B Corps, Benefit Corporations, Triple Bottom Line

Professor Ofira Ayalon | Jonathan Press & Elana Bartfeld | June 29th 2015

B Corps: The Future of Triple Bottom Line & CSR

People Planet Profit

CSR and Triple Bottom Line-There are positive changes in companies that use CSR.-Struggles of Triple Bottom Line:

~No set guidelines, indexes, or structure. (+) Broad interpretation and flexibility (-) Can be confusing and lead to less adoption

Complexity

Simplicity

Source: http://www.triplepundit.com/2014/08/whats-difference-certified-b-corps-benefit-corps/

Not To Be Confused: Differences

Benefit Corporation-Legal Status Conferred by State Government

-Annual reports not required to be certified or verified from a 3rd party organization

-Corporate status recognized by 26 states

-Not as widely adopted as Certified B Corps

-Slow growth

-Lower visibility

-Self Assessment

Certified B Corps-Conferred by Non-Profit B Labs.

-Social and Environmental Performance Assessment

-Services that Benefit Corporations Don’t Receive---Marketing, Sales, Raise Money (Global Impact Investing Rating System), Save Money

-Annual Reports Assessed by Third Party Standards

-Available in all 50 States, and All Over The World

-1307 Corporations, 41 Countries, 121 Industries

Definitions and StandardsThe B Impact Assessment simply builds upon the important work that other organizations and industry groups are doing to define and measure impact. >> Carbon reports must be easily comparable.

Global Reporting Initiatives definitions and reporting standards are a critical part of the B Impact Assessment.

GRI indicator shows if a company is reporting its emissions according to best practice.

B Impact Assessment evaluate if company increase/decrease emissions relative to revenues or practices of other businesses.

Helps consumers, investors, institutions who want to support businesses who put their values into action.

Capitalism 2.0

Environment, Worker, Community

In a rapidly growing, dynamic, globalized business environment, businesses need a clear way to communicate to stakeholders that they are a good company.

Trend of pure corporate & shareholder benefit is nearing it’s end.

With B Labs support, a company can show stakeholders that they care for the environment, their workers, and their community.

B Corps → advocates to state governments to adopt CSR friendly corporate law framework for Triple Bottom Line implementation.

B Corp Assessment1. Meet performance requirement

a. Score at least 80/200 on the B impact assessmentb. Complete an assessment review with B Lab staffc. Submit supporting documentationd. Complete a disclosure questionnaire

*about 10% a year selected for on-site review*these steps must be completed every 2 years*The assessment varies depending on the company's size (number of employees), sector, and location of primary operation.

http://search.proquest.com/docview/904035434?accountid=14544

B-Corp Assessment contd.

2. Meet Legal Requirements

a. Determine: amend or obtain Benefit corporation status in your state

b. If necessary: engage key board members, legal counsel, and investors about

usefulness/implications of legal changes for raising money, selling the business,

& directors' liability.

c. Obtain board approval of your planned amendment

d. Obtain shareholder approval of your board-approved amendmendment

e. If Corporation → file amended articles with Secretary of State within 1 year

B-Corp Assessment contd.

3. Make it official!

a. Sign B-Corp declaration of interdependence & term sheet

b. Pay user fees based on company value

c. Earn the badge

AccountabilityB Lab's Standards Advisory Council → Independent committee of 20-22 members● All respected in the field ● Deep industry or stakeholder expertise

Council oversee content weightings of B Impact Ratings System for companies/funds in two groups:1. Developed markets2. Emerging markets

All for One & One for All★ Startups, SMB’s

★Multinational Corporations, Franchises, Subsidiaries

★ International Companies Outside USA or Canada

Successes❏ Rapid growth

❏ Standardizing

❏ Simplifying

❏ Accessible to all businesses

❏ Trustworthiness

❏ Transparency

B-Corps—A Growing Form of Social Enterprise: Tracing Their Progress and Assessing Their PerformanceXiujian Chen1 and Thomas F. Kelly1 - Journal of Leadership & Organizational Studies 2015, Vol. 22

“B-Corps with the B Impact Score in the top quartile exhibit a stronger revenue and employee productivity growth rate than B-Corps in the bottom quartile. If this level of performance continues, it will enable B Lab and B-Corps to claim that these business organizations have a robust financial performance in addition to their significant level of social responsibility and environmental compatibility.”

Successful B-Corps Companies

Criticisms❏ Financial sustainability not measured

❏ B Corp status does not ensure revenue growth

❏ New ventures are challenging

❏ Investment into social and environment can put new

businesses at risk/under more pressure

❏ When will regulators scale up? >> Domestic & International

❏ Erase and Replace: Old Corporate Law

Coming Soon To Israel

Questions?

Thank You!

Sources:

http://brandgeek.net/2014/11/23/golite-gone-trademark/

http://www.triplepundit.com/2014/08/whats-difference-certified-b-corps-benefit-corps/

https://www.bcorporation.net/what-are-b-corps

http://link.springer.com/article/10.1007%2Fs10551-012-1254-1

http://www.brynmawr.edu/businessworkshops/management/documents/Lencioni-Makeyourvaluesmeansomething.pdf

http://www.triplepundit.com/2011/05/corp-status-protects/

http://strongertogether.coop/fresh-from-the-source/b-corp-a-new-kind-of-corporation/

http://boss.blogs.nytimes.com/2012/03/14/for-b-corps-a-new-corporate-structure-and-a-triple-bottom-line/?_r=0

André, Rae. "Assessing The Accountability Of The Benefit Corporation: Will This New Gray Sector Organization Enhance Corporate Social Responsibility?." Journal Of Business Ethics 110.1 (2012): 133-150. Philosopher's Index. Web. 15 June 2015.

Hasler, Jacob E. "Contracting For Good: How Benefit Corporations Empower Investors And Redefine Shareholder Value." Virginia Law Review 100.6

(2014): 1279-1322. Business Source Complete. Web. 5 June 2015.

Chen, X., and T.F. Kelly. "B-Corps—A Growing Form Of Social Enterprise: Tracing Their Progress And Assessing Their Performance." Journal Of

Leadership And Organizational Studies 22.1 (2015): 102-114. Scopus®. Web. 2 June 2015.

Source: B Lab

Certified B Corps & Benefit Corporations: