Real-World Lessons on Stakeholder Capitalism: How B Lab and B Corp Movement Catalyze Change in Society

Abstract

B Lab started in 2006, developing standards, a legal framework and certification to take into account all stakeholders for businesses that wanted to be not only the best in the world but also the best for the world. The objective was finding a way to harness capitalism’s positive elements while also protecting individuals and society from its negative aspects and, at the same time, helping scale businesses while remaining true to their social or environmental mission and creating a credible system of social and environmental transparency and accountability to engage consumers. Fifteen years later, B Lab and the B Corp movement are considered relevant actors in the purpose ecosystem, which are actively creating favorable framings, systems, policy change, and infrastructures to support the development of purpose-driven businesses. B Lab considers that businesses can act as a starting point to catalyze systemic change, given their direct relationship with multiple stakeholders within the economic system and society at large in order. This chapter presents B Lab’s theory of change and how it is developing its corresponding global strategies in practice.

1 Introduction

Business activities have been an important a major cause of environmental degradation and social inequalities. Although these concerns were progressively included in business operations through corporate sustainability, complex social and ecological problems are increasing, not decreasing (Whiteman et al. 2013). Because of their negative environmental impacts, such as pollution, green house gas emissions, resource extraction, and also social negative impacts, such as social injustice and inequalities, businesses have increasingly suffered a legitimacy crisis, i.e., losing support and approval. The same happened to other institutions, such as global governance organizations, that were supposed to deliver solutions to major global threats such as climate change. This lack of legitimacy, have turned into a political opportunity (Kurzman 1996; van der Heijden 1997) that allowed institutional entrepreneurs, such as B Lab, to act as brokers for new forms of relations (Hoffman and Jennings 2021).

B Lab is a nonprofit organization dedicated to redefining business as a competition among entities to be not only the “best in the world, but best for the world. Cofounded in 2006 by Jay Coen Gilbert, Bart Houlahan, and Andrew Kassoy, B Lab’s strategy was to drive systemic change through firms, markets, and institutions, building a community of certified B corporations; creating new tools, such as the Impact Reporting and Investment Standards (IRIS) and the Global Impact Investing Rating System (GIIRS), to accelerate the growth of impact investing; and promoting new legislation that recognizes and a new corporate form that meets higher standards of purpose, accountability, and transparency (Cao et al. 2017; Marquis 2021).

Although we are used to witnessing social movements pressuring for solutions to our current social and environmental crises, such as Fridays for Future, it is less common to see private actors exerting pressure from within to reshape the business domain and initiate institutional change, infusing new beliefs, norms, and values into social structures. This is the case of B Lab and the B Corp movement (Edwards et al. 2018). B Lab has framed “purpose” as an identity formation approach that enables collective action (Edwards et al. 2018) and resignified the existing business frame with new meanings, for example, “Using business as a force for Good,” “Companies not just best in the world but also best for the world,” “Redefining the role of business in society,” “New way to do business,” and “A new social contract between business and society” (Ordonez-Ponce and Devenin 2020). Instead of exerting pressure through grievance and protest, B Lab relies on enhancing private actors’ agency and corporate activism, identifying social and environmental problems as market opportunities, making customers change agents, and influencing local agendas and public policies (Ordonez-Ponce and Devenin 2020; Tabares 2021).

The internal pressure the B Corp movement creates in the business arena is not conflictive but an invitation for business to evolve. Through strategy and tactics that reshape discourse, norms, and structures to guide organizational action and beliefs (Hoffman and Jennings 2021), change may be easily absorbed by a broader scope of people who see an opportunity to integrate their environmental or social concerns with their main economic activity.

Evidence shows that the B Corp movement is growing and succeeding. Since the creation of B Lab in 2006 (Marquis 2021), there have been more than 4500 certified companies in 77 countries, including highly recognized sustainable brands, such as Patagonia, Ben & Jerry’s, Natura, and Danone.¹ The B Lab organization has grown, creating regional hubs, such as Sistema B² in Latin America (2012), B Lab Europe³ (2013), B Lab Australia and New Zealand⁴ (2014), and local chapters as well at a country level. Additional B Corps coalitions have emerged that aim to tackle specific challenges, such as engaging large companies (Movement Builders), taking action on the climate emergency (Net Zero 2030), and promoting urban sustainability (Cities can B). Alliances are also part of the B Corp movement agenda. A remarkable example is the cocreation of the SDG Action Manager with the United Nations Global Compact (UNGC).

