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How (and why) to build a sustainable business: a talk with B Lab founder

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With the goal of promoting businesses that are both environmentally and socially sustainable, the Pennsylvania-based nonprofit B Lab has designed a certification model that exceeds what LEED does for buildings.

With the goal of promoting businesses that are both environmentally and socially sustainable, the Pennsylvania-based nonprofit B Lab has designed a certification model that exceeds what LEED does for buildings. I spoke recently with B Lab co-founder Jay Coen Gilbert about the growing contingent of B Corporations -- and what they mean for business as usual.

What does it mean to be a B Corporation?

There are about 370 certified B Corporations from about 60 different industries around the country. They've all met rigorous and independent standards for social and environmental performance. B Corporations are for sustainable business what LEED is for green buildings. In the case of a B Corporation, it's not just about the building. It's about the business as a whole -- how they treat their employees, how they're engaged in their local community, how they treat their suppliers and how they are good stewards of the environment.

Talk more about the non-building aspects of B Corporation status.

You can work in a green building, but the people that work in the green building can be treated like crap. They can have poor pay, low benefits, very inflexible work hours, no ownership stake in the company. B Corporations are measured across all those different parameters of their employee practices.

Your environmental impact is much more than the building you sit in. It could be the environmental impact of the products you manufacture and how they are delivered to your warehouse, then how they're delivered to consumers. Your environmental impact includes waste and water and renewables and how your building is operating, not just how it's built. Often your corporate offices don't say anything about your manufacturing facilities, your transportation fleet or supply chain. So B Corporations are measured on all of those attributes of their environmental performance.

Beyond your employees and your environmental impact, you have supplier relationships, most notably if you're a manufacturer. Who you choose to do business with and what types of behaviors you encourage in your supplier base are important. If I have a supplier preference for local suppliers, that's another way I can reduce my environmental footprint and support my local economy. I may have a supplier preference for women or minority-owned businesses or for businesses that are located in or draw their employees from low-income communities. [If you have overseas suppliers] do you have a third-party audited code of conduct that ensures that the factory workers are being paid fair wages, paid for their overtime, that they're working in safe conditions?

Your company can be located in an empowerment zone in a low-income community that helps create jobs and economic activity. You could organize company-wide service days or give your employees 40 hours of paid time off to volunteer in the local community. You can be more or less charitable with your profits. All of those are different ways companies can have positive impact on society. It's more than about whether you're in a building that's got low-flow toilets and CFL light bulbs.

So the assessment process must be different for each company. How does that work?

If you're a paper manufacturer or a law firm, you're going to be asked different questions. As importantly, the weightings assigned to your answers will also vary depending on whether you're a heavy manufacturer or a typically light-impact service business. You'll both be asked environmental questions, but the manufacturer is going to be asked more of them. The weighting of the environmental section will be greater for a paper mill than for a law firm. It's nice if a lawyer sends you an email that says "please don't print this unless necessary" and they have blue buckets under their desks, but that's not nearly as important as how the paper mill uses water or where it sources its fibers from. There is a core assessment across all companies, but that assessment might be customized for your sector.

We're in the process of rolling out what are called "industry addendums." We can ask questions that are specific to the paper mill or the footwear company or the food industry. The first two industry addendums are for the financial services industry -- banks, venture capital firms, wealth managers -- and for the green building industry, which would include architects and designers and planners to contractors and builders to real estate developers. The next couple of industries will be focused around food, micro-finance and energy.

Talk about the registered B Corporations. Do the majority come from a particular sector?

There are a fair number of consumer product companies, whether they be in food and beverage or home products or health and beauty. There's probably an equal number of B2B businesses. There are a fair number of law firms and accountants and IT professionals or marketing services companies. There are banks and wealth managers and private equity investors. If you go onto our website, you'll see B Corp Directory. You'll see a search tool that could help you find a bunch of these companies.

What are the benefits of becoming a B Corporation?

  • There is a million-dollar marketing campaign behind these companies. If you're a B Corporation, you get to benefit from that. You get to be identified by an independent, third-party nonprofit that you're a better business that's worthy of support.
  • Lots of B Corporations, more than 20 percent, are saving money as a result of becoming certified. This group of B Corporations is saving more than $1 million a year as a direct result of their certification. Companies like SalesForce.com and NetSuite and Intuit are offering large discounts to B Corporations because they want to support a better way of doing business. Many companies support nonprofits in that way. Those same companies have approached B Lab [saying they want to support sustainable businesses], but since everybody claims to be that, how do we know who's really worthy? They're using B Corporation certification as a way to determine who qualifies for those discount programs.
  • Companies become certified B Corporations because while they think there's a benefit to their business, it's of equal importance that this helps advance the sustainable business movement as a whole. By joining companies together from more than 60 industries across the country, we can build collective voice for a better way to do business. We can do that by banding together around performance and transparency and a higher standard of legal accountability that helps distinguish these companies and lead the next generation of entrepreneurs to follow the examples of these sustainable businesses.

Talk more about the marketing campaign.

We've just launched our first national ad campaign. It's going to reach over 17 million values-driven consumers thanks to the donated ad space of fellow B Corporations, Ogden Publications and Care2 and Sustainable Industries. The ad campaign hit newsstands right before Thanksgiving and it's going to run throughout 2011. It shows consumers a home or an office and how a family or a group of office workers are supporting B Corporations in every aspect of their business or home life.

Do you have anything else to add?

This group of businesses has become a very powerful constituency for legislation to support sustainable business. In the spring of 2010, together we passed legislation in Maryland and Vermont creating legal recognition for B Corporations as a corporate form. Among other things, that makes it a lot easier for the next generation of entrepreneurs to follow the lead of these businesses. There are eight other states that either have already introduced or are getting ready to introduce B Corporation legislation in 2011. The bigger issue is creating changes in corporate law that allow us to have a new economy because we'll have a new type of corporation that's accountable to create benefits for all of us, not just for their shareholders.

Photo: Jay Coen Gilbert

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Christina Hernandez Sherwood

Contributing Writer

Contributing Writer Christina Hernandez Sherwood has written for the Los Angeles Times, Newsday, the Philadelphia Inquirer, Diverse: Issues in Higher Education and Columbia Journalism Review. She holds degrees from the University of Delaware and Columbia University's Graduate School of Journalism. She is based in New Jersey. Follow her on Twitter. Disclosure