Big impersonal corporations are becoming more personal as they adopt concepts of social responsibility, sustainability, and environmental awareness.
In our global economy, many companies get lost in their pursuit of profit and lose sight of the bigger picture—that businesses operate within a larger economic ecosystem. Fortunately, a new culture of business is emerging, where companies recognize their part in taking care of the world for future generations.
Corporate Social Responsibility (CSR)
CSR is a concept in which companies voluntarily take into account social and environmental concerns in addition to their pursuit of profits. These additions are considered equally, if not more important than a company’s economic pursuits, and essentially boils down to a “triple bottom line” approach of accountability to people, planet, and profits.
An important distinction here is to recognize that business affects more than just a company’s shareholders—those who are financially invested or may own the financial rights to a business. As consumers, it’s often difficult to see that many of the products and services we buy are embedded within extremely long value chains, often encompassing several companies, multiple chains of supply, and geographic areas—all of which are relied upon by communities around the world.
Think about all the different people involved in bringing you something such as a smart phone or a loaf of chocolate chip banana bread.
Beyond shareholders, companies looking to adopt CSR strategies will also consider stakeholders. These include not only those who interact directly with a company—employees, customers, suppliers, and other communities integrated into a particular industry—but also those affected indirectly—people and communities who may be affected by externalities such as waste deposits, congestion, air pollution, or depletion of natural resources.
As well as mitigating the negative impacts on communities and the environment, Dermot Hikisch, head of community development at B Lab, a nonprofit certification body that “is to sustainable business what LEED certification is to green building or Fair Trade certification is to coffee,” sees the business sector as a crucial arena for improving global sustainability. “Businesses really need to be a part of the solution,” says Hikisch. “Nonprofits and governments are doing great work, but without businesses actively engaged, I don’t think we’re going to have a chance at solving the task at hand.”
As we’ve learned from previous greenwashing epidemics around corporate environmental commitments, discussions around CSR undoubtedly raise the question, “How do we know how much a business has really committed to sustainability?”
Ian Walker, president at Left Coast Naturals, says that his business is about more than making money; it’s about making something that will benefit the world. “We’ve always had an attitude that business is part of society, and if we’re going to be a part of society, we need to be a positive influence,” says Walker.
But when it came to sharing his company’s support for sustainability, Walker was left with the question of how to communicate a genuine sense of responsibility to the public. “My biggest fear,” says Walker, “was to come across as being a greenwasher.”
Much like Leadership in Energy and Environmental Design (LEED), organic, or fair trade certification, B Corp certification represents a third-party certification based on a specific set of standards.
What is unique about B Corp is its universal approach to measuring a company’s commitment to sustainability. Hikisch says, “The B Corp certification captures the good things a company is working on, from supply chains, labour initiatives, and greenhouse gas emissions management to community involvement, and puts them together under one score to show what the whole company is doing.” He adds, “Our core purpose is to be a service to the entrepreneur who wants to do good in the world.”
A system of verification
Modelled after the governing structure of standards organizations such as the Forest Stewardship Council, B Corp operates strictly as a nonprofit organization, and its standards are controlled by an independent advisory council that consists of industry and issue specialists.
B Corp standards are built around performance, transparency, and accountability and require that companies actively work to benefit workers, communities, and the environment. For example, some of the evaluation criteria include
- offering health benefits and professional development opportunities for employees
- having at least 50 percent of products that directly address a social issue
- donating 10 percent of profits or 1 percent of sales to charitable organizations
- actively recycling at least one output material
- helping industry create social and environmental standards
To become B Corp certified, a company completes a self-assessment with the goal of scoring 80 points. Once they achieve this score, they submit their assessment for review while providing the necessary documentation to prove that the questions were answered accurately.
The assessment lasts for two years, during which time there will be a 20 percent chance that the company will be randomly selected for an on-site review. Every two years, the company needs to retake the assessment, maintain a minimum score of 80 points, and go through the same review process.
B Corp also goes beyond looking at what companies are doing; it helps build a framework for a company’s future commitment to sustainability, something that Walker was quick to discuss. “If I built [Left Coast] into a massive business and made great profit,” says Walker, “I don’t think I’d be as proud as if I made something better for the world.”
“It really is about legacy for a lot of these original founders,” says Hikisch. “They’ve been building these companies for decades, and all of a sudden they’re worried their mission won’t be carried on for the next 50 years.”
Hikisch explains that B Corp requires companies to “make a legal change in their articles, corporate charter, or operating agreement.” This change, referred to as the “B Corp Declaration,” essentially makes it clear that a company will operate in consideration of all stakeholders and seek to benefit everyone. Making these changes “really brings the notion that ‘we shall consider all stakeholders’ right to the core of the company,” says Hikisch.
This change is especially relevant in the case of publicly owned companies, where profit maximization can dominate the corporate strategies of managers who often feel obligated to their financial shareholders. Hikisch explains that within a public company, “Shareholders could jump away next week and come back later on. This approach is really disruptive to a lot of companies trying to do bigger things than just manage their economic flows and make as much profit as possible.”
Consumers taking notice?
Aron Bjornson, director of marketing at Salt Spring Coffee, a B Corp certified company, says, “We’re seeing increased awareness and demand for organic, more recognition of fair trade, and more people talking about buying local and fresh as being important.” But he also sees a disparaging support for products that cater more toward convenience and fast-paced lifestyles—a self-centred perspective that isn’t so concerned with people or the environment.
In speaking to the transparent and measurable outcomes of business certification, Bjornson says, “This is where growing awareness of what sustainability means, and being able to quantify it—to distill it—is really important so that consumers can understand it.”
“[Consumer] actions actually have big impact,” adds Bjornson, who encourages consumers to look for certifications such as B Corp. When it comes to supporting these commitments on behalf of business, it’s important that consumers recognize the influence of their purchasing decisions—both in terms of supporting more sustainable products and services, and in supporting the businesses that offer them.