2 B Lab and the B Corp Movement as Actors in the Purpose Ecosystem

Organizational change agents form collective movements, using shared and accumulated resources and power to overcome historical inertia (Hoffman and Jennings 2021). Aligned with this view, Dahlmann et al. (2020) claim that a “purpose ecosystem” with the potential to support system transformations for achieving the UN SDGs is emerging. The purpose ecosystem, which includes actors such as Impact Investors, Sustainability Target Initiatives, and Business Purpose Change Agents, aims to create favorable framings, systems, and infrastructures to support the development of purpose-driven businesses (Dahlmann et al. 2020). B Lab and the B Corp movement are part of this emergent ecosystem. As a Business Purpose Change Agent, B Lab contributes by setting principles, guidelines, and assessment and certification tools, as well as creating a community around purpose-driven companies (Dahlmann et al. 2020).

The efforts of B Lab go far beyond the improvement of businesses’ social and environmental performance. Its objective is to redefine the nature and purpose of business, promoting a wider systemic change, i.e., the result of actions that lead to a significant alteration within a system, potentially leading to substantial impacts (Clarke and Crane 2018, p. 308). Clarke and Crane (2018) state that the system can be at any scale. In the case of B Lab, the scale of the system is the global economic system, advocating for a stakeholders’ economy, also called “stakeholderism,” which tries to rebalance the asymmetric power of shareholders vis-à-vis other stakeholders and to revitalize the legitimacy of business.

A sizable share of corporations already practices some form of stakeholderism in response to pressure from value-conscious investors, consumers, and others. More than 90% of large corporations, for example, claim to explicitly contribute to the Sustainable Development Goals. Environment, social, and governance (ESG) investing—a class of value-based investments that target corporations that meet minimum ESG criteria—has been growing rapidly, with an estimated total value of $50 trillion in assets under management by 2025.^{5, 6}

But stakeholderism has had mixed success. While some companies have managed to create environmental and social value, many engage in “greenwashing,” “impact washing,” and even “SDG washing” to mask their unsustainable performances. This is in part due to a mismatch between a renewed corporate purpose that emphasizes stakeholder value and corporate governance principles and incentive structures that are primarily designed to maximize shareholder returns. Even as corporations make commitments to take greater societal and environmental roles, they often fail to change their governance guidelines and board structures to reflect these intentions. This has resulted in a dissonance between what they aspire to achieve and what they can show for it—a process that can also undo the legitimacy of the emerging stakeholder economy.

This lack of consensus on how corporate governance should adapt to help build a stakeholder economy is due in part to a lack of clarity on who qualifies as a stakeholder as well as what stakeholder value entails. Therefore, redefining values is a core part of the emerging needs of the stakeholder economy. Without specificity on what value a company creates, for which stakeholders, and how, a generic commitment to advance stakeholder interests has little practical meaning. The integration of social and environmental performance indicators in company success metrics, creating investment conditions dependent on impact reports and enforcing fiduciary duties that go beyond profit maximization are currently private ones that individual businesses are alone responsible for.

Acknowledging that revisiting public indicators for measuring contribution in the system change and the need for appropriate regulatory frameworks both constitute strong public levers for change, B Lab created its own “theory of change.” B Lab’s theory of change is a framework collectively built inside the movement to create a common understanding of how a business coalition can address global economic systemic change and, based on that framework, identify the role of B Lab and give direction to its objectives and global strategies.

B Lab’s theory of change considers business as a key actor within the economic system, controlling significant resources and holding direct relationships with people, communities, and the environment. As the current effects of business on human development are insufficient and unsustainable, redefining the purpose of business is critical so that we can achieve an inclusive, equitable, and regenerative economic system for all people and the planet. The challenge is that the dominant culture and practice of business is about profit maximization at the expense of all stakeholders (workers, consumers, communities, environment, etc.). The way legal and economic systems, including capital markets, are designed reinforces a narrow focus on business. Figure 1 shows B Lab’s analysis of the current economic system, which is the basis of B Lab’s theory of change proposal.

Fig. 1

B Lab’s analysis of the current economic system

Elaborating its own theory of change, B Lab wanted to tackle two fundamental root causes that, according to its diagnosis, underlie why the global economic system creates negative outcomes; the purpose, function, and structure of the system; and the consciousness of the actors within the system. B Lab’s vision of change implies a multigenerational inclusive, equitable, and regenerative economic system for all people and the planet. The system change includes the recognition of planetary boundaries and their impact not only on current generations but also on future ones.

B Lab’s theory of change can be summarized into three main drivers:

• Businesses are at the center of the theory of change, given their direct relationship to multiple stakeholders within the economic system and society at large.

• B Lab, a business-based movement, expects to be able to engage with and influence the remaining system’s stakeholders, acting as catalyzers for change in the broader ecosystem.

• System change is a result of cross-sector collaborative work with other movements and organizations.

B Lab, as part of the “purpose ecosystem,” aims to work with other organizations and movements (allies) to collectively build an ecosystem for system change by engaging different stakeholders, either directly or indirectly, within the economic system and society at large. Figure 2 shows the relationship with stakeholders.

Fig. 2

Relationship with stakeholders within B Lab’s theory of change

3 B Lab’s Theory of Change in Action

The shortcomings of the individual sectors and the systemic nature of sustainability challenges require collaborative action by organizations across industries, sectors, and geographies (Pedersen et al. 2021). However, collaborative action presents several challenges (see, for example, Ansell and Gash 2007). B Lab is a recognized actor in the purpose ecosystem, setting principles, guidelines, and assessment and certification tools, as well as creating a community around purpose-driven companies (Dahlmann et al. 2020), but it also acts in practice as a convener, i.e., an organization with specific experience and capacity in instigating and driving this kind of partnership, mitigating challenges, navigating tensions in the collaboration process, and driving the partnership process forward (van Hille et al. 2019).

Through its global network, B Lab’s global strategy is to drive the adoption of B Lab’s equity-driven standards, which manage the impact of business, guide accountability, and empower credible leadership. This enables and catalyzes secondary strategies to be implemented directly or in partnership, depending on the context and maturity of the regional or local B movement. Figure 3 shows B Lab’s global strategies. Figure 4 shows some examples of global strategies in action. Next, we present how these strategies are developed in practice.

Fig. 3

B Lab’s global strategies

Fig. 4

B Lab’s global strategies in action

3.1 Global Strategy 1: Standard Development and Evolution, Impact Measurement Tools

3.1.1 B Lab Is the Certifying Body of B Corporation Certification

B Corp certification is a designation that a business is meeting high standards of verified performance, accountability, and transparency on factors ranging from employee benefits and charitable giving to supply chain practices, resource consumption and waste management, as well as input materials. In order to achieve certification, a company must:

• B Impact Assessment: Demonstrate high social and environmental performance by achieving a B Impact Assessment score of 80 or above. The assessment includes more than 200 criterias from governance practices, workers, community, environment and clients consumers. Additional criteria, known as impact business models, can be activated to capture a company’s extraordinary, positive impact. Overall, companies pass a robust risks review, and in the case of multinational corporations, they must also meet baseline requirement standards.

• Legal commitment: Change the company’s corporate governance structure to be accountable to all stakeholders, not just shareholders. Companies can also achieve benefit corporation status if available in their jurisdiction.

• Transparency: Allow information about the company’s performance measured against B Lab’s standards to be publicly available on their B Corp profile on B Lab’s website.

B Corp certification is holistic, not exclusively focused on a single social or environmental issue. The process to achieve and maintain certification is rigorous and requires engaging teams and departments across the company, alongside senior management. The verification process differs for small and medium-sized enterprises (SMEs) and multinationals. But in both cases, it takes into account the company’s size and industry and involves documentation of the company’s business model and operations, structure, and various work processes, as well as a review of potential public complaints and possible site visits. Large companies and multinationals experience additional steps: they undergo an in-depth risk review process as a preliminary phase, which can trigger eligibility review due to controversial practices they may have or have had or operations in a controversial industry (for more, see below). A scoping exercise helps to account for the complexity of their structure and to identify their certification pathway across countries and continents. And performance thresholds push the company to align best practices within its entities.

