Why is it important for businesses to focus on social, environmental, and economic impact?
We are in the midst of a global culture shift toward business that prioritizes social, economic, and environmental good.
In 2018, Larry Fink, Chairman and CEO of the multinational investment firm Black Rock, wrote a letter to corporate CEOs urging them to prioritize purpose alongside profit. Consumers are increasingly looking to companies to address social, economic, and environmental issues, Fink said. He suggested businesses focus on "purpose" as a new strategy for navigating the changing expectations of workers and customers.
CEOs listened. They started talking about “purpose” as a differentiator and making it part of their strategic plans. In a few months, "purpose" became the business buzzword of the year.
But purpose-driven business models aren't new. In 2006, three friends left careers in business and private equity to create an organization (now B Lab) dedicated to making it easier for companies to protect and improve their positive impact over time. They certified the first 19 B Corporations® in 2007 and continued on to build a global movement of more than 2,500 mission-driven companies in more than 50 countries. These Certified B Corps™ — Ben & Jerry's, Patagonia, Seventh Generation, Danone, and Echo&Co among them — do business that equally balances people, profits, and planet (a "triple bottom line").
The B Corp™ certification is a commitment to higher standards of social and environmental performance, transparency, and accountability. It is to business what Fair Trade certification is to coffee, or what USDA Organic certification is to dairy and produce.
We started our work toward becoming a Certified B Corporation in 2017 and we received official certification for Echo&Co in April 2019. The process was not easy. It required a rigorous assessment of many things, including:
Corporate governance, mission, and engagement.
Transparency, accountability, and ethics.
Employee engagement, benefits, and practices.
Diversity and inclusion.
Community involvement and civic engagement.
When we first completed our assessment, we scored 55 (the minimum qualifying score for certification is 80 on a scale of 0 to 200). Today, we are at 83.9 and continue to measure and improve our positive impact as we work toward the highest standards of practice.
"Purpose over profit" may be the mantra of the moment, and while it is impactful, it's not enough to focus on purpose. I say this quite a bit. Purpose can be a motivating force, but it's also a powerful ruse. It's a feel-good veneer used to satisfy customers and employees while their companies continue to operate in ways that deplete and damage our human and natural resources.
In order for businesses to truly prioritize good, they need to fundamentally shift who they serve, what their objectives and motives are, and how they operate. Further, they need to adopt an agreed-upon standard of practice that goes far beyond "purpose" and sets in place practices, with rigorous accountability, that achieve the highest social and environmental standards. B Corp certification sets that standard.
Until next time,
P.S. If you’re interested in learning more about the process of becoming a B Corp, check out the conversation I had with my teammate Ehmonie about the experience.