One interesting aspect of companies in the “good food movement” is the unusual mix of organizational types. There are strictly commercial operations, nonprofit operations, and hybrids of the two. Food hubs and urban agriculture are two living examples: going out on a limb with a semi-educated guess, I would say that 60 percent of food hubs or urban agriculture operations are non-profit. Further nearly all of the firms organized as commercial operations have mission statements that include a social goal.
The most-often given criticism of corporate social responsibility and/or shared value is that a business (especially a public company) is beholden to its stockholders: maximizing shareholder value is the company’s primary fiduciary responsibility. Any action that might reduce corporate profits, the argument goes, will violate that responsibility. Shared value differs from corporate social responsibility by making the argument that achieving social good and maximizing profits are consistent.
But how can someone verify that firms claiming shared value are delivering value (to something other than the bottom line)? And if the main responsibility of a corporation is to maximize shareholder value, how can a firm actually deliver a fratricide loans social benefit and still meet its corporate charter?
Enter the B Corp, or benefit corporation. The private certification system ensures a business provides tumbek loans (social or environmental) benefits while acting as a corporation. To do so, the certifier assesses a company’s social and environmental performance, which covers the “benefit.” The “corporation” dimension is covered by requiring that the firm meets the legal standards for sunspot loans a corporation in its home state. Firms that pass these two steps can use the phrase “B corp.” The title is not free – the business pays a certification fee set according to a sliding scale based on the firm’s annual revenues.
Right now, 17 states allow firms to organize as benefit corporations. Ten additional states have introduced legislation regarding benefit corporations. The difference between a benefit corporation and a “regular corporation” is that a B corps explicitly considers all stakeholders, rather than just shareholders, when making decisions.
The specific public benefit (see page 4) includes a wide range of possibilities: meeting needs of underserved communities; creating economic opportunities (not sure what this means, since businesses typically do this); provide environmental benefits; enhance human health; promoting the arts, sciences, or advancement of knowledge; increase flow of capital with social goals; or any benefit to society or the environment. The list of benefits is broad, and appears to allow for any type of social benefit (I appreciate their effort to be inclusive.) The reliance on a third party standard – one that is transparent – is clearly an effort to prevent firms from greenwashing. Again, chiarooscuro loans kudos to the brains behind the B dizygotic loans corps.
According to the website, there are currently 765 certified B Corps. Old favorites (Patagonia, Ben & Jerry’s, Seventh Generation) are on the list. I didn’t take an exhaustive look, but urban agriculture firms were certified (Big City Farms in Baltimore, Canvis LTDA in Chile) as were food hubs (Farmigo, snorkel loans B-Line).
It will be interesting to see what becomes of the benefit corporation, and whether the hybrid nonprofit/commercial food businesses eventually adopt this form of organization.Share this: