In this blog, published to support our B Corp event, Malu Villela from the School of Management and IEI, discusses her research on B Corporations. Can they really save people and planet?
B Corp certification offers a comprehensive framework for companies seeking to address ethical, social and environmental concerns at the core of their business. By considering these concerns as central to the business and adding such commitment to the company’s bylaws, it frees shareholders to pursue goals other than profit. In doing so, it also draws a distinction between more traditional corporate social responsibility (CSR) approaches in which such aspects would be dealt with at the periphery of businesses with limited impact on profit-seeking goals.
Advocates of B Corps would argue that they clarify the purpose of business in society as well as the need for bolder and progressive responses to the many pressing challenges of our times. But although the idea that “the social responsibility of business is to increase its profits”, as once proclaimed by Milton Friedman, is no longer tolerated, there is still a long way to go in order to fulfil the potential of these so-called purpose-led businesses.
As their movement claims, B Corps are using business as a force for good by seeking a balance among profit, people and planet. Yet the extent to which an ‘ideal balance’ is possible is questionable. In my research, I identified that high certification scores can reflect progress on only some dimensions of the certification and don’t necessarily lead to roadmaps for further improvement on social and environmental goals or governance processes. The certification can sometimes be overstated as the one factor differentiating certified companies from traditional ones and achieving the B Corp label becomes the ultimate goal.
But other than treating the certification as an end goal, what actually reveals a company’s commitment is how they work on the gaps identified in the certification, especially with regards to stakeholder engagement and corporate governance. Other research on B Corps shows that governance approaches less centred on the founders and directors and more distributed among employees, such as employee ownership models, have the power to address stakeholder engagement in more effective ways.
This suggests that before (or while) tackling key global challenges we should be focusing on the necessary changes in our own organisations and institutions. How boldly companies respond to those challenges also depends on how strong their foundations are. As a more democratic, inclusive and sustainable world is needed, we must also make sure our organisations are fit for purpose in the way they operate, from recruitment practices and decent work to ownership and control structures.
While this might imply a move inwards, it also suggests a move outwards to learn quickly from organisations, networks and movements that have already come up with solutions and ways of tackling them. A recent event promoted by the Future Leap Network in Bristol brought together the local B Corp chapter and the Employee Ownership Association to discuss purpose-led governance and how one movement could empower the other. Local and regional companies like Sawday’s, Riverford and Resource Futures, all B Corps and employee-owned, are just some examples of companies who adopted both models. Moving towards more democratic forms of governance can deliver better decision-making processes and clarify what goals to prioritise.
It also is important to remember that no model is a guarantee that companies will behave according to their proclaimed values. As was widely publicised a few months ago, the craft beer company BrewDog was accused by former employees of promoting a toxic culture based on fear which left workers facing bullying and mental illness. This happened despite the company scoring highest in the workers dimension of the B Corp assessment. The allegations were made in an open letter signed by former employees accusing the company of building a cult of personality around its founders and pursuing growth at all costs.
The founders later apologised, but such an example demonstrates that those making the decisions are ultimately the ones who hold power and the profit imperative is still very much alive. It seems to me that it encourages us to ask whether and how a balance between financial, social and environmental goals is indeed possible, which might be answered by understanding whose voices are getting heard.
(For more information about B Corps click here.)
To view a recording of an online B Corp discussion, hosted by Professor Martin Parker, lead for the Inclusive Economy Initiative at the University of Bristol, between Andy Hawkins, a Bristol based consultant and Dr Malu Villela from Bristol University School of Management click here B Corp Discussion