Today’s Sustainability Jargon Buster for us is, like we call it in The Netherlands, Gesneden Koek. Literally translated, it would be Cut Cookie (not to be confused with cookiecutter), and it means that we basically live and breathe the topic of today. We talk about it so frequently that this won’t sound like much news for many of our loyal readers. If you haven’t been here before, please keep reading, it is definitely important stuff.
Triple Bottom Line
Money, money, money, it’s a rich man’s world. Sorry if this now got stuck in your head, but this often seems to be the mantra of the reality we live in. Businesses around the world are driven by the bottom line, governments and individuals are dictated by money, and in many cases the lack or even absence of money. At a point in history, the goal became to maximize the profit (in money) for the shareholders of businesses.
The problem is that maximizing shareholder value leads to a couple of other issues, like resource depletion, the wealth gap, unfair wages and the destruction of biodiversity around the globe. Maximizing shareholder value (in money) and never-ending economic growth in a finite world is simply impossible.
With the Triple Bottom line instead of the single bottom line, we shifted from the idea that profit means monetary value for a select group of shareholders, to value measured in people, planet and prosperity for all shareholders. It is a more holistic and more sustainable approach to running a business.
The Triple Bottom Line is an idea of John Elkington, which he coined in 1994. In the initial version, it was People, Planet and Profit, but in (date) the last P, Profit is changed into Prosperity, indicating that the focus should be a long period of thriving instead of a short term gain in monetary profit.
Luckily, we are seeing a counter-movement of companies that choose business as a force for good. And the front runners of this movement are in many cases B Corporations.
We Envision a Global economy that uses business as a force for good. This economy is comprised of a new type of corporation – the B Corp – which is purpose-driven and creates benefits for all stakeholders, not just shareholders. B Lab
You just read the vision of B Lab, the non-profit organization behind the B Corp certification, which grew into a global movement, recently breaking the record of 4000 B Corps around the world, spread out over 74 countries, unifying 1 goal; people using business as a force for good. And believe us, this is just the beginning. We are in the midst of a global shift towards a more inclusive, sustainable (eventually regenerative) and fair society and B Corps are leading the way.
“Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.” Source: B Lab
Want to know if this would B a good move for your company? Jump over to our recent blog “13 Reasons To Become A B-Corp.
The B Corp Certification process is created and guarded by the independent Non Profit organization called B Lab, started in 2006 by three friends who left their careers in business to start the B Lab organization. You will notice that the majority of B Corps are located in North America, but the numbers are increasing around the world.
B Lab is mainly focused on keeping the B Corp Certification processes up to date and in sync with the latest socio-economic situations around the globe and with checking the thousands of applications from companies who filled in the B Impact Assessment (BIA). The BIA is a freely accessible online tool that organizations can use to analyse the current state of their businesses with a focus on governance, community, workers and the environment. You can either use the BIA to analyse your company without the intention of actually becoming a B Corp, but just to know where you are standing and how you can improve. Or you focus on becoming a B Corp which means that you need at least 80 out of the 200 points. And of course, you need to be able to justify your answers and give solid proof. The certification is definitely not a simple checking the boxes process and becoming a B Corp is serious business. Luckily many professionals around the world love companies that use business as a force for good and decided to become an expert in helping business through the BIA, you can call them B Leaders. And you probably saw this coming, as we recently haven’t stopped talking about B Corps, Minou is a B Leader and Pamela is soon to B).
We can hear you wonder, is a B Corp the same as a Social enterprise or a benefit company? No, although they can be.
A social enterprise exists to achieve a social or sustainable purpose. Think of Tony’s Chocolonely (which in this case does happen to be a B Corp) that strives to end slavery in the chocolate supply chain, or Marie Stella Maris, working on safe drinking water for all.
A social enterprise combines a social or sustainable purpose with a business model.
But these organizations are not a charity or NGOs (that rely on donations or funding), but pursue their mission with a business model, usually by selling a product or service. As such, social enterprises seek to maximize profits while simultaneously maximizing benefits to society and the environment.
So can a B Corp be a Social Enterprise? Absolutely! In the B Corp community, a business model with a targeted focus on a social or sustainable purpose is called a B Impact model. Not every B Corp is a social enterprise or vice versa, but some are.
So if B Corps and social enterprises use business as a force for good does that make them Benefit Companies? Nope, not necessarily. Where a social enterprise has an impact business model and B Corp certifies that a business is doing good, a benefit corporation is legally empowered to pursue positive stakeholder impact alongside profit.
Essentially, a benefit corporation is a legal tool, a legal incorporation type. It’s similar to a traditional corporation but has modified obligations committing it to higher standards on three important aspects: purpose, accountability and transparency.
- Purpose: Benefit corporations commit to creating public benefit and sustainable value in addition to generating profit. This sustainability is an integral part of their value proposition.
- Accountability: Benefit corporations are committed to considering the company’s impact on society and the environment in order to create long-term sustainable value for all stakeholders.
- Transparency: In most regions, benefit corporations are required to report to show their progress towards achieving social and environmental impact to their shareholders and in most cases the wider public.
A benefit corporation is a legal tool to create a solid foundation for long term mission alignment and value creation.
Traditionally, we have come to expect businesses to use profit maximization for shareholders as their guiding focus in decision making. By formalizing as a benefit corporation, a business becomes legally required to consider all stakeholders in their decisions.
Since 2010, about half the states in the US have passed laws around benefit corporations. In 2015, Italy became the first country outside of the US and so far, Colombia, Ecuador, and British Columbia, Canada have followed. Fortunately, more and more countries like The Netherlands, Australia, Argentina and Chile are looking into this legal pathway for mission-driven entrepreneurs!
Unicorn Vs. Zebra
You have probably heard of Unicorns before. They mostly gallop into our world, from a place like San Francisco and they are so rare and valuable that ten thousand or even millions of people around the world are chasing them. Unicorns are privately held startup companies that are valued at over One Billion dollars. Most people can’t even imagine a number this big and the question is, should becoming a unicorn even be a goal, can we even justify this type of rapid and almost bizarre growth? Maybe unicorns should stay in fairytales so we can focus on the Zebra’s of this world.
Zebra’s? Why Zebra’s?
“Zebra companies are both black and white: they are profitable and improve society. They won’t sacrifice one for the other.”
Zebra’s are collaborative animals. They bond together and protect each other. Their individual inputs make the collective output stronger.
So what exactly is the difference between Unicorn and Zebra companies?
Source: Small Business Forum
Zebra’s are for-profit companies that show that you can combine a functioning business model with a social or sustainable purpose. Zebra’s are for the Social Enterprise world what Unicorns are for the Venture Capitalists in San Francisco and Beijing.
What are you chasing Unicorns or Zebra’s?
If the answer is Zebra’s, give us a call! Sprints are excellent methods which can help you catch you Zebra faster.
Minou & Pamela