Companies operating in controversial industries and/or undergoing controversial practices must abide by additional, higher standards on performance and transparency. Companies willing to certify as B Corps and operating in controversial industries for which such higher standards are not already set trigger so-called industry reviews. Industry reviews are designed to define mandatory performance thresholds and requirements for companies based on industry best practices, expert consultation, and company engagement. Companies unable to meet the resulting stringent standards are deemed ineligible for certification.

Aside from higher standards and scrutiny for controversial industries and practices, multinationals must prove their alignment with baseline requirement standards. Typically, these include mandatory reporting, materiality assessment and material issue management, tax and government affairs disclosure, and human rights policy.

As leaders in the movement for economic system change, B Corps reap remarkable benefits. They build trust with consumers, communities, and suppliers; attract and retain employees; benefit from operational efficiencies as they manage their environmental footprint; and draw mission-aligned investors. As they are required to undergo the verification process every three years in order to recertify, B Corps are by definition also focused on continuous improvement, leading to their long-term resiliency.

3.1.2 The B Impact Assessment

The B Impact Assessment (BIA) was released in 2007. Based on standards developed by B Lab, the BIA is an impact management tool and framework that helps companies assess their impact on various stakeholders, including their workers, community, customers, and the environment, aside from their governance practices. Organizations can use the free standardized tool to compare their performance with other businesses and to identify and track opportunities for improvement, enabling them to measure, manage, and improve their impact by addressing a series of elements about business practices and outputs. High verified performance on the B Impact Assessment is one of the three requirements for a company to be eligible to earn certification as a B Corp. The B Impact Assessment is already used by more than 150,000 businesses.

3.1.3 SDG Action Manager

Developed by B Lab and the United Nations Global Compact, the SDG Action Manager is a free self-assessment that helps all businesses understand their contribution toward facilitating the United Nations Sustainable Development Goals (SDGs) and plan for improvement. Any business, whether its size, with an ambition to understand and manage their performance on the SDGs can use it. There is no need to be a B corporation.

3.1.4 Impact Management Partnership

Created in 2021, the Impact Management Platform is the result of a collaboration among standards organizations in the Impact Management Project, including B Lab, the Global Impact Investing Network (GIIN), the Organisation for Economic Co-operation and Development (OECD), UNGC, World Benchmarking Alliance, and others.

Acknowledging that there has been significant growth in resources to support companies across different impact management actions, there is still a lot of confusion around the different standards that exist and how they can be used on their own and with other tools. This platform aims to support practitioners to manage their sustainability impacts, including the impacts of their investments; to explain how standards can be used to address the Sustainable Development Goals; and to offer concrete actions for businesses to improve their impact. It is a performance framework that allows to track businesses’ progress, benchmark them against others, and assist their implementation with supplemental resources.⁷

3.2 Global Strategy 2: B Corp Certification and Multinational Engagement

3.2.1 The Case of the B Movement Builders Program

B corporations are predominant smaller companies. More than half have less than ten employees, and more than 80% have less than 50 employees (Fonseca et al. 2021). The vast majority of +4500 certified B Corps are small with less than $1 million in annual revenue.⁸ However, in the last few years, a high number of requests from multinationals created a need to certify them.

Recognizing the challenges of B Corp certification for multinationals, B Lab cocreated the program B Movement Builders with the most committed multinationals that have made certification work. They created the multinationals advisory council to think about what would have to change to serve multinationals in terms of achieving the B Corp certification, which is recognized as a long-term goal and guidance to help multinationals go through the huge and complex shift from shareholder governance to stakeholder governance.⁹ This program requires large multinational corporations (MNCs) to follow B Corp principles without requiring parent group company to certify himself, due to complexity, but also governing independence of entities or business unit who cannot meet the certification requirement (independent governance, profit and loss (PNL) statement, legal entities for bylaw changes, etc.)

The B Movement Builders program was launched in 2020 with an initial cohort of six pioneering companies: Danone, Natura & Co, Magalu, Gerdau, Bonduelle, and Givaudan, representing $60B in combined revenue and 250,000 employees in more than 120 companies across five industries. These companies make credible commitments, identify opportunities for scalable collaboration, and work internally to affect impactful transformation that accelerates a global system change of business and culture. Danone and Natura & Co serve as B Movement Builders mentors.¹⁰ B Movement Builders, as of June 2021, is also a prerequisite for parent companies of subsidiaries that apply for B Corp certification when they have +5bn of revenue. In January 2022, 22 applications were received. At least eight of them will start the program this year.

