For a number of years the world has been seeing a growing awareness and interest among the public in supporting ethical and socially responsible business activity. It is almost a decade since the Occupy movement first emerged in New York City, rapidly going on to engender activity internationally in protest against inequality. Time was called on the premise of ‘the rich get richer while the poor get poorer’. Whilst movements and groups such as Occupy and Anonymous have provided a very obvious, activist expression of societal discontent, in the world of business a quieter but no less significant revolution has been progressing.
The actual manifestations of this revolution have various names. B Lab, Justmeans, Sustainable Brands, Green America – all separate organisations committed to the same goal of providing a certification system by which the public can identify businesses that conduct themselves in socially ethical and responsible ways at all levels. For the purposes of this article I have chosen to focus attention on B Lab and its B Corps certification, which is now tending to lead the field, but much of what follows can be applied to any similar organisation.
In the UK the concept of the social enterprise has been around for two decades. These are businesses with primarily social objectives that reinvest their surpluses either in the communities in which they are based or in the business itself to improve the social value of what it offers. Crucially, these are businesses that do not commit those surpluses to lining the capacious pockets of their board members and shareholders each year while their workers are left to struggle without the kind of spending ability that makes a real difference to local economies.
B Lab (the B stands for ‘beneficial’) was founded in America in 2006.
Like its American and international counterparts it is a private sector organisation that was set up for the purposes of providing certification to ‘for profit’ corporations that voluntarily aim for transparency, accountability and sustainability in the way they conduct their business, and that use their profits for the benefit of all stakeholders and wider society rather than merely dividing them among shareholders. Businesses may apply to B Lab for certification on the basis of environmental and social performance and, once assessed and approved, they become B Corps (‘beneficial corporations’).
It is worth noting that in the US the similar term ‘benefit corporation’ is an actual legal designation by which businesses of this type are recognised in much of the country. Many of these may be B Corps as well, but the two terms are separate. Benefit corporations have legal responsibilities as such. Although B Lab is a powerful lobbying force for the creating, changing and enforcing law in relation to ethical business practices, a B Corps certification itself does not carry any legal status.
B Corps certification has become a powerful force in the drive for stakeholder over shareholder primacy. B Lab now has international offices and, as of April 2020, there were more than 3,300 certified B Corps in 71 countries around the world. This and similar organisations may have emerged in the wake of the social enterprise movement in the UK, but they have done a great deal more than merely follow along behind.
What we are seeing increasingly nowadays is a redefining of what constitutes a successful business.
This process has been expanded and accelerated by the Covid-19 pandemic in ways that no one could ever have foreseen. Governments and nonprofit organisations alone cannot solve all of the problems facing society today, and this has never been clearer than in the last few months. Business has an important role to play too but, for the majority of people, to see individual shareholders in big corporations profiting from the present crisis could hardly be more distasteful.
Pre-Covid there was much discussion of the extent to which it was even realistic to imagine a time when the majority of businesses turned away from traditional economic models towards a more societally focused aim of making the world a better place by what they do. It isn’t just about rewarding businesses for doing good. It’s just as important to make the consequences of doing bad hurt. The only really compelling way in which this happens is for customers to begin to desert the businesses that fail in the areas that matter. Enabling members of the general public to make value judgments about the businesses they support without needing to undertake extensive research is precisely what B Corps certification and similar is designed to do. B Lab and its counterparts do the research so that we the people do not need to. All well and good, but could it ever really happen on the scale that would make a real difference? Enter Covid-19.
Our world, our lives, our ambitions, dreams and aspirations, have changed irrevocably in recent months.
It is now abundantly clear to most people that if we are ever to make sense of the tragedy that has happened and emerge from it into a brighter future, we need to recognise that getting back to normal is not going to be the same thing as deciding that 2020 just didn’t happen. The world has changed and it will change more. People think differently now than they did twelve months ago. The things that were important then may not seem so significant now, and all across the world there is an expectation now that business will do good and benefit society that simply would not have developed without this crisis. It is Covid’s twisted blessing that when we do eventually emerge from this it will be possible to build back better in a way that would never have been possible otherwise.
In the US senator and presidential candidate Elizabeth Warren had been a leading voice pre-Covid calling for the B Corps models of excellence to be pushed harder in law. But now her voice has been joined by many, many others. Global leaders in multiple sectors are now having real conversations about the creation of post-pandemic economies that will be fundamentally different from those of the past.
