A Wish for the New Year: Let’s Have More “B” Corporations

As we make our wishes, resolutions and plans, we would like to suggest that we see more “B” Corporations in the New Year ahead. “B” stands for “benefit,” and this new type of corporation distinguish itself from the traditional “S” and “C” Corps because B Corps are not only for profit, but also for the public benefit.

B Corps are typically defined as “people using business as a source for good,” and are certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. They have a much wider fiduciary responsibility that includes a responsibility to their employees, the community, and the environment as well as to their shareholders.

Is it Socialism or is it smart 21^st century capitalism? Here are three good reasons for electing to create a B Corp:

1. Transparency. Today’s information revolution has created a demand for transparency. Consumer’s now know that they are voting with their money and consequently for the policies and behavior of the companies whose products they purchase. Companies that hurt the general welfare are being exposed daily, whether it’s for poor treatment of employees, disregard for the community, or environmental damage.

2. Engagement. Employees want to work for companies that stand for more than their mercantile products and services. They want to know that they are participating in a company that is making the world a better place. They want to “brag” about their employer’s higher standards to their family, friends, and followers in social media.

3. Investment. Investors increasingly are looking for companies that will make a difference while returning a profit. Investors realize that companies that have reduced turnover and engaged employees will be more profitable, and that companies that give their customers a social reason to buy their products will have greater customer loyalty.

As more B corps demonstrate profitability, sustainability, and popularity, the old paradigm that “good deeds only come at the expense of profits” is slowly but surely coming to an end.

Maryland was the first state in the country to authorize the creation of B corps. Since then, California, New Jersey, New York, Vermont, Virginia, and even “corporate haven” Delaware have joined the movement. Why? Because it’s (finally) just plain good business.

When we started Barefoot Wines in 1986, there were no B Corps, and there was no such term as Social Entrepreneurship. But as cash-strapped outsiders, we stumbled onto a way of getting the word out on our brand without paid advertising. We called it “Worthy Cause Marketing,” and years later when we finally could afford to advertise, we chose to continue our support of non-profits as our sole means of spreading the word about our product.

Not unlike today’s definition of Social Entrepreneurship, we supported social and environmental causes that were important to us and to our customers. The membership of the non-profits we supported had a social reason to buy our products. Our employees were engaged because they knew they were making the world a better place. The success of Barefoot Wine is proof positive that social entrepreneurship works!

Today’s new B Corporation is an excellent way for companies to tell the world, including their investors, employees and customers, that they are making a difference. We would like to see more states pass legislation this year to enable this new corporate structure of social entrepreneurship. We hope more companies and start-ups will elect to become B Corporations in the New Year, making it a happier New Year for all!