3.3 Global Strategy 3: New Business Narratives and Related Global Marketing and Communications

3.3.1 The Case of Imperative 21

The Imperative 21 coalition is a co-led B Lab initiative that is advancing the ambitious goal of shared and durable prosperity. It comprises 72,000 SMEs and multinational enterprises (MNEs) worldwide, representing 18M employees and more than €6,6T revenues among 150 industries and 80 countries, probably the most significant purpose-driven business movement.

Imperative 21 advocated for an economic system change that requires leaders to accelerate their transition to stakeholder capitalism, shifting the cultural narrative about the role of business and finance in society, realigning incentives, and facilitating a supportive public policy environment. Figure 5 shows the imperatives for economic change. This coalition is refusing the dogma of infinite economic growth on a planet with finite resources. They are advocating for an overhaul of public and private policies around the imperative principle of creating long-term shared value for all stakeholders. A concrete expected action is the revision of public indicators for measuring success and the need for appropriate regulatory frameworks.

Fig. 5

Imperatives of economic change

Imperative 21 launched a global marketing campaign called RESET. It is a long-term campaign that aims to raise awareness around the necessity of, and opportunity for, economic system change. The campaign was launched on September 13, 2020, the 50th anniversary of Milton Friedman’s seminal essay on shareholder primacy. The RESET campaign calls to overcome shareholder primacy and restart the economic system based on stakeholder capitalism. The campaign started with a full-page ad in the New York Times on September 13, and the next day, at 9:50 am, the Nasdaq Tower, in Times Square, New York City, showcased the campaign for 10 min. Figure 6 shows this historic moment. This campaign continued to occupy public spaces in different countries and was supported by a social media campaign.

Fig. 6

Reset campaign

3.4 Global Strategy 4: Proposing, Mobilizing, and Articulating Policy Change

3.4.1 Promoting the Benefit Corporation Legal Framework

B Lab promotes a model law—the Model Benefit Corporation Legislation—that may adopt the establishment of a new form of corporation structured to pursue social and environmental interests in addition to profit. The Model Legislation, introduced in 2013, rapidly gained success in many US states. To date, more than 7704 benefit corporations have been established in the United States, such as in Oregon, New York, Nevada, Delaware, and Colorado, and it has expanded to other countries, such as Italy, Colombia, and Canada.

Benefit corporations should not be confused with certified B corporations, which do not necessarily qualify as benefit corporations in jurisdictions recognizing this corporate form. B Corps are certified by private nonprofit organization B Lab, after achieving a minimum verified score on the B Impact Assessment, defined by B Lab itself.

Benefit corporations were originally intended to soften shareholder primacy, and they differ from standard corporations through their main legal requirements. First, a company can be incorporated as a benefit corporation or become one by amending its articles of incorporation so as to specify that it is a benefit corporation. Second, benefit corporations should pursue the general public benefit purpose but may also elect one or more specific public benefit purposes. Third, the board of directors of a benefit corporation should act in the best interest of the company and also consider the effects of any action or inaction of the company on a wide range of stakeholders in connection with the general public benefit and/or the specific public benefit purpose elected. Fourth, the benefit corporation should have an independent “benefit director,” who shall submit an annual benefit compliance report to the board of directors. Fifth, the benefit corporation should issue an annual report in which it assesses, among other things, the ways in which it has pursued the general/specific public benefits against a third-party standard.

3.4.2 Initiatives at the Country Level

The UK Better Business is a coalition of leaders from across all sectors and all regions of the UK that aims to amend Section 172 of the Companies Act, ensuring businesses are legally responsible for benefiting workers, customers, communities, and the environment while delivering profit. More than 900 companies have joined the coalition. The campaign concept and strategy were initiated by B Lab UK, which acts as Secretariat of the coalition.

