By Thomas Kostigen
Certified B Corporations are businesses that commit to balancing both profits and purpose—and interest in them has grown rapidly since they were introduced in 2007. There are now thousands of B Corps in some 70 countries, and many of the companies are publicly traded.
Because B Corps serve a dual purpose, there is more than one reason to consider investing in them. Does the social mission of the company, which commits to higher standards of verified social and environmental performance, public transparency, and legal accountability, appeal to you? At the same time, does the company make for a good investment prospect?
The first metric is, of course, a subjective choice for investors. The latter metric may be better answered by a professional financial advisor who can decide whether the traditional measures of the company fit properly within the constructs of an investment portfolio. According to B Lab, the organization that certifies B Corps and serves as its industry oracle, “Society’s most challenging problems cannot be solved by government and nonprofits alone. The B Corp community works toward reduced inequality, lower levels of poverty, a healthier environment, stronger communities, and the creation of more high-quality jobs with dignity and purpose. By harnessing the power of business, B Corps use profits and growth as a means to a greater end: positive impact for their employees, communities, and the environment.”
To ensure companies live up to becoming forces for good, there is a comprehensive certification process behind the B Corp designation. B Lab conducts an assessment and evaluation of a company’s operations and business model. It analyzes how a company treats its workers, its community relations, customer relations, as well as environment impacts. Supply chains (including input materials), charitable giving, and employee benefits are also measured and verified. A company must commit to transparency and be accountable for its actions. And the commitment comes with a legal requirement: it is built into the company’s legal structure.
Companies see value in certifying as a B Corp because it gives them a recognized designation that they can point to as testimony to their commitment to do good. As the rise in interest for Environmental, Social, and Governance (ESG) investing continues, especially among institutional investors that control trillions of dollars in capital, companies, obviously, want to do what they can to appeal to these stewards of capital; B Corp certification is a clear way to do that. Moreover, there is a strong directory of B Corp companies that can be tapped into for partnering or networking purposes.
B Corp certification comes with lots of value added. The clothing company Patagonia, beer maker New Belgium Brewing, and cosmetics company Natura are just a few of the types of companies that have B Corp designations. Well-known subsidiaries of multinational corporations also have acquired B Corp status: Ben & Jerry’s and Sundial Brands (owned by Unilever) and New Chapter (owned by Proctor & Gamble) are several examples.
B Corps commit to a good cause. Whether they produce good returns is entirely another matter. Investors should balance both prospects and choose wisely.
Thomas Kostigen is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Thomas is a best-selling author and longtime journalist who writes about environmental, social, and governance issues.