Stakeholder

Capitalism
The Fix That Our Economy Needs
to Build Shared and Durable
Prosperity for All
What is the role of business in society? Should business be responsible for the ways it impacts
the lives of its workers, the health of the environment, and the communities it relies on or
sources from? Or is the sole purpose of business to accumulate wealth, which will provide
the means for all the rest?

In 1970, Milton Friedman published what is often referred to as the seminal and definitive
essay where he declared the purpose of business and its role in society as limited exclusively
to increasing earnings for directors and shareholders, termed shareholder primacy. For the
past 50 years, businesses have been legally bound to maximize profits, meaning business
directors are not allowed — at risk of legal action — to make decisions that take into account
the environment, the financial well-being of employees, or the health of the communities
they operate in unless that choice is the most profitable choice.

A growing movement of people, including business leaders, distinguished academic

researchers, policymakers, lawyers and more, recognizes this system cannot continue its
never-ending need for growth and survive into the long term. These movement leaders
also recognize that our growing global inequities are exacerbated by the current systemic
commitment to shareholder primacy.

A new impact economy is being built, one where businesses prioritize

and consider their impact on all the stakeholders they impact—
including communities, workers, customers, and the environment.

This is what stakeholder capitalism looks like in practice — and why more researchers,
experts, and thought leaders are pushing for this systemic change. This report shares why
these leaders believe in the stakeholder model and how the B Corp community demonstrates
the impact economy in action.
 TABLE OF CONTENTS
Stakeholder Capitalism Gains Wide Validation 1

How the B Corp Movement Enables the Shift to Stakeholder Capitalism 2

by Chris Marquis

Real Change in Real Time: Benefit Corps See Renewed Interest 9

by Frederick Alexander

Our Economic System Isn’t Working: The Global Crisis Drives a Renewed Market 11
Focus on Stakeholder Capitalism
by B The Change

Why Laureate Education’s IPO Matters to Silicon Valley 14

by John Montgomery

Stakeholder Capitalism in Practice 16

Guidebook Helps States Create Better Businesses: Guide to Passing B Corp Legislation 17

B Corps Prioritize Climate Change Mitigation 19

Actionable Insights on Working and Learning Together in Times of Crisis: 23

Supporting Vulnerable Workers and Community Members

How Companies Can Move From Words to Action to Address Systemic Racism: 26
B Impact Assessment Provides a Framework for Evaluation and Progress
 Stakeholder Capitalism
Gains Wide Validation
Stakeholder capitalism needs a working model rooted in transparency and
authenticity. As leaders move toward stakeholder capitalism, the community of
Certified B Corporations has received attention as such a model for its reliance
on an independent assessment. The B Impact Assessment is used by B Corps to
measure and manage impact on their stakeholders as rigorously as they measure
and manage their profits. By relying on a third-party reviewed assessment, B Corps
access a database of best practices, set a baseline to work from, establish goals to
work toward, and benchmark their progress year over year.

This section shares examples of the reasons the stakeholder model as practiced by
Certified B Corporations is gaining widespread attention and validation.