B Lab Spain launched a campaign in 2021 to promote the development of a legal framework for benefit corporations adapted to the Spanish reality (Sociedades de Beneficio e Interés Común (SBIC)). The campaign started with an online presentation of the “Green Book of Purpose-Driven Companies,” coordinated by B Lab Spain and Gabeiras y Asociados. This was considered the first step toward promoting recognition of the purpose-driven business model in Spain. Additionally, they presented the “Manifesto to promote a new inclusive and sustainable economic and business model in Spain,” which was signed by more than 50 well-known personalities in Spain, to ask the Spanish government to create this legal figure. They also launched an ambitious communicational and activist campaign using diverse channels such as the platform EmpresasConProposito.net so that nonprofit organizations, institutions, and Spanish companies can support and join the cause; started a Change.org campaign to involve society in this claim and achieve greater visibility and impact; initiated a guerrilla marketing campaign called #EmpresasConPropósito; and mobilized hundreds of people and organizations in different cities in Spain. As a result, more than 400 organizations committed to this campaign, and more than 30,000 people signed to support this cause.

With the support of B Lab Switzerland and SDSN Switzerland, in November 2021, parliamentarians from all sides joined forces in the parliamentary intergroup on the 2030 Sustainable Development Goals (SDGs). The new parliamentary intergroup aims to initiate a solution-oriented exchange on the way to a more sustainable Switzerland, for a pleasant life and a flourishing economy while respecting planetary limits. B Lab Switzerland is driving the economy and sustainable finance topics alongside SDSN Switzerland, which will provide its scientific expertise. The parliamentary intergroup is focusing on three strategic levers to promote sustainable development: a sustainable economy with projects around enhancing fiduciary duties under the law, a commercial and financial system to support alignment with international standards and accounting norms, and the transformation of the food system and governance in the sense of political leadership for sustainable development. In order for these levers to be activated effectively, it will be necessary to seize all opportunities with determination and to deal constructively with conflicting objectives upstream, beyond the boundaries of groups and committees. In the future, the great challenges of our time will have to be approached in a more strategic and integrated way.

3.4.3 Initiatives at the Regional Level: The Case of the Interdependence Coalition

The Interdependence Coalition, the first significant pan-European campaign by the B Corp community, brought together more than 100 companies calling for an EU-wide change in company law to make stakeholder governance mandatory. The Coalition aimed to put pressure on the EU Commission to consider the change as part of its Sustainable Corporate Governance initiative. The Sustainable Corporate Governance initiative’s goal was to improve the EU regulatory framework on company law and corporate governance to help companies focus on long-term sustainable value creation rather than short-term benefits.

The Coalition’s core proposal was that all companies registered within the EU should be required (and not just allowed) to consider the interests of all of the company’s stakeholders when making business decisions. This requirement should be aligned with the obligations of investors to consider how their capital will be used to impact society and the environment. The coalition called for a change in EU-wide company legislation, meaning all the member states would have to abide by it. It also asked the Commission to embed in the directive the legal obligation to consider the environment as a stakeholder. This regulation challenges the status quo; therefore, it is uncertain whether the Commission will be able to finally instill this mandate or not.

3.5 Global Strategy 5: Community and Movement Building, Collective Action

This global strategy has the potential to create or promote the development of several subgroups that may tackle different topics or objectives, such as the B Corp Climate Collective and NetZero 2030, Climate Justice for Business, Covid-19 Best Practices, Regional and Partners Resources for Business Impact, and Anti-Racism Resources, among others. Next, we present the case of NetZero 2030.

3.5.1 The Case of Net Zero 2030

B corporations are positioning themselves as climate action leaders in the business community. Leaders of the B Corp Climate Collective, a volunteer-led global community of B Corp leaders, and the B Global Climate Task Force, a strategy council made up of staff members throughout the B Lab and Sistema B Global network, share how B Corps are mobilizing globally to address the climate emergency and pursue a zero-carbon economy while centering that work in climate justice.

In 2019, more than 500 B Corps committed to net zero by 2030, publicly promising to accelerate the reduction of their greenhouse gas (GHG) emissions. One thousand five hundred more have since joined them, both within and outside the B Corp community. This is the largest business network engaged in the net zero race, with an ambitious agenda by 2030.

An increasing number of large companies, including some in industries with a history of negative environmental impact, are announcing efforts to pursue net zero status for carbon emissions. This had some climate advocates questioning the credibility of these claims and asking companies to pursue net zero through long-term changes that measure and reduce GHG emissions rather than solely relying on the purchase of carbon offsets.

