Companies have the potential to solve social and ecological problems – so-called B Corporates show just how this is possible.
Whether they are shopping for food, household appliances or clothing, there are a large number of organic labels that help consumers select products that are particularly environmentally and socially friendly and meet strict quality standards. However, what applies to products does not automatically apply to the companies that produce them. An increasing number of consumers, employees and investors are choosing or not choosing a company based on whether and how sustainability is implemented in the core business itself: sustainability is becoming a real competitive factor in the business world. Since 2006, the internationally recognized B Corp seal has certified a company’s sustainability as well as its contribution to society. It also helps socially minded investors find suitable investments.
B Corp stands for Benefit Corporations, companies that want to have a positive impact – not just for their shareholders, but for society as a whole. All B Corps believe that companies have the potential to resolve social and environmental problems. Their shared vision is that competition is less about being the best company in the world, and more about being the best company for the world. Launched in the US in 2006, B Corp comprises a global network of for-profit companies that have passed the rigorous sustainability assessment conducted by the non-profit organization B Lab.
At the heart of B Corp is the B Impact Assessment, a sophisticated online tool that companies can use free of charge to assess their social impact. The main criteria include social and environmental performance, as well as the degree of transparency vis-à-vis the public. In order to become certified, companies must amend their articles of association and legally establish that their social goals go beyond simply maximizing profits. More than 90,000 companies have already used the B Impact Assessment to determine where they stand in terms of social impact and sustainability. Of these, over 3,700 companies worldwide, spread across 74 countries and 150 industries, are B Corp-certified. In 2014, a branch was also established in Switzerland, which currently has 42 certified B Corps, including Globalance Bank and Impact Hub Bern.
Companies that score at least 80 out of 200 points in the B Impact Assessment qualify for B Corp membership. Any company can apply. The fact that the barrier to entry is below 50 percent of the total possible score could mislead people to assume that the test is “a breeze” to pass. However, the 80 points are anything but easy to achieve. Most companies’ responses to the questions don’t make the cut. These include: Does your company have a mission statement that explicitly involves making a positive contribution to society and the environment? How high does employee satisfaction score in surveys? Does your company have an innovative approach to social engagement that has changed the entire industry?
One business that has passed the B Impact Assessment is the American outdoor clothing company Patagonia. Neither they nor the other B Corp-certified companies are interested in who scores the most points in the impact assessment. Instead, their focus is on changing the awareness of top executives in terms of what corporate success means – and must mean – today, in light of the unprecedented gravity of social and environmental problems. “The B Corp movement is one of the most important of our lifetime, built on the simple fact that business impacts and serves more than just shareholders – it has an equal responsibility to the community and to the planet,” says Patagonia’s CEO Rose Marcario.
It is not difficult to refute suspicions that B Corp is a form of greenwashing or a way to improve a company’s image. The assessment process, which examines a company’s entire value chain, is too extensive for it to be otherwise. For sustainable investors, B Corp certification is an important investment criterion. Impact investors and parties pursuing philanthropic ends, such as LGT Venture Philanthropy, benefit from the integration of a company’s contribution to society and often use the same measurement tools: IRIS and GIIRS Ratings & Analytics are milestones in the standardization of social impact measurement and the professionalization of doing business in a way that benefits society.
In the long term, B Corp could become a kind of currency for both companies and investors that not only measures and documents sustainability, but represents a measure in itself. Instruments such as the B Impact Assessment have developed comparative standards for sustainability and social contributions that all companies will have to contend with if they want to continue to perform well in the competition for the favor of investors, customers and employees in the future.
LGT was early to commit to sustainability; long-term thinking and actions have always been among the company’s core characteristics. That’s why LGT has been working for many years now to further strengthen their commitment to sustainability both in terms of its operations and its core private banking and asset management business. LGT wants to ensure that its activities make a positive contribution to the environment and society. Find out how LGT achieves this here.