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(Photo by Ethan Hoover on Unsplash)
How the B Corp Movement Enables the Shift to
Stakeholder Capitalism
By Chris Marquis, author of Better Business: How the B Corp Movement is Remaking Capitalism
The economic slowdown and job losses due to the
COVID-19 epidemic expose flaws in the shareholder-
based capitalist economy. In the widely accepted
ideology that rules today’s major economies, the role
of business is to focus primarily on profits. The other
stakeholders in any business, such as the environment,
the communities where the business operates, and the
employees it hires, are viewed as “externalities” — in
other words, not the business’s problem. But
consumers — a large group of stakeholders — are
starting to hold bad actors accountable for their profit-
at-all-costs behaviors.
Amazon, the e-commerce giant, faced a drop in
stock price after it fired two tech employees who had
publicly criticized safety and working conditions
at its warehouses during the early period of this
epidemic.1 Supercheap Auto and other auto parts
companies had difficulty finding suppliers after they
took advantage of the epidemic to further delay paying
bills to small vendors.2 Though financially stable, some
big companies, such as Burlington Stores, Staples,
Victoria’s Secret and the luxury conglomerate LVMH,
used the pandemic to repudiate the rent to local
malls — and then suffered cold welcomes by local
consumers.3
1 Jon Porter. (2020). Amazon fires two tech workers after
they publicly criticized warehouse conditions. https://www.theverge.
com/2020/4/14/21220353/amazon-covid-19-criticism-protest-fired-em-
ployees-cunningham-costa-climate-change
2 https://www.afr.com/companies/professional-services/covid-
19-blamed-for-paying-suppliers-late-20200330-p54f8f
3 https://www.wsj.com/articles/landlords-compa-
nies-clash-over-rent-payments-during-coronavirus-11586865600
2
These public criticisms are demanding that businesses
do better by considering and taking care of the
lives they touch and the natural world they extract
resources from — they are calling for wider adoption
of a stakeholder governance model to build a more
equitable, just economy.
The leaders of prominent businesses were aware of the
necessity of making such a shift before the pandemic
began. On August 19, 2019, the influential trade group
that represents the largest U.S. companies, the Business
Roundtable (BRT) released a statement declaring that a
corporation’s purpose should be to serve the interests
of all of its stakeholders, including consumers,
employees, suppliers, communities, and shareholders.
This was a dramatic change, because for decades
maximizing shareholder returns has been the guiding
principle of business, particularly for the large public
companies that the BRT represents. This statement
marks a potentially significant shift in the strategic
priorities of big business. However, it came under quick
and significant critique, as the Council of Institutional
Investors (CII) said it would result in a situation where
“accountability to everyone means accountability to no
one” by diminishing shareholder rights and “proposing
no new mechanisms to create board and management
accountability to any other stakeholder.”4
It is true that without accountability, such discourse
could be no more than empty promises designed to sound
caring or even possibly to implement a greenwashing
strategy whereby a company intentionally emphasizes
more socially or environmentally laudable aspects of its
record while not really engaging in substantive actions.
For example, during the COVID-19 crisis, BRT signatory
Marriott furloughed a large proportion of its U.S.
employees while at the same time paying out more than
$160 million in dividends to shareholders and seeking
a raise for its CEO.5 Thus, for the CEOs of the BRT to
match their words with actions, they must develop
mechanisms to align their governance structures and
operations to create stakeholder value, not just deliver
value to shareholders. Furthermore, they must work
4 The Council of Institutional Investors, “Council of Institution-
al Investors Responds to Business Roundtable Statement on Corporate
Purpose.” Retrieved April 28, 2020 from https://www.cii.org/aug19_brt_
response.
5 https://www.nytimes.com/2020/04/13/business/busi-
ness-roundtable-coronavirus.html
toward greater transparency and accountability.
Otherwise, a focus on stakeholder governance would
be hollow or, like the CII critique states, “hiding places
for poor management.”6
Now, in 2020, with stark predictions of a drop in the
U.S. GDP and a dark outlook for small brick-and-mortar
retailers across the country, a business approach that
includes consideration of all stakeholders alongside
profits is more important than ever. But many businesses
have a poor understanding and limited history of
incorporating stakeholders in their practices. The
purpose of this report is to explain what stakeholders
are and why they are important to business operations.
This report highlights a movement of businesses that
have adopted stakeholder governance with reporting
transparency, a recurring assessment of management
practices and progress, and third-party, independent
review of their impact: Certified B Corporations (B
Corps).
The B Corp movement provides a new model of
businesses that can be accountable and transparent
to their stakeholders and uphold high standards for
measuring and managing their stakeholder impacts.
Such standards are what separates true stakeholder
governance from the corporate social responsibility
(CSR) initiatives found in many companies, most of
which are not an integrated component to the business
core. For example, in the home products industry,
Method and Seventh Generation have challenged the
chemical-based cleaning and home product industry
by providing natural, non-toxic, and biodegradable
products. Apparel brands like Patagonia and Athleta
have been tackling clothing waste through recycling or
repurposing. In the education field, Laureate Education
has been working to provide quality higher education
that is accessible and affordable to underserved
populations — almost half of Laureate’s students come
from underserved groups. These companies are all
B Corps, and they show how businesses that focus
on stakeholders can play a positive role in society
and generate increased returns through effective
stakeholder management.
6 The Council of Institutional Investors, “Council of Institution-
