World-Changing Ideas: A Q&A With Andrew Kassoy, Cofounder Of B Lab
As a founder of B Lab, a nonprofit that certifies sustainable businesses, Andrew Kassoy knows all about the complexities of considering social good while trying to grow a business. Join Co.Exist senior editor Ariel Schwartz for a live chat with Kassoy on Tuesday, March 4 at noon (ET).
As more states roll out benefit corporation legislation, allowing companies to pursue social good missions without getting sued by investors, the possibility of a public company becoming a benefit corporation increases (in fact, that was one of Co.Exist's predictions in our list of World-Changing Ideas for 2014).
Andrew Kassoy, a former private equity investor who cofounded B Lab in 2006, knows all about the complexities of considering social good while trying to grow a business. B Lab, a nonprofit that offers B Corporation certification to companies that meet certain corporate social responsibility standards (this is different from benefit corporation certification), has been working for years to familiarize the public with benefit corporations‹and to grow the ranks of B Corporation-certified companies.
Join us as we talk to Andrew about B Corporations, benefit corporations, and the rising tide of companies that want to consider purpose alongside the bottom line.
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We're joined by Andrew Kassoy, a former private equity investor and the cofounder of B Lab—a nonprofit that certifies companies as B Corporations and campaigns for the growing benefit corporation movement (we'll define those terms in a minute). Today, over 20 states legally recognize benefit corporation status, with many more states on the way. There are B Corporations in over 60 industries and 29 countries. Andrew will answer questions today about benefit corporations, B Corporations, and why we should pay attention to both of these things.
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That's a good place to start. The two are often confused. They share much in common but have a couple of important differences. Certified B Corp is a certification conferred by the non-profit B Lab where I work - essentially it's a judgment by a private party - B Lab - that a company has achieved high levels of social and environmental performance, accountability, and transparency. Benefit corporation is a legal status - like a C Corp or S Corp or LLC or partnership - conferred by a state.
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While we wait for Andrew's response, some context: an article written by Ariel in 2011, detailing B Lab.
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There is some overlap. Since legislation started passing over the past few years, over 500 companies have chosen to change their legal status from C or S Corp to Benefit Corporation in the 20 states that have passed the legislation. About 20% of those 500 are also Certified B Corps. And that number is rising as more Certified B Corps decide to ensure they can continue to pursue their mission even as they scale, go public, or sell.
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How cool would it be if Apple and GE each went through the B Impact Assessment given their recent opposite responses to pressure to explicitly state they do not pursue anything other than shareholder value maximization? Given Apple's admirable response, maybe they should become a benefit corp too - make it clear by making it legal!
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We've talked a bit about larger companies. But there can be a big financial burden on companies who want to become B Corps, because they have to meet certain strict social responsibility criteria. Is it a good idea for small companies/startups with limited resources to seek certification?
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It depends. There are lots of B Corps and other responsible businesses that would tell you that the work they've done to integrate mission into their business has saved or made them money - attract and retain talent, consumer loyalty, minimize risk, more efficient practices. There are some companies that make clear trade-offs, and the B Corp framework allows them to make that explicit and transparent so that they can attract the kind of talent, consumers, and investors who value that. There are 15,000 companies using the B Impact Assessment, lots of them small start-ups. So I'd point them there to get started while they're small.
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Yes! One of the best ways for us to have impact is to partner with great organizations that are building the next generation of great businesses. We've worked with a lot of incubators and accelerators, as well as a number of venture funds, investors, business school competitions, and government entities, to use the B Impact Assessment and B Corp certification as tools for these businesses. Here's a link to a list of those partners:
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Skeptics pat B Corps on the head and say this movement is cute but small. The evidence is quickly becoming to the contrary as B Corps and companies like them scale, disrupting and replacing traditional businesses.
To borrow - or mangle - a great quote.... There are lots of skeptics. As the B Corp movement has gotten traction, skepticism from some with a strong interest in maintaining the status quo will transition to opposition. Eventually, it will just seem totally obvious that there is a better way to do business in which ALL companies compete not only to be best in the world, but best FOR the world. And when that happens, business as usual will be creating a shared and durable prosperity for all. -
Last question for you before we wrap up: where do you see the B Corp/benefit corporation movements five years from now? There has been so much traction just in the past few years that I imagine the landscape of participating companies could be pretty different.
