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To B or Not to B Corp: The Rise of Social Enterprise

Alan Scott

The green building movement has long focused on the use of healthy, sustainable materials. The evolution of sustainable building framework has increased expectations of transparency in revealing the environmental and health impacts of building materials. With momentum increasing to reduce the negative “footprint” of the built environment, we now look to the social and sustainable commitment of the manufacturers, design firms and construction companies that make, specify and install those materials for positive “handprints.” While awareness of social responsibility, equity and inclusion has increased, so has the development of certifications for corporate social and environmental responsibility.

Over the last two decades an increasing number of large corporations have embraced voluntary reporting of their environmental scorecards (climate impact, supply chain, etc.) through platforms such as the Carbon Disclosure Project (CDP), Global Reporting Initiative (GRI) and Dow Jones Sustainability Index. These efforts drive business performance improvements and mitigate sustainability related risks for investors, but these platforms are not usually a good fit for tens of thousands of smaller businesses. They don’t address the wide array of positive social and environmental impacts companies can have on their employees and on the communities in which they operate. But, that is where new frameworks for social enterprise come in.

Organizations like Green America have been around since the1980s, certified thousands of small businesses with sustainable missions, and helped boost major green brands like Cliff Bar and Seventh Generation. However, the last decade has seen a significant growth in interest and the introduction of new platforms, including B Corp, Benefit Corporations, and the JUST program. These platforms allow companies both large and small to demonstrate conscientious leadership, authenticity in their commitments, and accountability and transparency in adherence to their social and environmental missions. By doing so, companies can better attract and retain employees, build customer trust and loyalty, and establish positive community relations. Let’s take a closer look at each one:

Courtesy of B Lab

B Corps

Certified B Corporations can be any size and structure of business (sole proprietor, LLC, C Corp., etc.) and located anywhere. They are assessed and certified every three years by B Lab, the not-for-profit organization founded in 2006 with a mission to redefine the meaning of business success by setting the “highest standards of verified, overall social and environmental performance, public transparency, and legal accountability,” and leveraging the power of markets to solve social and environmental issues. They established the framework based on the B Corp Declaration of Interdependence, that reads:

“We believe:

  • We must be the change we seek in the world.
  • That all business must be conducted as if people and place mattered.
  • That through their products, practices and profits, business should aspire to do no harm and benefit all.
  • To do so requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations.”

There are currently over 2,500 certified B Corps around the world, including 35 design and planning firms, 18 contractors, and four building materials companies, in addition to well-known brands like Patagonia and Ben and Jerry’s. Companies can become a B Corp by meeting performance and legal requirements, and signing the declaration of interdependence. They are scored on key indicators including environmental performance, workforce support (compensation, benefits, training, ownership opportunities, work environment), customer benefit, community impact (supplier relations, diversity, local community involvement), and governance (accountability and transparency).

Benefit Corporations

Benefit Corporations are complimentary yet distinctive from B Corps. The Benefit Corporation designation defines the legal structure of a business’s incorporation, and is currently only available to corporations in 30 states and the District of Columbia. Limited Lability Corporations (LLCs) in Maryland and Oregon can also attain Benefit Corporation status. Under its articles of incorporation, a Benefit Corporation is required by law to create a real, positive impact on society and the environment, in addition to generating a profit for shareholders. Unlike typical Corporate Social Responsibility (CSR) programs, which are usually run separately from core business activities, the Benefit Corporation’s mission becomes part of its day-to-day operations. B Lab developed the model legislation enacted by states that have enabled Benefit Corporations, and it provides a free reporting tool for corporations to meet the transparency requirements with their self-reporting (annual Benefit Report). In the eight years since they were first introduced, more than 1,800 companies have registered as Benefit Corporations, including Etsy and Klean Kanteen.

Courtesy of ILFI

JUST

Following the industry enthusiasm for the Living Building Challenge for buildings and the Declare label for products, the International Living Future Institute introduced the JUST program for certification of social equity in organizations. JUST is a voluntary disclosure program for organizations, like a nutrition label for a socially just and equitable organization. JUST can be applied to for-profit businesses, non-profits, educational institutions, government agencies, public and privately traded companies, trade unions, cooperative businesses and family-owned businesses located anywhere in the world. The label includes 22 indicators in six categories:

  • Diversity (gender, ethnic)
  • Equity (union-friendly, living wage, gender pay equity, family friendly)
  • Safety
  • Worker Benefit (happiness, healthcare, continuing education)
  • Local Benefit (local control and sourcing)
  • Stewardship (community volunteering, charitable giving, responsible investing).

Organizations may opt out of up to three of the indicators, but no more than one in each category. An entity must update its JUST label every two years. A total of 74 organizations have earned the label, with the list currently dominated by architecture firms. JUST certified organizations can contribute to the Equity Petal in the Living Building Challenge.

In addition to these core programs, there are other certifications that focus on specific industry niches. GRESB is a certification that assess the ethical and sustainable impact (environmental, social and governance) of real estate, debt (real estate lenders) and infrastructure portfolios, and is now piloting a resilience assessment. Fair Trade USA Certified serves the food, apparel and consumer packaged goods markets, assessing equitable trade practice in a company’s supply chain. Many in the building industry are familiar with Forest Stewardship Council (FSC) certification for wood products, but FSC also emphasizes economic sustainability in forest and mill communities.

As our society (and the design and construction industry) raises its awareness of, and more importantly, commitment to social equity, transparency and authenticity in each company’s social and environmental practices will increasingly be in the spotlight. Using the right indicators, metrics and validation tools establishes a meaningful measurement of each organization’s positive handprint, encouraging continuous improvement, attracting talent and loyal customers, and harnessing business as a positive force for change. Vibrant, healthy and equitable communities are the foundation of strong economies, and companies that embrace social enterprise can help sustain them, and also reap the benefits.


Alan Scott, FAIA, LEED Fellow, LEED AP BD+C, O+M, WELL AP, CEM, is an architect with over 30 years of experience in sustainable building design. He is a senior associate with WSP in Portland, Ore. To learn more, visit https://www.wsp.com/en-US/services/built-ecology and follow Alan on Twitter @alanscott_faia.