al Investors Responds to Business Roundtable Statement on Corporate
Purpose.” Retrieved April 28, 2020 from https://www.cii.org/aug19_brt_
response.
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Based on research I did for my forthcoming book,
Better Business: How the B Corp Movement Is Remaking
Capitalism, this report aims to articulate how the B
Corp movement model of change enables stakeholder
governance and accountability.
1. What Is Stakeholder Management
and Why Is It Important?
Stakeholders are defined as “any group or individual
who can affect or is affected by the achievement of
an organization’s purpose.”7 More narrowly, they are
“individuals and constituencies that contribute, either
voluntarily or involuntarily, to [the company’s] wealth-
creating capacity and activities, and who are therefore
its potential beneficiaries and/or risk bearers,” and
thus, managing stakeholders can be thought of as
7 R. Edward Freeman, Strategic Management: A Stakeholder
Approach (Cambridge, UK: Cambridge University Press, 2010), p.53.
(Photo by Pixabay on Pexels)
“managing the extended enterprise.”8
A stakeholder approach to strategic management
views the long-term success of a company as a function
of its relationships with its stakeholders, including
employees, consumers, governments, investors,
suppliers, and communities. In this view, the ultimate
purpose of the company is to create and deliver welfare
or value to all of its stakeholders, and the achievement
of this purpose depends on the cooperation and
support of these stakeholders, who also supply critical
resources to the company.
Typically, individual stakeholders may obtain
three types of benefits from companies: functional,
psychosocial, and “desirable end-states,” based
on individuals’ values. Functional benefits refer
to tangible benefits that individuals gain from a
8 James E. Post, Lee E. Preston, and Sybille Sachs, “Managing
the Extended Enterprise: The New Stakeholder View,” California Man-
agement Review 45 (2002): 6-28.
4
company’s policies or activities, such as employees
learning concrete skills through manufacturing
personal protective equipment (PPE) and participating
in health-initiative projects launched by their company.
Psychosocial benefits occur as the result of functional
benefits and/or the stakeholder’s perceptions of
and involvement in company activities. In the case
of health-initiative projects, employees can achieve
psychosocial benefits — work-life integration — through
their participation in these programs, and their
perception and involvement leads them to feel their
companies care about causes that they care about. This
leads to those employees achieving “desirable end-
states” — they feel that their work and personal lives
are in harmony.9 (See Table 1 below.)10
As individual stakeholder returns move beyond
purely functional benefits, the stakeholder-company
relationship improves in quality: from satisfaction
that the functional role is being filled, to a relationship
based on trust and commitment, to stakeholders
identifying with the company and championing its
work to other stakeholders. A company benefits if its
relationships are built on trust and commitment, and it
is able to capitalize greatly on those relationships if the
stakeholders develop identification with the company.11
For instance, the company-consumer relationship can
translate into revenue enhancement when customers
trust the company, continue to buy products from it,
and recommend its products to others.
9 C. B. Bhattacharya, Daniel Korschin, and Sankar Sen,
“Strengthening Stakeholder—Company Relationships through Mutually
Beneficial Corporate Social Responsibility Initiatives,” Journal of Busi-
ness Ethics 85 (2009): 257-272.
10 i.b.i.d.
11 i.b.i.d.
Strong company-employee relationships can improve
productivity and thus enhance a firm’s financial
performance.12
The fight against the COVID-19
pandemic has provided
examples of how stakeholder
governance operates in times
of stress and crisis.
Communication with investors and clients about how
a company addresses this challenge will help build a
good reputation, which in return strengthens customer
loyalty and investor trust. For example, Redvespa, a B
Corp in New Zealand that provides consulting services,
always has emphasized open communication and
interaction with its stakeholders. During the COVID-19
epidemic, its sales team has been sharing plans with
consumers and adapting to changing client needs.13
Effective stakeholder management solidifies
stakeholder endorsements and can improve companies’
financial performance.14 More importantly, though,
12 Jody H. Gittell, Kim Cameron, Sandy Lim, and Victor Rivas.
“Relationships, Layoffs, and Organizational Resilience Airline Industry
Responses to September 11,” The Journal of Applied Behavioral Science
42(2006): 300-329.
13 Laura Caccioppoli. “What the World Could Learn from B
Corps in the Age of COVID-19” B the Change, accessed July 22, 2020
https://bthechange.com/what-the-world-could-learn-from-b-corps-in-
the-age-of-covid-19-98e55cc7c8cd
14 Marc Orlitzky, Frank L. Schmidt, Sara L. Rynes, “Corporate
5
it contributes to risk management. As institutional
investor BlackRock CEO Larry Fink wrote in his annual
letter, “A strong sense of purpose and a commitment
to stakeholders helps a company connect more deeply
to its customers and adjust to the changing demands
of society.”15 Good relations with diverse stakeholders
foster interdependencies among various stakeholders,
which builds stability and flexibility; this in turn
enables firms to absorb exogenous disturbances and
develop alternative solutions to disruptions.16
Academic studies have shown that a commitment to
employees, suppliers, customers, and communities
enables a company to maintain its current competitive
advantages for a longer period, and helps less efficient
companies recover from disadvantageous positions
more quickly;17 company engagement in social
initiatives that aim to serve communities can offer an
“insurance-like” benefit, as these firms experienced
less value (i.e., stock price) loss when negative events
happened.18 Even in the case of the 2008 global financial
crisis, companies with high levels of engagement with
their stakeholders were able to recover better and faster
than others.19
Social and Financial Performance: A Meta-analysis,” Organization
Studies 24(2003): 403-441; Wang and Jaepil Choi, “A New Look at the
Corporate Social–Financial Performance Relationship: The Moderating
Roles of Temporal and Interdomain Consistency in Corporate Social
