Finding the World’s ‘Best’ Social Entrepreneurs

Rigging Libor, bribing governments, running sweatshops: Corporations’ worst behavior is often the most visible. B Lab, a small Berwyn (Pa.) nonprofit, is trying to highlight the opposite stories: businesses that act responsibly, treat their workers well, and do good things for the environment and their communities.

Since 2007, B Lab has certified as “B Corps” more than 700 companies trying to balance their social missions with making profits. Its process involves documenting the company’s beneficial impact (and the company paying a fee to B Lab of $500 to $25,000 a year, depending on revenue). Most B Corps are relatively unknown small or midsize companies. A handful, like Patagonia and Warby Parker, are bigger brands.

B Lab has also been instrumental in getting 12 states, including California and New York, to recognize new legal structures that give company directors legal cover to consider social and environmental goals instead of just financial returns. Twenty more states, including Delaware, are considering similar legislation.

Today, B Lab is releasing its second annual list of companies that score in the top 10 percent on its assessments, what it calls the “Best for the World” list. How did the 67 companies get there? There’s no single formula. Many paid workers generously and gave them good benefits. A lot of them have business models intended to create broad public benefits, like providing services to the poor or elderly, or promoting clean energy. Nearly one-third of the companies on this year’s list came from outside the U.S. More than half of them have been certified as B Corps just in the last year. I spoke with B Lab co-founder Jay Coen Gilbert about the list. Edited excerpts follow.

Why put together a list of “best” companies?
Business is the most important man-made force in the world, and our biggest social and environmental challenges are too big to be solved by governments or nonprofits alone. The list tells us which businesses are creating the most value for the world.

Is it challenging to compare companies in different industries and countries? How do you compare companies making sustainable clothing in the U.S. with a telecom provider in Afghanistan?
The B Corp movement is in the early stages of going global. No question, comparability is difficult the broader you get. Since capital flows globally and often across sectors, there’s a need to do the best we can to provide a comparable set of metrics that can look at a core function of a company. Every company has employees, every company operates in the local community, every company has an environmental footprint.

What practices helped companies get included on the list?
In order to be that high a performer, you’re going to have to be operating pretty well on all cylinders. They’re typically not only excelling in one area, just employee practices or environmental practices. They’re bringing that same intention to create shared value for all of their stakeholders.

What’s the challenge ahead for the B Corp movement?
The biggest challenge: It takes real effort to earn this certification. This isn’t “pay a fee and get a seal of approval.” All of these companies have also made legal changes to their governing documents. That’s the attribute that makes these companies built to last. Companies that do that are the ones that make [the mission] more than a nifty mission statement pinned on the wall. The biggest challenge for B Lab is how to grow the community exponentially as opposed to arithmetically.