Canadian ‘B Corps’ Put Their Money Where Their Branding Is On Social Causes

For-profit companies that trumpet a commitment to social and environmental causes often struggle to prove to investors and customers that their dedication to betterment runs deeper than a clever green-washing campaign.

But that has begun to change.

A growing number of Canadian companies are now becoming certified as “B Corps,” a new designation that seeks to distinguish firms that are committed to improving more than their bottom line.

Jay Coen Gilbert, Founder of B Corps shares his vision to harness the power of business to solve society’s problems through B Corporations — a new standard labeling socially and environmentally responsible companies. B Corps will help corporations be profitable while solving society’s problems.

The aim, says Dermot Hikisch of B Lab, a Pennsylvania-based non-profit that has certified more than 500 B Corporations in the U.S. since 2007, is to do the same thing for companies serious about addressing social and environmental issues as Fair Trade certification has done for firms dedicated to ethical labour practices.

“Consumers, investors and even employees aren’t necessarily believing what a company says until they have a third party seal of approval on it,” Hikisch told The Huffington Post. “B Lab acts as that third party standard to make sure these companies are as good as they say they are.”

Since 2009, 39 Canadian companies — ranging from engineering firms to coffee retailers — have become designated B Corps, with 27 new companies certifying in the past year.

As Hikisch explains, achieving certification is “no small measure.” In addition to passing a social and environmental “impact assessment,” companies must articulate their commitment to these values directly into their articles of incorporation.

“You have to have a board meeting to really walk through [it] with your board and your shareholders [and] say, ‘I’m going to make this amendment to my documentation to say that we shall consider stakeholders within our business,’” he says. “They’ve baked it right into their company.”

Altering the company bylaws is intended to prevent these values from being abandoned in the event of a big corporate shake-up, such as a merger or acquisition.

Tim Masson, executive vice-president of The Ian Martin Group, an Oakville, Ont.-based employment consulting firm, didn’t mind the added paperwork.

“We became a B Corp to help clarify, define, and articulate our purpose as an organization,” he said in a press release. “We hope to learn from other B Corps, improve our impacts, measure our progress, and become more transparent and accountable to that purpose.”

Some of the allure no doubt stems from a desire to attract capital from the burgeoning impact investing industry, which seeks to put its money on precisely the kind of firms that B Lab certifies.

As Bill Young, founder of Toronto-based Social Capital Partners, a non-profit social finance organization, explains, “A certification process on social business helps an investor who wants to do that kind of thing, but doesn’t have the time themselves or the means to really test the legitimacy of the social purpose. It’s a valuable service to know that someone has done that.”

Impact investor Joel Solomon concurs.

He says it’s “still too early to expect that [all companies] would be aware of the designation,” but he has begun to take notice when a company has achieved B Corp certification.

“B Corp certifications add a layer of confidence and are a signal of a level of commitment and values by an entrepreneur or company,” Solomon, who is chairman of Vancouver-based Renewal2 investment fund, said in an e-mail.

The B Corp movement has had to overcome several hiccups in the U.S., where corporations that make decisions that prioritize environmental or social goals over profits can face legal action, and some states prohibit corporations from making changes to their bylaws.

To address this, B Lab spearheaded legislation, which has been adopted in seven states since 2010, to create a different class of company. Among other commitments, so-called “benefit corporations” are required by law to make “a material positive impact on society.”

California-based outdoor clothing retailer Patagonia Inc. is among the corporations that have made use of the new legislation, and ice cream icon Ben & Jerry’s plans to incorporate as a benefit corporation in the state of Vermont in the coming months.

According to Allyson Hewitt, director of social entrepreneurship at the Toronto-based MaRS Discovery District, which has been at the forefront of the Canadian B Corp movement, it’s somewhat easier for Canadian corporations to become B Corps.

As she explains, corporations on this side of the border must already “consider other stakeholder interests besides shareholders,” and are required by law to abide by some of B Lab’s standards, such as offering relatively generous (at least compared to the U.S.) maternity leave benefits.

Still, Hewitt’s team is investigating the possibility of drafting benefit corporation legislation in Canada, which she says may strengthen the designation. Their findings will be released in a white paper in the next few months.

As Hikisch sees it, there is significant “upside” potential for the movement in Canada, which is now home to the second-highest number of B Corporations after the U.S.

“Canada is one of those places [where] business owners do believe and know that they can be a big part of the solution, and not have to wait for … governments to act or the consumers or anyone else to do the job for them,” he says. “I have no doubt that there [are] over 500 to 1,000 potential B Corporations in Canada.”


        • DIRTT, which stands for “doing it right this time,” designs and builds custom, sustainable office interiors. Among its offerings are floors that house telecom and electrical cables, and “living walls” that turn room dividers into hanging gardens. Headquartered in Calgary, DIRTT now has offices across Canada and the U.S., including in New York, Chicago and L.A. The company employs 580 people.
        • British Columbia-based Salt Spring Coffeecelebrated its 15th anniversary of selling fair trade coffee in 2011. The company boasts it “pays above market rates to farmer-owned coffee co-operatives that do not harm the environment with their production methods.” The company reports $10 million in sales annually and employs 60
        • Founded in 1994 by Carol Newell and Joel Solomon, Renewal 2 is a social venture fund that aims to turn a profit by investing in socially conscious enterprises. The fund says it has placed “$7million of equity investments” and also placed “$20 million in conservation financing, social purpose non-profit real estate, social enterprise business lending, education, convening, capacity enhancing shared services for charities, and the building of financial services for philanthropists.” Among the companies in its portfolio are Better Energy Systems and Sensible Organics.
        • Vancouver-based Ethical Bean has been selling fair trade coffee since 2003. One dollar of every unit of coffee sold at the retailer goes to charities helping children in Guatemala. The company has 26 employees.
        • Fairware provides custom-branded products to companies and organizations that want to increase their brand exposure with promotional product lines. The company is involved directly with causes, providing products that can be used as prizes for charity raffles, for instance. Among its clients are Aveda, BC Hydro and Amnesty International.
        • Vancouver-based Lunapads offers reusable cloth sanitary napkins, as well as a line of women’s underwear. The company describes itself as a “women-owned and operated social mission-based business.” It has been in business since 1993.