Performance,” Journal of Management 39 (2013): 416-441; Witold J.
Henisz, Sinziana Dorobantu, and Lite J. Nartey, “Spinning Gold: The
Financial Returns to Stakeholder Engagement,” Strategic Management
Journal 35(2014): 1727-1748; Shawn L. Berman, Andrew C. Wicks,
Suresh Kotha, Thomas M. Jones, “Does Stakeholder Orientation
Matter? The Relationship between Stakeholder Management Models
and Firm Financial Performance,” Academy of Management Journal
42(1999):488-506.
15 “Larry Fink’s 2020 Letter to CEOs Purpose & Profit,” Black-
Rock, accessed December 31, 2019, https://www.blackrock.com/corpo-
rate/investor-relations/larry-fink-ceo-letter.
16 Mark DesJardine, Pratima Bansal, and Yang Yang, “Bouncing
Back: Building Resilience Through Social and Environmental Practices
in the Context of the 2008 Global Financial Crisis,” Journal of Manage-
ment 45(2019): 1434-1460; Miha Sajko, Christophe Boone, and Tine
Buyl, “CEO Greed, Corporate Social Responsibility, and Organizational
Resilience to Systemic Shocks,” Journal of Management 2020, https://
doi.org/10.1177/0149206320902528
17 Jaepil Choi and Heli Wang, “Stakeholder Relations and the
Persistence of Corporate Financial Performance,” Strategic Management
Journal 30 (2009): 895-907.
18 Paul C. Godfrey, Craig B. Merrill and Jared M. Hansen, “The
Relationship between Corporate Social Responsibility and Shareholder
Value: An Empirical Test of the Risk Management Hypothesis,” Strategic
Management Journal 30(2009): 425-445.
19 Mark DesJardine, Pratima Bansal, and Yang Yang, “Bouncing
Back: Building Resilience Through Social and Environmental Practices
in the Context of the 2008 Global Financial Crisis,” Journal of Manage-
ment 45(2019): 1434-1460; Miha Sajko, Christophe Boone, and Tine
Buyl, “CEO Greed, Corporate Social Responsibility, and Organizational
The importance of managing businesses from a
stakeholder perspective goes beyond creating financial
benefits and protecting firms from disruptions. As
Klaus Schwab, founder and executive chairman of
the World Economic Forum (WEF), said in January
2020: “Business has now to fully embrace stakeholder
capitalism, which means not only maximizing profits,
but using their capabilities and resources in cooperation
with governments and civil society to address the key
issues of this decade. They have to actively contribute
to a more cohesive and sustainable world.”20
2. How the B Corp Movement Enables
Stakeholder Management
As noted, the recent focus on stakeholders from
organizations like the BRT, WEF, and BlackRock has
come under attack because it is viewed as potentially
nothing more than talk. To ensure effective stakeholder
management, mechanisms of accountability are
needed. This section elaborates how two fundamental
innovations from the B Corp movement — the benefit
corporation (a new legal business classification)
and the B Impact Assessment (BIA) — can help firms
adopt stakeholder governance in a substantive and
accountable way.
Aligning Governance Structure with Stakeholders
The benefit corporation is a new corporate form that
recognizes a company’s commitment to creating
a material, positive impact on society and the
environment in addition to being financially profitable.
Registered benefit corporation governance not only
permits and requires entrepreneurs to take into account
stakeholders’ interests in addition to shareholders’
interests, but it also offers protection to founders
concerned that taking in outside capital could lead their
companies to “drift” away from their social missions.
The necessity of this structure is illustrated by legal
cases challenging for-profit corporations addressing
stakeholders’ interests. When Ford Company increased
the welfare level of its employees, it was sued by its
Resilience to Systemic Shocks,” Journal of Management 2020, https://
doi.org/10.1177/0149206320902528
20 “Stakeholder Capitalism: A Manifesto for a Cohesive
and Sustainable World,” January 14, 2020, https://www.weforum.
org/press/2020/01/stakeholder-capitalism-a-manifesto-for-a-cohe-
sive-and-sustainable-world/
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(Photo by Fauxels on Pexels)
shareholder Dodge and lost the lawsuit for not fulfilling
its fiduciary duty to maximize shareholders’ value.21
When Craigslist committed to generous community
service, which was part of the corporate culture since
its founding, it lost a lawsuit filed by its shareholder
eBay for the same reason.22 Thus for a company to be
truly stakeholder driven, this principle needs to be
encoded in its foundational legal structure.
This legal form expands the fiduciary duty of directors
to consider the impact of their decisions on a broad
spectrum of stakeholders, not just shareholders. B
Corps register as benefit corporations if that corporate
structure is available where they are incorporated.
This includes well-known companies like Kickstarter,
King Arthur Flour, Laureate Education, Patagonia, and
Plum Organics. In addition, for transparency reasons,
benefit corporations issue a regular “benefit report,”
which follows third-party standards, for assessing and
reporting on social and environmental metrics that
must be distributed to all shareholders.
21 https://www.casebriefs.com/blog/law/corporations/corpora-
tions-keyed-to-klein/the-nature-of-the-corporation/dodge-v-ford-mo-
tor-co/
22 https://caselaw.findlaw.com/de-supreme-court/1558886.html
Over the last decade, 36 states, the District of Columbia,
and Puerto Rico, as well as Italy, Colombia, and Ecuador
have passed benefit corporation legislation, and more
than 10,000 U.S. companies have incorporated as
benefit corporations.
Accountability and Transparency to Stakeholders
To achieve certification, B Corps have to take the B
Impact Assessment (BIA) developed by the nonprofit
B Lab to measure the social and environmental
impact of their entire operations. To qualify as a B
Corp, a company must achieve a verified minimum
score of 80 points on the BIA. B Corp certification
verifies a company’s commitment to a diverse group
of stakeholders. The BIA is a holistic assessment of
a company’s operations organized into five areas:
governance, workers, community, environment, and
consumers. The BIA is free and tailored to company size,
industry, and geography so every company can use it.
The standardized components within the BIA provide a
holistic and systemic model for managing a business for
the long run. Companies can use different components
to guide management of specific stakeholders.
7