B Corps that have committed to net zero by 2030 are pursuing strategies that, first and foremost, reduce emissions wherever possible. Only then do they use verified offsets that emphasize carbon removal projects to balance emissions that cannot be eliminated. Through the transparent pursuit of these goals and the use of science-based targets, B Corps can ensure they are creating meaningful GHG reduction strategies. Some of the climate actions are declaring a climate emergency, accelerating carbon reduction, developing a net zero plan, climate advocacy, and continuous standard update.

4 Theory of Change: Global Outcomes

B Lab’s intended outcomes help the global network to guide their strategy and objectives, determine the way in which they deploy their different strategies (global programs), and evaluate their success. It is recognized that individual organizations may have organizational outcomes that, individually, may not be directly contributing to global outcomes but will be when rolled up with the outcomes of the collective network. Figure 7 shows these intermediary outcomes at the business level.

Fig. 7

Intermediate outcomes

The expected final outcomes seek to address the negative impacts that were identified as part of the problem. The collective achievement of all of these outcomes (intermediary and final) aims to contribute to B Lab’s vision of systemic change. Figure 8 shows the expected final outcomes of B Lab’s theory of change in action.

Fig. 8

Final outcomes

5 Conclusions

The past two years proved that we can change faster than we ever imagined. The climate crisis requires immense change, and like COVID-19, it is a global problem that will affect us all. As businesses, we need to work together to tackle the biggest challenge of our lifetime. We need radical responsibility to address the surviving plan of humanity, the so-called UN AGENDA 2030, and a recognition that everyone has a part to play in finding solutions for us all.

The needed leadership at the scale required a profound transformation in the current mainstream exclusive and extractive mindset to build to an inclusive and regenerative one. Who is going to lead the beat? Governments and policy makers? Consumers? Citizens? We believe business players are playing a major role in redefining success in society and addressing grand society challenges and that their social and environmental impact will dictate their future license to operate. Taking responsibility for all stakeholders, human and natural capital as main drivers will allow conducting the impact required based on reflection and action—for many, that means radical change.

Change is an important part of our future. Our social fabric will need to adapt and pivot to future-proof businesses and aligned policy or mention incentives to accelerate the transformative process. The most critical questions challenge business models. And answers require creative solutions to open doors to untold opportunities. Such challenges can be driven by a movement with the right imperatives as guiding stars. B Lab thrives to align the standard and develop the future B Corp certification framework to achieve universal outcomes—which all certified companies should act on—while tailoring the specific requirements to companies’ contexts when needed (using “Targeted Universalism”¹¹).

If responsibility leads to action ahead of regulation by strengthening relationships with stakeholders to speed up change, it could unleash the learning from others and build partnerships in a collaborative and respectful approach among peers, setting the bar for others and opportunities with other leaders. The mass power would then increase, like with employee engagement and retention, as values align within companies. Are we capable of moving from experiments to a mainstream approach, and is it worth trying? Today, 4600 B Corps around the world are sending a signal—business can be a force for good at various scales but can be powerful when unified by a simple principle: we are interdependent!

Accountability is a journey that is stressed out by planet boundaries and social crises. To embrace radical responsibility, B Lab designed a robust framework for transparency with all stakeholders. This is a marked shift from the leadership of yesterday. It is an important but hard transition. A future-ready business does not have all the answers. Instead, it is fueled by candor. We live in a world where social media prevents cover-ups and secrets from being contained. Build trust with honesty. Mistakes are inevitable in such a complex world, but our world will understand and respond to a business that owns and learns from errors. The decade to come will be the litmus test for society and our global economy. B Lab and other leading organizations are powering up the inclusive market infrastructure to encourage business to take responsibility and act with humility to meet the challenge set by our planet and our children.

Appendices

Text Box 1

1.1 What Is a B Corporation”

B corporation is the name given to a company that, as a for-profit business. is meeting high standards of verified performance, accountability, and transparency on factors ranging from employee benefits and charitable giving to supply chain practices and input materials.

As leaders in the movement for economic system change, B Corps reap remarkable benefits. They build trust with consumers, communities, and suppliers; attract and retain employees; and draw mission-aligned investors. As they are required to undergo the verification process every three years in order to recertify, B Corps are by definition also focused on continuous improvement, leading to their long-term resiliency.