Story run by Huffington Post, February 3, 2012

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50 Fastest Growing Brands Serve a ‘Higher Purpose’

New research on the world’s 50 fastest growing brands found a cause-and-effect relationship between a brand’s ability to serve a higher purpose and its financial performance.

Brand consultants Millward Brown and former Proctor & Gamble marketing officer Jim Stengel developed the list of 50 brands, which they say built the deepest relationships with customers while achieving the greatest financial growth from 2001-2011. Furthermore, investment in these companies – the Stengel 50 – over the past decade would have been 400% more profitable than an investment in the S&P 500.

The list includes numerous brands with strong reputations for sustainability, such as Method, Seventh Generation, Stonyfield Farm and Chipotle.

The study forms the backbone of Stengel’s book GROW: How Ideals Power Growth and Profit at the World’s Greatest Companies (Crown Business; December 27, 2011).

“We wanted to uncover which brands grew the most over the past decade, both in terms of customer bonding and shareholder value,” said Millward Brown Optimor VP Benoit Garbe, who led the study. “Once we identified these brands, our burning question was what, if any, were the common principles that sparked and sustained their growth.”

To arrive at the Stengel 50, Millward Brown Optimor valued thousands of brands across 30+ countries. The list included both B2B and B2C businesses in 28 categories ranging in size from $100 million in revenues to well over $100 billion:

Ideals – The Ultimate Growth Driver

A research team – comprising Millward Brown Optimor brand strategists, Jim Stengel, Professor Sanjay Sood and MBA students at UCLA Anderson Graduate School of Management – uncovered that the most successful brands were built on an ideal of improving lives in some way, irrespective of size and category.

“We define ideal as the higher-order benefit a brand or a business gives to the world,” said Stengel. “Some companies are very explicit about their ideals, like Zappos – their ideal of delivering happiness is on their boxes, all over their offices, even on t-shirts employees wear. Other brands, like Louis Vuitton, are more implicit about it. But all their actions – throughout their products, stores and communications – amplify their ideal to luxuriously accentuate the journey of life.”

Added Garbe, “We found that this ideal is both a source of inspiration externally among customers, as well as a compass for internal decision making. So whether it’s Red Bull which seeks to Uplift Mind and Body or Pampers which is all about Caring for Happy Healthy Development of Babies, an ideal influences all facets of the business from HR and Marketing to R&D and Finance.”

Through case studies, GROW demonstrates how brand ideals aren’t simply about altruism or corporate social responsibility but a fundamental human value that is authentic to the brand and ultimately a driver for extraordinary growth. In fact, Millward Brown Optimor’s analysis discovered that those who centered their businesses on ideals had a growth rate triple that of competitors in their categories.

How Ideals Impact the Consumer Mind

Millward Brown’s team also determined that the 50 brands touch on five fundamental human values:

  • Eliciting Joy: Activating experiences of happiness, wonder, and limitless possibility
  • Enabling Connection: Enhancing the ability of people to connect with each other and the world in meaningful ways
  • Inspiring Exploration: Helping people explore new horizons and new experiences
  • Evoking Pride: Giving people increased confidence, strength, security, and vitality
  • Impacting Society: Affecting society broadly, from challenging the status quo to redefining categories

The list of companies is as follows:

Accenture, management and enterprise consulting services

Airtel, mobile communications

Amazon.com, e-commerce

Apple, personal computing technology and mobile devices

Aquarel, bottled water

BlackBerry, mobile communications

Calvin Klein, luxury apparel and accessories

Chipotle, fast food

Coca-Cola, soft drinks

Diesel, youth- targeted fashion apparel and accessories

Discovery Communications, media

Dove, personal care

Emirates, air travel

FedEx, delivery services

Google, Internet information

Heineken, beer

Hennessy, spirits

Hermès, luxury apparel and leather goods

HP, information technology products and services

Hugo Boss, luxury apparel and accessories

IBM, information technology products and services

Innocent, food and beverages

Jack Daniel’s, spirits

Johnnie Walker, spirits

L’Occitane, personal care

Lindt, chocolate

Louis Vuitton, luxury apparel and leather goods

MasterCard, electronic payments

Mercedes-Benz, automobiles

Method, household cleaners and personal care

Moët & Chandon, champagne

Natura, personal care

Pampers, baby care

Petrobras, energy

Rakuten Ichiba, e-commerce

Red Bull, energy drinks

Royal Canin, pet food

Samsung, electronics

Sedmoy Kontinent (“Seventh Continent”), retail grocery

Sensodyne, oral care

Seventh Generation, household cleaners and personal care

Snow, beer

Starbucks, coffee and fast food retailer

Stonyfield Farm, organic dairy products

Tsingtao, beer

Vente-Privee.com, e-commerce

Visa, electronic payments

Wegmans, retail grocery

Zappos, e-commerce

Zara, affordable apparel

Bart King is regulat contributor to Sustainable Life Media and a PR consultant at Cleantech Communications

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