Take an exclusive sneak peek at a new tool the UN hopes will revolutionize the way companies track their sustainability goals
- Around 600 of the roughly 3,000 B Corporations pledged to achieve carbon neutrality by 2030.
- B Lab is a nonprofit launched in 2007 that verifies B Corps, businesses that reject shareholder primacy and go above industry norms in their treatment of employees, customers, the environment, and communities, in addition to their shareholders. B Corps include Danone North America, Patagonia, and Allbirds.
- It is releasing a new tool in January in conjunction with the UN Global Compact that will allow companies to measure their sustainability practices and set new goals.
- This article is part of Business Insider's project "The 2010s: Toward a Better Capitalism."
- The Better Capitalism series tracks the ways companies and individuals are rethinking the economy and role of business in society.
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On a recent night in B Lab's small downtown Manhattan office, two of the nonprofit's leaders gave Business Insider a demo of a tool they hope will change the way thousands of businesses around the world operate over the coming decade. It was the same day that 533 of the more than 3,000 "B Corporations," like Allbirds and The Body Shop, pledged to achieving carbon neutrality by 2030 (20 years ahead of the Paris Agreement goal), and that Time magazine announced 16-year-old climate activist Greta Thunberg was its "Person of the Year."
For the past 12 years, B Lab has been dedicated to moving businesses away from profit at all costs. In the office, there was a sense that as the 2010s draw to a close, the group had not only been one of the first to tap into the most important discussion of the past decade, it had achieved real progress. And less than a day after the announcement, around 70 more B Corps announced they wanted to join the pledge.
"What's exciting is, I think the B Corp community and the B Corp movement continue to be an aspiration," said B Lab's director of standards, Dan Osusky, one of the team members giving the demo of the tool, the SDG (Sustainable Development Goals) Action Manager. He said B Lab was like a "North Star" for many of the companies who have joined the decade's movement for reconsidering the role of business in society.
Back in 2007, AND1 cofounder Jay Coen Gilbert, along with his former colleague Bart Houlahan and Andrew Kassoy, their friend from Wall Street, formally launched B Lab (the b standing for benefit). They decided that to avoid "greenwashing" and similar disingenuous practices, where companies can give the impression of "doing good" with nothing more than a clever ad campaign, there should be a certification system. B Lab, then, would analyze and then verify businesses that went beyond industry standards for not only sound corporate governance, but for treatment of workers, customers, their communities, and the environment. Examples include Patagonia, Ben & Jerry's, and Eileen Fisher.
The founders' driving force was a rejection of the theory of shareholder primacy that had reigned since the 1980s, which states that a corporation exists solely to benefit shareholders, and that anything that would benefit others would naturally come as a side effect.
In 2010, the team achieved a major victory when it successfully lobbied for the first "benefit corporation" legislation, in the state of Maryland, that allowed companies to embed the values of a B Corp in their charter. Over the next 10 years, B Lab accrued more than 3,000 B Corps and 8,000 benefit corporations around the world.
This year, the Business Roundtable, a collection of around 200 CEOs of the largest American companies, released a statement that rejected shareholder primacy and advocated for a "stakeholder" model in its place, which, despite lacking binding language, gave major credence to B Lab's mission.
Additionally, when international food giant Danone's North American branch became the largest B Corp last year, with 6,000 employees and $6 billion in revenue, B Lab gained a giant corporate ally. You can find the B Corp stamp on Danone's popular American brands, like Dannon yogurt, Horizon Organic milk, and Silk soy milk products.
"By earning a B Corp Certification we show our employees, consumers, customers and others" that the company will "meet high standards of social and environmental impact, transparency and accountability," Danone North America CEO Mariano Lozano told Business Insider. He noted that he has been proselytizing the value of joining the B Corp community to the heads of other companies. Danone CEO Emanuel Faber has also said he's put the international parent company on the path to gaining B Corp certification, and is one of the funders for the SDG Action Manager.
Kassoy, one of B Lab's cofounders, told us that over the past decade, the financial crisis caused a cultural shift away from corporate criticism on primarily a case by case basis to one demanding systematic change. He said that he saw businesses respond to the millennial generation's demands for this change, as young people came of age in this time, through their spending and participation in the workforce. He sees this past decade as defined by a successful change in the conversation, and the upcoming one as a chance to put that momentum toward actual change.
"Now it's about walking the walk, and things like collective action and public policy create the opportunity for lots of companies to walk the walk," he said. He wants B Lab to be one of the leaders in guiding companies and politicians toward this action.
So, as this decade closes out and another is about to begin, B Lab is setting its focus on sustainability, and has partnered with the United Nations Global Compact. The UNGC is a UN-affiliated network of businesses that make joint commitments to sustainability and share best practices.
B Lab decided that the UN's Sustainable Development Goals (SDGs), 17 goals set in 2015 that are aimed at addressing causes and effects of inequality and man-made climate change, would be their guide. The sustainability tool Osusky and his colleague Laura Velez Villa, who oversees the project, showed us gives companies the ability to assess their sustainability efforts against the SDGs.
Velez Villa pointed out that a central tension that companies face when considering the SDGs is that they were developed for countries, but that the private sector represents 75% of global GDP - that is, if the SDGs are ever going to be achieved, business has to be along for the ride.
"So our answer in putting this out into the world is, regardless of the type of business you are, here is how you make a real dent in these big challenges," she said, referring to the SDG Action Manager.
With the manager, users can answer a series of baseline questions to determine which of the sustainability goals are most relevant to them. For example, an automaker will be especially equipped for working toward No. 13, climate action, but likely not No. 2, zero hunger.
The program will recommend a set of SDGs that the company can have the most impact on, and then the user can go through a series of questions for them. The modules are filled with learning resources provided by the UNGC, and allows companies to set goals for themselves. After answering every question, the tool will generate a percentage, where 100% is an impossible goal, and 40-50% is about what a typical B Corp would score.
Osusky and Velez Villa said that beta testers are indicating that most companies will want to focus on one to five particular SDGs, and that after about a month of being live, the Action Manager will have enough data to show how a company measures up against others in its industry. Velez Villa has set a goal of 5,000 users by the end of 2020, with at least 500 of them using the manager to set goals for their company.
She noted that today's conversation around the role of business seems to be a sudden shift, but has been building for years, and has been accelerated by events like the financial crisis and new research on the dangerous future the planet faces if we continue on the path we're on.
"We all are aware of the Business Roundtable, which is a significant milestone and an important signaling mechanism, but for that type of thing to happen, so much was brewing underneath, right? There's a lot of anger and disappointment and lack of trust in the public," Velez Villa said.
This unrest, from peaceful ones like Thunberg's climate march to the student demonstrations in Hong Kong, is compelling society to rethink power structures, and business is part of that, Velez Villa said.
"It is waking up to the reality that is inequity, and the reality that is environmental injustice," she added. "And I think that something good should come out of that."
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