified by B-Corp have met transparent, rigorous criteria available in their annual report.

B-Corp is also important in that, unlike other trade groups, it seeks significant changes to a century of convoluted corporate law, and thus seeks changes to capitalism as we know it. The more successful B-Corp is, the more consumers benefit from the growth of sustainable businesses and social enterprises that are legitimized as a form of business, not just a marketing gimmick.

B-Corp working towards global CSR standards

For this reason, B-Corp's ability to work with major financier members of the Global Impact Investing Network (such as Prudential and JPMorgan Chase) in developing GIIRS, is tremendously important. GIIRS stands for Global Impact Investing Rating System and provides transparent social standards on a larger scale, hopefully resulting in stakeholder education that drives financial investment towards companies with the highest rates of societal return over highest rates of return generally. In this way, B-Corp's model is already being adopted for application to mass financial markets.

The B-Corp movement shows just how pragmatic activists have become since 'fight the man' and treesitting days just a decade ago. B-Corps harness the power of social enterprise and sustainable business to fund the lobbying necessary to fix the corporate law problems  that give rise to shareholder primacy that incentivizes short term metric obsession in the first place. In doing so, they also provide information for consumers to purchase more responsibly, and they create a powerful marketing tool for already existing social enterprises. B-Corp, my heart beats for you.