B Corps Aim to Right the System
Traditional business models have recently experienced many manmade traumas, including the housing/banking industry collapse, world recession, nuclear pollution in Japan, the BP Gulf oil spill and the Massey Energy Company coal mining deaths in West Virginia.
The conventional response is that smarter regulation is needed to prevent such crises in the future, but a growing number of business analysts say the problems go deeper, and a new kind of corporate legal structure is needed that requires companies to operate for the good of society, not just for their shareholders. These new entities, called B Corporations (the B is for benefit), are growing in number, having been adopted so far in Maryland, New Jersey, Vermont and Virginia.
According to B Lab, the nonprofit behind the concept, “Our vision is simple, yet ambitious: to create a new sector of the economy that uses the power of business to solve social and environmental problems. It will be comprised of a new type of corporation—the B Corporation—that meets rigorous and independent standards of social and environmental performance, accountability and transparency.”
Jay Coen Gilbert, a B Lab co-founder, says, “We can’t have a new economy unless we have a new type of corporation. Corporate law actually works against sustainability.”
Its certification effort helps consumers identify truly responsible companies. It also works with private equity investors to help them make better-informed investment decisions. Ultimately, it is pushing for new laws to, “…redefine fiduciary duty and hold companies accountable to create a material positive impact on society and the environment, as measured by an independent, transparent, third-party standard.”