The immortal words of English naturalist Charles Darwin remind us that, in the perpetual struggle for existence, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”
The basic truths of natural selection apply not only to the diverse spectrum of living beings that inhabit our precious planet, but also to the forces that underlie the complex framework of our social structure and economic system.
Corporations are just as susceptible to the need for constant adaptation as any living being. Depleted resources and altered environmental realities are undeniably affecting the underpinnings of our capitalistic system, forcing corporations to evolve beyond a purely profit-driven model to one that incorporates social responsibility and environmental stewardship. Items that economists have traditionally described as “externalities” are now becoming central tenets of blended-values based decision making.
While traditional business structures continue to focus solely on shareholder return and financial valuation metrics, the B Corp, or “For Benefit” corporation, is emerging as a solution to address the needs of our changing economy. This rapidly growing class of organizations is redefining fiduciary responsibility, governance, ownership, and stakeholder relationships, so that B Corps can simultaneously and equally value social, environmental, and financial considerations.
According to the founders of B Lab, a not-for-profit that created the B Corp certification, “the primary objective of the benefit corporation is to enable mission-driven businesses to be built to last and scale with their missions intact… Benefit corporation status requires that the corporation seek to create a material positive impact on society and the environment as assessed and publicly reported against a credible and comprehensive third party standard. Current corporate law does not address these issues of corporate purpose or transparency, but increasingly, entrepreneurs and investors care about these issues, as does, and perhaps because so does, a skeptical public that wants to support a better way to do business.”
Prominent (and profitable) corporations are taking the leap into the new business structure, including well known consumer products brands such as Seventh Generation, Method, and Dansko, as well as some companies in our own industry, including Icestone, US Tile, Southern Energy Management, and Sun Light & Power.
Not surprisingly, Patagonia is leading the charge and will become one of California’s first For-Benefit Corporations. Yvon Chouinard, founder of Patagonia, says that by turning the company into a For Benefit corporation, he can “ensure the values of my company continue. I compare it to a conservation easement on a piece of property: It’s a conservation easement on a company.”
Sara is the Co-Founder and CEO of Green Builder Media. An experienced entrepreneur, investor, and sustainability consultant, Sara specializes in developing companies that are simultaneously sustainable and profitable. Sara is a former venture capitalist and has participated in a portion of the life cycle (from funding to exit) of over 20 companies. Sara graduated Cum Laude from Dartmouth College and holds an MBA in entrepreneurship and finance from the University of Colorado. This article was reprinted with permission from Green Builder Media.