I am proud to be part of the leadership team of The Myers-Briggs Company that made the effort to change its corporate structure to become a California benefit corporation and obtain its B Corp certification through B Lab, a non-profit certifying entity. Not only did we do all of the necessary work to become certified by B Labs in a way that makes us accountable for metrics beyond traditional financial measures, we are one of the oldest company in North America to do so. The choice was natural for us, since we have always operated with all stakeholders in mind. As such, developing metrics reflecting our commitments to our employees, customers, community and the planet was just an extension of our business practices.
So here I am, the Chair of the Board, beaming with pride at this accomplishment, and it turned out to be a bit anti-climactic. What was incredibly surprising to me, was how few people seemed to know or appreciate what it means to be a Certified B Corp. Even though we join the ranks of over 2,600 companies in 60 countries, many colleagues had no idea what that meant. Given that, I thought I’d share some highlights.
What is a Certified Benefit Corporation?
First, there is often some confusion on the difference between a Benefit Corporation and a Certified B Corporation. A benefit corporation is a legal structure that allows for-profit companies to align their corporate mission with the interests of all stakeholders, especially around environmental and social issues, as well as issues that affect employees and their communities. This is accomplished by expanding the fiduciary duties of the board of directors and officers to consider the impact of its decisions on these different stakeholder groups and to require the company to publicly report out on how it is performing against a third-party standard that measures these impacts. A Certified B Corporation (or B Corp), on the other hand, is an entity that has been audited and certified by B Lab as meeting certain rigorous standards in regards to its governance, employees, environment and community. In addition, certified B Corps must become Benefit Corporations (if their state of incorporation provides for this legal form) to maintain their B Corp certification. B Lab requires this step to ensure that there is “mission lock” and that companies are not using the certification solely for marketing purposes but instead intend these values to be part of the “corporate DNA.”
Some pundits view this growing movement as a natural outgrowth of the “triple bottom line plus” construct in corporate governance, which has led to the growth in Corporate Social Responsibility (CSR) programs. Whereas many goals stemming from CSR initiatives are elective and often not measured, the performance of certified B Corporations is intended to be measured against a rigorous third-party standard, with the results being public shared to ensure accountability and transparency. To this point, to be certified by B Lab, B Corporations must go through a rigorous self-evaluation and auditing process and must be audited and recertified every three years.
A very common misconception about the B Corp movement is that it is a structure for non-profits. Choosing to become a B Corporation does not change the fundamental “for-profit” nature of the organization, nor does changing a company’s legal entity status from the traditional C Corp to a benefit corporation. Many well know companies, like Patagonia, Athleta (a Gap-owned company), Kickstarter, and Ben & Jerry’s are certified B Corporations. In addition, large, international, highly profitable firms have embraced the B Corp movement and have become B Corp certified. For instance, Dannon North America recently obtained its B Corp certification.
Why Become a Certified Benefit Corporation?
There are many reasons that companies are choosing to become certified B Corporations and similarly, many reasons why investors are applauding the move.
- Sustainability improves performance – 80% of the studies on sustainability demonstrate that strong practices have led to enhanced performance. (http://benefitcorp.net/investors/who-investing-benefit-corps
- Companies want to demonstrate authentic concern for stakeholder interests– A recent study by 2 business school professors concluded that the rise of CSR programs within large companies was often done for the firms to appear to be “green” and socially responsible. In the face of this, many smaller firms wanted to demonstrate their commitment to these principles by not just measuring a certain practice but being held accountable for it. The B Corp certification allows these firms to differentiate themselves from competitors whose efforts are purely in the realm of marketing hyperbole.
- It provides a recruiting advantage – It is no secret that millennials are a powerful cohort in the labor market and will become 75% of the workforce by 2025. They are often very purpose driven, and working for a company with a higher purpose to the community and the planet can be a differentiating factor and help a company become an employer of choice.
- It can create tremendous engagement with employees – At The Myers-Briggs Company, we launched a bottoms-up, employee-led initiative to obtain our certification and to establish specific additional metrics by which we would be measured. Employees from every office worldwide, across disciplines and rank, came together to find ways to improve our performance against the B Lab metrics and to establish metrics that are particularly relevant to our mission. The buy-in and excitement this created was tremendous, and we plan to continue this employee empowerment model across everything we do.
- Liability can be reduced – The benefit corporation structure offers legal protections to the Board and the company’s officers to balance the financial and non-financial interest involved in key corporate decisions.
For the Myers-Briggs Company, all of these reasons applied. Moreover, we also realized that serving all stakeholders was just part of our DNA. We were already doing many of the things that were measured in the B Lab assessment. For us there was no anguish or indecision – to become a Certified B Corp – to B – was never the question, but rather the right answer.