As of 2020, more than 3,000
companies across 150
industries and 71 countries have
been certified as B Corps.23
While becoming a B Corp may initially be a stretch
for many larger companies, such as those in the BRT,
there are a number of steps they can take in the short
term. They can start by using the BIA as a stakeholder
23 B Lab (2020) A Global Community of Leaders. Retrieved
April 13, 2020 from https://bcorporation.net.
(Photo by Bamagal on Unsplash)
performance management tool to assess parts of their
business and/or their suppliers. The BIA score gauges
where a company is doing well and how well it is doing
across the five different areas. Moving forward, these
companies could commit to year-on-year improvements
on the key stakeholder metrics within chosen BIA areas.
More than 50,000 companies already use BIA to measure
their impact today.24
Companies with BIA scores below 80 can still incorporate
as benefit corporations, as B Corps and legal benefit
corporations are separate: The former is the certification
program for businesses run by the nonprofit B Lab; the
latter is a form of legal incorporation akin to a C Corp.
24 B Lab (2020) B Impact Assessment. Retrieved
April 13, 2020 from https://bimpactassessment.net/?_
ga=2.253482121.1037077161.1586769568-1274741240.1586769568.
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(Photo by Ethan Hoover on Unsplash)
Real Change in Real Time: Benefit Corporations See
New Interest
Investors Show They’re Eager to Invest in Responsible Businesses
By Frederick Alexander, founder of Shareholder Commons
Even though 182 big companies from the Business
Roundtable signed onto a statement proclaiming that
the purpose of corporations should change from profit-
making machines to stakeholder value generators in
August 2019, none of those companies have actually
changed their legal form. As a result, those companies
continue to have obligations only to shareholders,
despite their high-minded rhetoric.
As conventional corporations, each of these enterprises
must organize its operations in a manner that revolves
around optimizing its financial return to shareholders.
That is, they can take care of customers, employees and
communities, but only to the extent that such behavior
relates to shareholder value. These companies do not
have legal structures that countenance any sacrifice
of shareholder wealth for stakeholder welfare. We see
evidence of this failure of governance every day, from
the hyper-leveraged supply chains that are unable to
cope with a pandemic to the continual stripping of fair
pay and dignity from the workforce, feeding injustice
and unrest.
Benefit Corporations Are the Real Deal
We described an alternative to shareholder primacy:
conversion to a benefit corporation, a new type of
entity that requires corporate executives to consider
the interests of all stakeholders without prioritizing
shareholders. In Delaware, the form is known as a
“public benefit corporation” or “PBC.” Since we last
reported on the subject, there have been some very
promising developments that we hope will lead to more
corporations adopting better governance that protects
all of us, not just shareholders.
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First, in a Harvard Business Review article, the Former
Chief Justice of the Delaware Supreme Court, a highly
credentialed finance professor (from Harvard and
Oxford), and a leading asset manager issued a call for
business leaders and shareholders alike to support the
PBC:
If the Business Roundtable supports conversion of
their public companies to this model, their mere
“trust us, we care” words will become those of
accountable leaders who embrace an enforceable
obligation to others. But corporate leaders cannot
succeed unless institutional investors, such as
BlackRock, Fidelity, State Street, and Vanguard,
and organizations like the Council of Institutional
Investors also walk their talk on corporate purpose
and on the value of stakeholders. These and other
large investors have demonstrated that their voting
clout can move the market. If they support public
companies in converting to benefit corporation
status, our corporate governance system can
change for the better — fast.
The Market Is Moving
While no Fortune 500 public companies have met
the challenge, the shareholders of publicly traded
Amalgamated Bank recently approved benefit
governance at their annual meeting. Lemonade, an
innovative insurance broker backed by SoftBank,
Sequoia and other venture capital funds, completed
the most successful IPO of 2020, rising 139% on its first
day of trading (after pricing above the underwriters’
range). These two leaders will join the two corporations
with benefit governance already trading on the NYSE
or NASDAQ, Laureate Education and Natura (the owner
of Avon Products and The Body Shop). In addition,
the shareholders of Danone, the French multinational
consumer packaged goods producer, recently approved
its becoming the French equivalent of a benefit
corporation. 99% of the shareholders voted in favor.
The movement is growing internationally as well: On
June 30, the first Canadian benefit corporation law
became effective in British Columbia, adding to prior
adoption in the United States, Italy, Colombia and
Ecuador.
These developments make it increasingly difficult
for the Business Roundtable signers to argue that the
public markets aren’t ready for PBCs. The fact is that
investors are hungry for opportunities to invest in
responsible corporations. This study found hundreds
of rounds of private investment in PBCs:
[W]e find that there are 295 PBCs which have received
investment from VC funds amounting to over $2.5
billion in the aggregate. This investment is significant
because it shows that the PBC form is not a failure and
that it is capable of attracting for-profit investment, a
marker of success. This investment is coming not just
from pro-social VCs but from top-tier firms.
While these are all signs of growing interest from
companies, investors and thought leaders, perhaps the
most important news came at the end of June, when
the Delaware General Assembly passed legislation that
eliminated the artificial barriers of a supermajority vote
and a shareholder right to cash out when conventional
corporations convert to PBCs. The statute was also
amended to otherwise make the form more user-
friendly. (For more on these changes, read this excellent
memo from the Freshfields law firm.)
No More Excuses
With these developments, there is simply no excuse for
companies or investors to talk about the importance
of stakeholders as equal partners while maintaining a
legal form that treats shareholders as the only group
that matters. If you are an asset owner or manager, now
is the time to advocate for better governance at your
portfolio companies.
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(Photo by Kelly Sikkema on Unsplash)