Businesses have awoken to the brutal realities of the reliance they have on their workers at all levels, and on the societies both local and global in which they trade.
It is no longer possible to view shareholders as the be all and end all in your business model. Covid has highlighted, often in the most desperate of ways, that without all stakeholders in a business working effectively that business can, and eventually will, fail. We are likely to emerge from this crisis into a new world order that is profoundly in opposition to a dystopian, Orwellian model of workers as drones, and business leaders around the globe know it.
The financial crisis of 2008 taught many valuable lessons, and a great number of them hurt, but the resulting changes were not as significant as perhaps they should have been because of the way in which the crisis effectively divided the world of business from society in general. Millions suffered in that crisis. Jobs were lost, homes repossessed, families torn apart, and greed was blamed. The emergence of movements such as Occupy gave voice to frustrations and anger but the result in many cases was a survival of the fittest mentality that drove businesses to slim down, restructure, and often to make large scale redundancies in order that the pain of the crisis wasn’t felt too sharply behind the panelled doors of the boardroom and at the shareholders’ lunch. Broadly speaking, the poor got a lot poorer but for the most part the rich stayed rich.
Covid has been a totally different experience, however, because suddenly we have been faced with an enemy that has no regard whatsoever for the size of anyone’s bank balance. It has been a leveller like no other, and so there is a very real sense in which the greater part of a journey begun in 2008 can only, and will only, be completed through the pandemic of 2020.
As society begins the long process of recovery and rebuilding, we know that this will only be achieved working together.
B Corps are demonstrating by example the ways in which business has a hugely impactful role to play here. Resources must be shared, communities helped and served, and workers supported. In living memory it has never been more important for us all to feel that we are not alone. Those businesses that are making a real effort and having a real impact are becoming the examples against which all others will be judged. The old ways just won’t do anymore.
We are seeing businesses using their profits to provide free food, personal protective equipment for frontline health workers, and hospital supplies such as bedding and life-saving machines.
B Corps are demonstrating ways in which one business needing workers may take on employees from another business needing to lay them off, and a huge programme of online resources, advice, virtual live events, and business support is being fed by a willingness now to share business expertise for the good of all rather than guarding it for fear of helping the competition. In many cases businesses have begun to offer services to other businesses free of charge in order to give support, and are now seeing the beneficial results that might have seemed just too fanciful pre-Covid for many even to try. When even the leaders of the international banking community can come together and agree ways to provide support to struggling businesses in a spirit of love and cooperation, because they too have seen the direct effects of Covid in their own lives and those of their families, we cannot miss the obvious signs that should give us great hope for a better future.
No one can be in much doubt that the way out of the present crisis will be a hard one. Many difficulties lie ahead.
But history teaches us that, like the idea or not, pandemics always bring about a break with the past and a reimagining for the future. This latest, however, is different because it has affected a society that, through technology, is both more connected and at the same time more isolated than ever before. We all carry devices in our hands that make communication worldwide possible in ways that would have been unimaginable a few generations ago. Our news is delivered 24/7, straight to our phones, and if we so choose we can be better informed than at any time in our history. Yet most of us have been guilty of spending our lives interacting intently with our phone screens whilst totally ignoring the human being sitting next to us. Covid has brought about some change in that. We are increasingly aware, once again, of the needs of our friends and neighbours, and of the strengths and weaknesses of our local communities. This, together with the connectedness that technology offers, is creating a world in which businesses still espousing outmoded practices and placing the wealth of a privileged few above all else already find themselves more and more unable to hide from scrutiny. For them, life will only get worse.
Following the B Corps principles we can get this right, going forward, in a way that would not have been possible before.
Business can change the world for the better, they can conduct themselves in ways that make clear that people matter, they can strive to do only good in the world and they can work together for the benefit of this and future generations. As many of us struggle to make sense of what has happened we need to see some kind of positive potential to this mess. People fear talk of a new normal because they worry that it means the world they knew will be lost. In most ways this is not likely to happen. Science will provide, soon we hope, a means of getting our lives back to a pattern that feels much more familiar. But that does not mean that everything will go back to what it was before. If what was there before was a broken and corrupted system that worked for the few at the expense of the many, and Covid has provided an opportunity to fix that, why on earth would you not want to greet a new normal with open arms?
We’re in the process of going through our own B Corp journey, here at ELE Global. To find out more about this, click here.