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Large and small Kansas City businesses are taking a leadership position in a movement designed to help companies focus on more than just the bottom line.
B Corporations were the topic for the November ACG KC breakfast meeting. More than 300 people logged on for the panel discussion.
The definition of a certified B Corporation is one that meets certain standards in the areas of social and environmental engagement, public transparency and legal accountability to balance profit and purpose.
B Corps are relatively new. Fifty years ago a shift began in the corporate world, said Christopher Marquis, Samuel C Johnson professor in Sustainable Global Enterprise at Cornell University.
“Our economic system started moving to a place of shareholder primacy,” Marquis said. “What we are seeing now is a growing recognition that it needs to change to a stakeholder primacy system with an emphasis on employees and the community.”
But earning the status isn’t easy. B Corps have met a stringent set of parameters. And these organizations aren’t universally accepted – they are recognized in Kansas, but not in Missouri.
According to bcorporation.net, “Certified B Corporations achieve a minimum verified score on the B Impact Assessment—a rigorous assessment of a company’s impact on its workers, customers, community, and environment—and make their B Impact Report transparent on bcorporation.net. Certified B Corporations also amend their legal governing documents to require their board of directors to balance profit and purpose.
The combination of third-party validation, public transparency, and legal accountability help Certified B Corps build trust and value. B Corp Certification is administered by the non-profit B Lab.”
An early adopter both of the concepts and the designation of the B Corp was Patagonia. The outdoor apparel and gear company was founded in 1973 in California. Vincent Stanley, one of the company’s founders and today its director of philosophy, told the story of how Patagonia came to adopt its B Corp way of doing business.
After discovering that chemicals being using on the cotton in their manufacturing were causing people to become sick, they vowed to change.
“We switched to organic,” Stanley said. “It was a big decision. We broke our connection to the supply chain we’ been using and hand to find out how to make clothes in a different way.”
That started Patagonia on its sustainable, environmentally focused mission. Since 1985 the company has given one percent of its profits to environmental causes. It took a few times of being asked before Patagonia would go through the rigorous screening for the designation, but now Stanley can’t imagine not living by the principles it takes to achieve it.
The assessment is extensive and not for the faint of heart.
“With each assessment, you are forced to look at where you are, where you can improve,” Stanley said.
Anne St. Peter founded her marketing firm, Global Prairie, with the goal of being the first B Corp marketing company and to be fully employee-owned. Global Prairie has achieved both of those goals, along with committing 10 percent of its profits to organizations important to employees.
“We started the firm in 2008, which wasn’t a great time to start anything,” she said. “But I think being a B Corp is really the reason we are still here.”
Living on your billable hours is rough – for St. Peter and her team, the B Corp principles give them a purpose that extends beyond the hours and the profits.
“It gives our purpose an alignment,” she said. “We’re not soft. You can’t live without profit.”
St. Peter says she’s just carrying on the Kansas City tradition of companies who think more about people than profits.
“Look at the examples we have had,” she said. “The people such as Henry Bloch who built a company, but really cared about their associates, making the world a better place. In Kansas City we have had business leaders step up and show up to effect change.”
Bloch’s company, H&R Block, is led these days by Jeff Jones, named chief executive officer in 2017. How did Jones get the gig? Aside from his business credentials, he made an impression with the question he asked, “What was Henry and Dick Bloch’s purpose when they started the company?”
When Jones arrived in Kansas City he found a company, he said, with “a vision statement, but no purpose statement. The company knew what it did, but not why.”
In his almost three years at the helm, he’s worked on that – internally and externally. The company is prioritizing innovation, transparency and making the most of its purpose.
“We are working on serving more customers, helping them through an uncertain world, and are trying to build the best team possible,” Jones said. “But you can’t do that without the clarity of why you are here.”
Marquis said that B Corp principles are a way to future-proof a company.
“You are codifying your principles in your company,” Marquis said. “Your employees are engaged; they want to maintain the culture.”
These days customers are looking for more from a company than its bottom line profit.
“Customers want to buy from a company that’s bigger than itself,” Jones said.
Nov 17 2020