Our Economic System Isn’t Working: The Global Crisis

Drives a Renewed Market Focus on Stakeholder
Capitalism
Benefit Corporation IPO and Approvals Signal Stakeholder Focus Is a Growing,
Resilient Alternative
By B the Change

The COVID-19 pandemic has made for an economic
roller coaster, as recent stock market rebounds are
tempered by rising virus rates in the U.S. and hesitancy
among many consumers and workers to return to
“business as usual.” The profit-focused system that
drives U.S. and global economic markets, however,
faces new questions due to COVID-19, which revealed
our economic system’s brittle nature and inherent
faults. By putting profit margins and shareholders
above all other stakeholders — workers, customers,
community, the environment — our dominant model
of capitalism benefits the few and burdens society and
the planet.
The market also rose amid racial justice protests, with
one analyst noting that “The U.S. riots, disturbing
as they are, are also being discounted in the greater
economic picture” — a reflection of the fact that more
than 60% of U.S. shareholders are white. The “trickle-
down effect” here means that white shareholders drive
important corporate decisions regarding leadership
and business practices.

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The very governance structures of businesses are
perpetuating systemic racism and must be addressed if
lasting change is to take hold in our global economy. As
Miguel Padro of the Aspen Institute says, “The structural
racism in corporate governance reverberates far deeper
than the top tiers of corporations. It impacts workers
hardest. … From there, impacts cascade throughout
society, leaving working people across the board and
working people of color, in particular, in staggering
precarity. We cannot ignore what the last few months
have laid bare.”
Structural Change Through Stakeholder
Governance
These systemic cracks are renewing calls for institutional
investors like BlackRock and the Business Roundtable
to act on their earlier statements and creating calls for
economic change from businesses already working
to build an economic system that benefits all and is
more resilient because of its inclusive nature. These
companies are considering the effect of their everyday
practices on all stakeholders, while balancing the need
for profit with the needs of people and planet.
Businesses looking to lock in stakeholder governance
can turn to a legal status known as the benefit
corporation — now recognized in 36 states, plus Puerto
Rico and the District of Columbia, and in British
Columbia, Italy, Canada, Ecuador and Colombia — that,
once approved by shareholders, holds true through
leadership changes and capital raises. For-profit
companies also can choose to become Certified B
Corporations by achieving a minimum score on the
B Impact Assessment administered by B Lab, the
nonprofit that oversees this business community.
The benefit corporation model is gaining new
momentum during this time of global uncertainty and
social upheaval, as signaled by several recent events
involving businesses that have adopted or are pursuing
the governance model for a variety of reasons.
Stakeholder Governance Model Gains
Market Approval
Lemonade, an insurance tech startup with a goal
to “transform insurance from a necessary evil into
a social good,” recently made headlines for its July 2
debut on the New York Stock Exchange, becoming the
second public benefit corporation and B Corp to do so.
Investors gave Lemonade a warm welcome, as the value
of its shares more than doubled during its first week on
the stock market.
Lemonade CEO Daniel Schreiber says the company’s
status as a benefit corporation since its founding in
2016 has shaped its work from the start.
“Our very business model has social impact baked in:
A portion of our underwriting profits go to nonprofits
of our customers’ choosing — what we call the
Lemonade Giveback,” he says. “So we’re taking care of
our customers while our customers take care of their
communities, and as Lemonade grows, so does the
potential of Giveback.
“We became the second public benefit corporation
to go public, and it looks like investors are open to
the idea that doing good and doing well are mutually
compatible, and perhaps even mutually reinforcing,”
Schreiber says. (The first benefit corporation IPO
was by Laureate in 2017; Vital Farms, another benefit
corporation and B Corp, recently filed for an IPO.)
Stakeholder Governance Model Gains
Shareholder Approval
With annual global sales of more than $28 billion,
multinational food company Danone holds sway as a
market and industry leader with a growing focus on the
connection between the health of people and planet.
At its June 26 annual shareholder meeting, Danone
gained approval from 99% of shareholders to adopt
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(Photo by the United Nations on Unsplash)
the Entreprise à Mission model, a corporate status
created in 2019 by French legislation. The decision to
pursue the change was driven in part by the COVID-19
pandemic and its ripple effects on economic, health,
and food systems around the globe, CEO Emmanuel
Faber said during a recent Fortune podcast.
The pandemic also accelerated Danone’s goal of
becoming the world’s largest B Corp, which Faber says
the Paris-based company now hopes to achieve by
2025. “We want Danone to become a B Corp because we
believe that in the world in which we live, and certainly
in the world we are entering right now, there will be
increased attention paid to the ethos of companies and
of brands by consumers, governments, employees,
civic society, and many more,” he says.
Across the Atlantic Ocean, another influential B
Corp earned shareholder approval to make the legal
commitment to stakeholders by becoming a benefit
corporation. In late April, 99% of shareholders approved
benefit corporation governance for Amalgamated Bank,
requiring board members to consider the effects of their
decision on stakeholders and making it the second
benefit corporation on the Nasdaq index. Shareholders
also endorsed an employee stock purchase plan that
aims to enhance worker recruitment, retention and
connection.
Amalgamated Bank was founded in 1923 with the
goal of providing banking access — once reserved for
corporations and wealthy individuals — to hardworking
people and their families. Since then, the bank has
continued to build social responsibility into its business
model, becoming a B Corp in 2017, achieving its IPO
on Nasdaq in 2018, amassing more than $5 billion in
assets, and growing to serve customers and clients
sharing its purpose-driven mission.
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(Photo by Lukas from Pexels)
Why Laureate Education’s IPO Matters to Silicon Valley
The Global Network of Colleges Became the First Public Benefit Corporation
By John Montgomery, founder of Lex Ultima
Laureate Education made it safe for entrepreneurs,
lawyers and venture capitalists to incorporate and
build startups as benefit corporations. After 18 months
in registration, Laureate Education went public on
February 1, 2017, as the first publicly listed benefit
corporation.
By completing its IPO and raising $490 million,
Laureate Education legitimized this seven year old
corporate form. With Credit Suisse, Morgan Stanley
and Barcley’s as lead underwriters, Wall Street has
now accepted the benefit corporation. Laureate’s lead
investor, a consortium of private equity firms, including
Kohlberg Kravis Roberts & Co. L.P., Point 72 Asset
Management, Bregal Investments, StepStone Group,
Sterling Partners, and Snow Phipps Group, signal other
private equity and venture capital investors that the
benefit corporation is a legitimate and safe investment
vehicle.
Hats off to Laureate’s board for having had the courage
to debut the benefit corporation in the public market
and for paving the way for other benefit corporations
to follow.
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(Photo by Kari Shea on Unsplash)
What Laureate’s IPO Means for Impact
Investors
The benefit corporation form signals impact investors
that a company has opted out of business as usual
and is serious about creating positive social and
environmental impact. Laureate, for example, has
committed to “operate in a responsible and sustainable
manner” as a Delaware public benefit corporation
and its directors must balance the pecuniary interests
of stockholders with the interests of those affected by
corporate conduct and its chosen public benefit. As the
first publicly traded benefit corporation, Laureate sets a
new standard for corporate governance. Laureate is also
the third publicly traded U.S. Certified B Corporation,
following Etsy and Rally Software.
By placing its chosen public benefit to “produce a
positive effect (or a reduction of negative effects) for
society and persons by offering diverse education
programs delivered online and on premises operated
in the communities that we serve,” Laureate’s directors
are not constrained by the only legitimate corporate
purpose under prevailing Delaware corporate
law — maximizing stockholder welfare — from focusing
on the welfare of its students and the communities it
serves.
As a benefit corporation, Laureate’s pursuit of social
good no longer puts it at odds with the prevailing
corporate law and frees its directors from having to
demonstrate that its social goals are a direct means to
the sole legitimate corporate purpose of maximizing
stockholder welfare.
As the universe of publicly traded
benefit corporations grows, impact
investors will increasingly have a
real choice between investing in
corporations that exist solely to
maximize profit for stockholders
and those that are committed to
being a profitable force for good.
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Stakeholder Capitalism in
Practice: Examples from
the Community of
Certified B Corporations
To put stakeholder capitalism into action, businesses need to understand who
their stakeholders are and what practices, policies and decisions impact them.
For Certified B Corporations, the B Impact Assessment focuses on governance,
community, customers, workers and the environment. In this section, we look
at examples of changes that impact these stakeholders and how different
businesses and leaders are working to make the impact positive and part of
the company’s operating DNA.

