Hanna Lee for The Logic
The Big Read

Firms with benefits: B Corps are growing in both number and scale. Is the coveted designation worth the fuss?

VANCOUVER — Last fall, as a backlash swelled among MEC’s members after the co-op announced a deal to hand over ownership to an American private equity firm, its board of directors and its new owners received some unsolicited advice from a Toronto advisory firm called Impact Bridge: become a B Corp. Being certified as a “benefit corporation,” a “highly credible third-party performance standard”—that, among other things, provides a way for companies to benchmark their environmental and social performance—could help MEC’s besieged brand, Impact Bridge argued, calming the internal discontent and public outcry over whether the soon-to-be private outdoor retailer would remain true to its founding values

B Lab, the U.S.-based non-profit that doles out this corporate status symbol, says it is “transforming the global economy to benefit all people, communities and the planet.” Beyond the intrinsic reward of doing good, according to the organization the B Corp stamp of approval also aids networking and attracting talent—apparently enough to encourage thousands of companies to go through B Lab’s rigorous, time-consuming process and pay annual membership fees that, for some companies, run into the tens of thousands of dollars. 

Talking Point

More than 3,500 companies around the world have undergone a rigorous process to earn B Corp certification, a stamp of approval on a company’s environmental and social practices doled out by American-based non-profit B Lab. MEC, which recently shed its co-op status after an acquisition by a U.S. private equity firm, is considering applying this year after backlash to the deal. The B Corp designation gives companies a corporate halo effect, but tangible benefits to a corporate bottom line are murky.

When the B Corp movement started some 15 years ago, it was associated with small, independent companies that had an uncomfortable relationship with capitalism—like Patagonia, the activist outdoor apparel retailer that was an early adopter. As the movement has grown, it has drawn the attention of bigger corporations. Even bottled-water giant Danone has now certified 28 of its entities as B Corps. 

The growth of B Corps has raised questions about how best to assess these sprawling conglomerates—or whether they should be certified at all—and what’s in it for the companies. If the tangible benefits to their bottom line remain murky, and based on mostly anecdotal evidence, there is a clear corporate halo effect for a company with the B Corp designation in a world where investors and regulators are increasingly weighing environmental, social and corporate governance factors. Meanwhile, a growing skepticism around corporate social responsibility and one-percenter philanthropic efforts have started to expand to movements like the one B Lab leads, leaving some to wonder whether this gold standard of good corporate citizenship does as much good as it claims.

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