Are Benefit Corporations the Solution to Middle Class Despair?

On February 17, in Hamburg Germany Canadian Prime Minister Justin Trudeau addressed European political elite with a clear message. The anxiety of the middle class, primarily caused by job insecurity along with the transparent and excessive rise of the wealthy 1%, is transforming into anger.

Trudeau, who won the 2015 election through a deep understanding of and ultimately support from the Canadian middle class went on to espouse (likely unknowingly) Benefit Corporation values.

B Corps are for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. Famous eyeglass start-up Warby Parker, Jessica Alba’s Honest Company and social good alumnae Ben & Jerry’s are B Corps.

In order to become a B Corp a company must complete a B Impact Assessment. The assessment asks serious questions about a company’s values, ethics, policies, culture, structure and finances. Certification is granted to companies that score at least 80 points out of a possible 200. Each applicant must also pass an interview with the B Lab team. Companies need to improve their score every two years in order to be re-certified.

While Trudeau very eloquently articulated the risks of a working class in despair during his speech, B Corp provides a great model for the solution.

Trudeau

‘For business leaders, it’s about thinking beyond your short term responsibility to your shareholders. You have an equally important responsibility to your workers, their families, and the communities that support you.’

What B Corp Says

Use Business as a Force for Good. B Corps think long term, focus on the big picture and though they are bottom line driven profit is never at the expense of workers or the communities that serve them.

Trudeau

‘It’s time to pay a living wage. To pay your taxes. And give your workers the benefits – and peace of mind – that come with stable, full-time contracts.’

What B Corp Says

Twelve questions in the B Impact Assessment section are titled ‘workers’ and cover subjects from paid caregiver leave, days off, high to low pay ratio (this question actually asks for the ratio between the highest and lowest paid employee), and % of company owned by non-executive employees. Not only does B Corp raise important points with respect to employee quality of life, applicants must meet minimum standards of accountability in order to be certified.

Trudeau

‘You can’t build loyalty into corporate culture when people feel overworked and undervalued. You must give your workers avenues to update and modernize their skills for a changing world.’

What B Corp Says

The same section on workers covers cross-job skills training, skills-based training participation and employee satisfaction. It is impossible to be a B Corp without actively engaging with employees in a meaningful way. Training and development are fundamental to B Corp philosophy at all levels throughout an organization.

Trudeau

‘You must be part of the communities where you operate, realizing that these towns and cities support you, and you must, in turn, support them.’

What B Corp Says

The assessment section aptly titled ‘community’ covers most of what Trudeau touches on here. B Corps by their very nature are dedicated to enhancing and giving back to their communities. From charitable donations to suppliers including banks, B Corps demonstrate their values through their choices and actions.

Trudeau

‘And when you hear that an employee is expecting a child, congratulate her, don’t make her question whether or not she’ll have a job to come back to.’

What B Corp Says

Patagonia, a B Corp before B Corp formally existed has 100% retention of moms. In addition to having onsite childcare for over 33 years, they offer 16 weeks of paid childcare leave (the US minimum is 6 weeks) and when mom or dad travels for work she or he can bring childcare along and Patagonia foots the bill. Though not all B Corps have evolved to this new-mom nirvana the assessment specifically asks about paid childcare leave.

Trudeau

‘And you must ensure your workplace, and especially your boardrooms, reflect the full diversity of society.’

What B Corp Says

B Corps must quantify the number of minorities and women they employ, who participate on their boards and who own shares in the company. They even ask businesses to consider this factor when deciding on external suppliers.

Trudeau

‘It’s time to take a broader view of employee-employer relationships. One that treats workers as partners in success.’

What B Corp Says

One of the most eye opening aspects of B Corp Certification focusses on employee-employer relationships. Some of the most successful B Corps are partially or wholly employee owned.

There are over 2000 certified B Corps around the world, 171 are in Canada. A drop in the bucket relatively speaking, but an excellent model for business leaders who may be waking up to the fact that having confident, well treated and fairly paid employees is actually good for the bottom line. In fact companies with good employee engagement outperform the stock market by 20%.

Though Trudeau noted the irony of giving this speech about the middle class while wearing a Tux in a room full of privilege the real irony would be if those market chasing, anxiety inspiring, bottom line only businesses were actually leaving money on the table.

Brand for Benefit is committed to helping companies discover, certify and share their greater purpose as a path to growth. Our goal is to shift business from margin to mission with better results. Our aspiration quite simply is to help businesses do good business better.

CEO Carolyn Ansley is an award winning marketer, entrepreneur and mother who believes using business for good is good business.

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