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(Photo by Joakim Honkasalo on Unsplash)
New Guidebook Helps States Create Better Businesses
How to Pass Benefit Corporation Legislation
By Jennifer Kongs and Abigail Barnes
Today’s consumers are demanding that companies be
held responsible for their environmental and social
impacts. Employees are increasingly seeking jobs
aligned with their values and workplace environments
that champion worker well-being. Companies are
eager to declare themselves moral paragons and
environmental stewards.
To that end, an increasing number of companies are
incorporating as benefit corporations. These new
business structures require corporate directors to
consider all stakeholder interests (e.g. shareholders,
community, environment, employees and customers)
in company decision-making, and not let the interests
of one group dominate others. In this way, directors
are discouraged from letting short-term shareholder
profits — or short-termism — dictate corporate decisions
and must include other stakeholder interests.
According to the nonprofit B Lab, the benefit
corporation is “a new legal tool to create long-term
mission alignment and value creation,” which is then
protected during “capital raises and leadership changes,
[and] creates more flexibility when evaluating potential
sale and liquidity options.”
For companies to incorporate as a benefit corporation,
the state must first pass a law allowing this new corporate
form. So far, 36 states, the District of Columbia and
Puerto Rico have passed benefit corporation legislation,
meaning several states have yet to adopt this better
business structure.
There’s very little difference between a benefit
corporation and a C Corp. Tax law treats them equally.
The main difference is that a benefit corporation builds
language into its articles of incorporation and bylaws
requiring that its corporate directors and officers
consider all stakeholder interests in corporate decision-
making, while creating a material positive impact on
society and the environment. Many businesses do this
anyway, so this is really just a way of formalizing a
company’s commitment to higher standards of corporate
governance.
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In addition to the recent surge in benefit corporations,
an increasing number of businesses are becoming
Certified B Corporations — or “B Corps,” as they’re often
referred. The same principles inform both certification
and incorporation: to place stakeholder interests on
equal footing in corporate decision-making. B Corps
are for-profit companies that have passed B Lab’s B
Impact Assessment. You can think of the assessment
as a social and environmental report card. If the
company achieves above a certain score, it may become
certified. To remain certified, a company must pursue
benefit corporation legal status (or its equivalent, if
unavailable). For more on the differences between
Certified B Corporations and benefit corporations, read
“An Entrepreneur’s Guide to Certified B Corporations
and Benefit Corporations.”.
Why Are States Passing Benefit
Corporation Legislation?
Benefit corporation legislation is seeing widespread
bipartisan support, and for good reason. Many
business leaders and legislators recognize the value of
stakeholder-driven business decisions.
In 2017, Kansas passed benefit corporation legislation,
and one of the lawyers who worked on the legislation,
Bill Matthews, had the following to say:
“Perhaps Kansas taking this step is surprising, given
Kansas’ reputation as a solidly conservative state, in
which both chambers of the legislature are controlled
by Republicans and the governor, too, is a Republican.
Kansas’ motivation to adopt benefit corporations
is as simple as a desire to keep Kansas a business-
friendly state that enables individuals to conduct their
business affairs with the greatest freedom possible. The
legislation will give Kansas entrepreneurs the freedom
to conduct business using a corporate form that is
free from certain restrictions that apply to nonprofit
corporations and facilitate shareholder control over
corporate priorities beyond profit generation.”
There is also a strong case to be made that these
entities will help state economies. Here’s the rationale,
as explained in “A Legislative Guide to Benefit
Corporations,” by Patagonia Inc., Vermont Law School
and the Yale Environmental Law Association:
“Over the past half-century, companies have increasingly
prioritized shareholder interests and short-term profit
maximization at the expense of their employees, local
communities, and the environment. Globalization has
increased trade and communication among countries,
but has also fueled income inequality and transferred
millions of jobs overseas. Putting profits first has led
to industry consolidation, layoffs, pollution, and job
outsourcing; and although short-termism generally
translates into higher quarterly shareholder profits,
the costs of razor-thin margins are largely passed on to
consumers, the environment, and the long-term health
and resilience of both the individual company and the
nation’s economy.”
Growing consumer demand for values-aligned
businesses means shoppers are becoming more
discerning in where they spend their money.
Consumers are “voting with their dollars,” so to speak,
and companies are heeding these market signals.
Politicians who take advantage of these shifting
consumer preferences will help create greater economic
opportunities for their state.
Similarly, employees are seeking careers that allow
them to create a positive impact, and the talent pool
is gravitating toward benefit corporations and mission-
aligned businesses. For states that want to attract top
talent and retain a strong workforce, benefit corporation
legislation is an obvious step in the right direction.
Make It Happen
The legislative guide is a roadmap for citizens, lawyers,
and legislators through the whys and hows of passing
benefit corporation legislation in your state. The guide
includes a step-by-step process to help you take action
where you live.
Download the free guide and help your state create
better businesses.
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Leading by Example: B Corps Prioritize Climate
Change Mitigation
With a Healthy Planet in Mind, Companies Put Environment Among
Primary Stakeholders
Certified B Corporations aren’t waiting for government
action to start addressing the changes in our climate.
The B Impact Assessment, used to certify B Corps, helps
businesses measure and manage their environmental
and social impact.
B Impact Assessment results show that B Corps
outperform thousands of other businesses that have
taken the assessment by 16% on climate mitigation
efforts, such as using low-impact renewable energy,
adopting energy efficiency practices, monitoring and
managing greenhouse gas emissions and carbon
intensity, and providing products or services that
support cleaner burning or renewable energy.
We asked a few B Corps that excel at climate change
mitigation about their Earth-friendly business practices
and products. Here’s what they shared:
The statement: B Corps outperform other
companies by 16% on addressing climate
change.
The issue: Business has a huge global impact
on climate change. But in a report by the
United Nations Environment Programme,
only one-third of the companies reported
that their climate change strategy has a
“strong emphasis” on addressing climate
change risks or responding to emerging
opportunities.
Green Mountain Power
Green Mountain Power is an investor-owned electric
generation and distribution utility based in Colchester,
Vermont.
Green Mountain Power is using energy as a force for
good by supplying cost-effective, reliable power to
about 75% of Vermont, while helping customers cut
carbon to fight climate change. There is an urgency
to act to reduce carbon emissions, and we offer many
programs and opportunities that make it simple and
empower customers to take action about how they use
energy.
We offer customers innovative, industry-leading
products and services, like the Powerwall home
battery. We also offer incentives to help customers buy
19

