Saturday, March 20, 2010

Fixing Frankenstein: BCorporations (Part 2 of The Frankenstein Series)

I ended the previous post with the comment that I would delve into some of the business concepts that might help "fix Frankenstein" and take us forward sustainably. To be clear, I'm using the Brundlandt Commission definition of sustainability to guide my thinking; meeting the needs of the current generation without compromising the ability of future generations to meet their own needs.

Note that I will NOT be defining "needs" in any great depth beyond simple assumptions about the basics of Maslow's heirarchy, which we have yet to secure for humanity in its entirety.

For the sake of this part, I thought I'd mention something I've been reading about lately, B Corporations. I'll talk about L3Cs (limited profit organizations) in the next post.

I wrote a post not too long ago mentioning some of the B Corporations I'd been exposed to and the energy I felt around their work.

Registered B Corporations (registration provided by B Lab) integrate stakeholder interests into the operating charter of an organization and provide a third party verification of the organization's social and sustainability performance. Topics related to environmental and social performance stand alongside the fiduciary responsibilities to shareholders; they are not necessarily subjugated to shareholder interests as in traditional corporate entities. By integrating these tenets into the operational DNA of the organization, and providing a thorough third party verification of the B Corp's environmental and social performance, B Lab hopes to distinguish between sustainable/green marketing and performance; they strive to help companies that walk-the-talk be recognized for their efforts.

One of the drivers for this new form of business is to protect companies' values in the event of a sale, management change, or investment of capital. Since the social and/or environmental values of the company are an integral part of the company (not just the ideology of the management) those values are carried along with the company's sale. The sale of the famously socially progressive White Dog Cafe in Philadelphia illustrates the potential value of this arrangement, The values of the White Dog will remain despite the lesser management role taken by its founder and local economic development visionary, Judy Wicks.

I found this video with B Lab co-founder Bart Houlahan and B Corp Icestone's co-founder Miranda Magagnini informative, helping explain the creation of a "new sector" between corporations and non-profits.

There's been some news from the State of Vermont recently about progress toward passing a law that would recognize B Corps. I'd like to see it pass. Similar legislation has also been proposed in Colorado, Maryland, New York, North Carolina, Pennsylvania and Oregon.

One of the ways I believe B Corporations might help us change the way we think about business was illustrated in the WSJ's special section, ECO:nomics, published a few weeks ago. It became clear to me just how ingrained our current view of business and its role in our society is, note the use of language in this passage [emphasis mine]:
"...don't dally in trying to dominate the new energy market, because the spoils will go to those who exploit the uncertainty the best."
Maybe I'm splitting hairs, but the use of the words "dominate" and "exploit" seem to reinforce our view of business as a way to extract instead of create. We've viewed business this way for the past 200 years or so (maybe much longer), which, in my mind, means we're not changing the way we think about business and its relationship to humans and the planet. B Lab's desire to help companies bring their social values into the business for the long-term may help us change our language, perceptions, and practice.

About halfway through writing this post, I came across a post by Louis Galdieri with a response by B Lab co-founder Jay Coen Gilbert. I found it interesting, and though I tend to lean toward liking the ideas of B Lab, Mr. Galdieri's point about the public yielding more control to corporate entities (of any form) is thought-provoking.

How would you fix Frankenstein?