B Corps have a particular business model: the social and environmental dimensions are integrated into the mission; moreover, profitability is an objective to the extent necessary to achieve social and environmental results. They balance long-term goals and remain profitable in the short and medium terms. Their focus is on impact, increasing positive social and environmental impacts instead of just reducing negative impacts. The relationship with stakeholders is mutually beneficial, including nature, which is considered by its intrinsic value. Beyond their commercial activity, they aim to influence the sustainability agenda through interaction with stakeholders and the socioeconomic system (Stubbs 2017).

Text Box 2

1.1 Examples of B Corporations Around the World

1.1.1 Africa

Sama is a large Kenyan company that has expanded its operations over the years to include operations in the United States, India, Canada, and Uganda, where it provides artificial intelligence and data training programs for a variety of industries. The company also focuses on an impact sourcing project, giving programs to low-income people and marginalized communities, allowing them to better access the digital economy in an industry traditionally dominated by males and occidental countries. For its B Corp certification, it activated several IBMs relevant to its activities, such as Workforce Development and Designed to Give.

Olivelink Healthcare, a small Kenyan organization based in Nairobi, focuses on primary care for people living in informal settlements. They have a specific goal of using a patient-centered approach to humanize care for people in need. With the activation of Impact Business Models items in their B Impact Assessment, the company has a special impact on their customers, improving Health & Wellness and Serving in Need Populations.

1.1.2 Europe

Fairphone is a continuously growing phone company based in the Netherlands. The company succeeds in proving that an ethical phone model is possible, with its interchangeable parts model that avoids the waste of phones with most parts still working. With a B Impact score of 122, the company also makes specific efforts regarding workers and the environment with the IBMs Supply Chain Poverty Alleviation and Resource Conservation activated.

Watalux: the Swiss company Watalux produces water treatment devices and employs workers who are excluded from the traditional labor market. The produced devices are targeted to be sent to isolated areas, allowing the production of chlorine with only little material and thus treating water locally. The work of the small company is particularly promising, permitting impacts on their direct workers and customers’ communities. They provide Basic Services for the Underserved and Serving in Need Populations, which were IBMs activities for their B Corp certification.

1.1.3 South and Central America

Caravela coffee: based in Colombia, Caravela coffee exports and imports coffee from family, small-scale farmers, with a key focus on transparency. Caravela coffee is an example that a more horizontal functioning is possible, even for industries that often depend on prices set by buyers with commodity and financial rates. Certified in 2014 with a B Impact score of 152 and ranked in the Best of the World Top-Performing B-corps list for 5 years in a row, the company shows its commitment via the activation of IBMs such as Workforce Development, Supply Chain Poverty Alleviation or Land/Wildlife Conservation, and Toxin Reduction/Remediation.

Grameen de la Frontera is a small Mexican microfinance company, targeted toward the rural communities in the country. The company provides microcredit services as well as financial education for communities, including women and indigenous people. With a B Impact score of 154, and activated IBMs such as Portfolio Management and Leadership & Outreach, the local work of the company has a wide influence in making communities more self-sufficient and helping them improve their independence.

1.1.4 North America

Cotopaxi is a US-based large company selling sustainable clothing on different continents. Cotopaxi produces outdoor gear, with a sustainability holistic mindset by using recycled materials, giving back to communities, and also implicating workers in creation processes. With a global goal to reduce poverty, the company activated IBMs related to Communities, including Designed to Give and to the Environment, Environment Products & Services, and Resource Conservation.

Green Retirement is a retirement plan company based in Oakland, United States, steered toward sustainable investments and community building. The company represents a shift in comparison to the classic pension plans, for which customers have no power over the use of their money invested. Certified as early as 2007, the company now owns a B Impact score of 162 and has activated IBMs such as Investment Criteria and Leadership & Outreach.

1.1.5 Asie/Océanie

Kiwibank is a large New Zealander bank, focused on local functioning. The bank acknowledges the role of national traffic and local investments in supporting the national economy. Representing an alternative to traditional banking, Kiwibank activated several IBMs, along with their 90 B Impact score, such as Governance Mission Locked, Green Lending, and Investment Criteria.

SmartAir: the Beijing-based Chinese company SmartAir offers low-cost air filtration solutions. In addition to making air pollution protection more affordable, the company also provides education on pollution protection. To achieve its B Corp certification, SmartAir activated several IBMs related to their purpose, for instance, Health & Wellness Improvement and also Serving in Need Populations.