Green Mountain Power has programs to encourage customers to
switch to electric vehicles.
home batteries from other providers and drive electric
vehicles, which help reduce their carbon footprints and
stay comfortable.
The GMP energy supply is 90% carbon free and 60%
renewable. We operate wind, solar and hydro facilities
across the region.
GMP is a leader in using solar arrays combined with
energy storage to cut carbon and costs for all customers.
We have two solar and storage installations and plan
to construct three more. Our innovative work with
energy storage has already saved customers more than
$500,000.
Within GMP we are also taking on climate change by
tracking company carbon emissions internally in a
public way, and creating incentives and education
opportunities to encourage all employees to reduce
carbon every day. Some examples: We incentivize
video conferencing and carpooling. Our company fleet
has hybrids and EVs. We buy local foods, products and
services as much as possible. Groundskeeping at our
offices is electric, with much lower emissions than
traditional fossil fuel mowers and trimmers. We are
also in the process of installing a solar canopy over our
parking lot at our company headquarters.
People Against Dirty
People Against Dirty, based in San Francisco, is a home
and personal care company made up of two brands:
method and Ecover.
As a B Corp, People Against Dirty looks across
everything that we do to identify how we can eliminate
carbon. We always start with our products. Like most
product companies, our Scope 3 emissions — in our
case, the carbon associated with producing our bottles
and formulas — accounts for most of our carbon
footprint. The first step is using a majority of plant-
based, renewable ingredients for our formulas.
Next we look at our bottles. Most of our bottles contain
100% post-consumer recycled (PCR) plastic, and we’re
heavily invested in adding PCR into our pumps and
sprays. PCR is beneficial from a carbon standpoint
because using PCR plastic has about a 70% lower
carbon footprint than virgin plastic. We also offer refills
for most product types, which has a 80–82% lower
energy and plastic footprint than using individual
bottles and translates directly into carbon savings.
But our carbon initiatives are not just about our
products — we also look at how they’re made. Our
factory, the South Side Soapbox in Chicago, uses onsite
renewable energy from wind turbines and solar panels.
People Against Dirty built its South Side Soapbox factory in Chicago
as the industry’s first LEED-platinum certified plant.
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 community. We used LEED to inform how we could
make the most energy and carbon efficient factory
possible, and today the Soapbox is the only LEED-
Platinum certified factory in our industry.

Klean Kanteen

Klean Kanteen is a family-owned B Corp based in Chico,

California, that produces and sells BPA-free, stainless
steel drinkware and food containers.

At Klean Kanteen, we recognize current climate patterns

are being influenced in their rate of change and intensity
by an increase in greenhouse gas (GHG) emissions
from human activities. When it comes to running a
business in a global community that is seeking to limit
negative impacts of climate change, we aim to operate
with a low emissions intensity while still meeting the
everyday energy demand of our business. To that end,
we take an approach that involves identification of
Klean’s emission sources across the product life cycle,
measurement and active communication of emissions
risks and opportunities, adoption of renewable energy,
conservation, and mitigation. Below are some examples
of Klean’s climate strategy in action.

We measure and actively communicate internally about

energy use and GHG emissions connected to Scope 1, 2,
and 3 activities (direct emissions, indirect emissions,
The South Side Soapbox has on-site solar arrays and wind turbines.
and those related to the company’s activities).

Remaining energy needs come from renewable power

We take action to conserve energy at Klean’s
supplied through the utility.
headquarters. Windows were strategically installed
throughout the building to provide plenty of natural
We were also very intentional about the factory
lighting without impacting heat load. Thermostats
location to take transportation miles out of our supply
operate at conservative but still comfortable settings
chain; we use integrated manufacturing, bringing
year-round. LEDs and efficient office equipment are the
our bottle manufacturer, filling operation, decoration
norm.
and warehousing under one roof to eliminate carbon.
We shortened the distance that a bottle travels during
As a starting point we have looked to renewable
production from 1,000 miles to 1,000 feet, allowing us
energy credits (RECs) and carbon offsets to mitigate
to operate more quickly and flexibly.
our emissions while we work out how best to directly
avoid emissions. Investments in RECs and offsets help
We also built the factory in an urban location to create
subsidize emissions-reducing projects like wind energy
jobs closer to where people live to cut miles traveled;
and forest conservation. Between 2009 and 2017, Klean
most of our movers and makers come from the local five
purchased RECs equivalent to 100% of its facility
ZIP codes in the south side, which is also a part of our
electricity use. In addition, Klean started purchasing
mission to bring new, green jobs to an under-resourced
carbon offsets in 2010 to neutralize emissions related to

21
shipping products from our online store. Over the past
nine years these offsets have added up to 6,600 metric
tons of GHG emissions avoided.
In 2017, Klean Kanteen began tackling its GHG
emissions by installing 216 high-efficiency solar panels
with the ability to generate 141,323 kW of power on the
roof of our headquarters. Any extra power generated by
the solar array is fed back into the energy grid for others
to use. Our 2018 GHG emissions from facility electricity
use dropped 66% compared to the previous year, and
our emissions intensity also dropped.
Between 2009 and 2017, Klean Kanteen purchased renewable energy credits equal to all of its facility electricity use.
We use life cycle assessment to identify the emissions
hotspots of Klean products. Information from life cycle
assessment models coupled with energy and emissions
measurements are provided to Klean’s management
team to equip them with information they need to make
emissions-conscious business decisions.
We advocate for progressive climate and renewable
energy policies, and signed onto the We Are Still In
campaign in 2017 to demonstrate collective commitment
to the Paris Climate Agreement from businesses,
universities, nonprofits, and government to achieving
aggressive global emissions reductions.
22
(Photo by Chris Montgomery on Unsplash)
Actionable Insights on Working and Learning Together
in Times of Crisis
How the Pandemic Showed the Value of B Corps as a Community of Practice
This article is a personal perspective from two employees
at B Lab, the nonprofit behind Certified B Corporations. In
this series, we invite individual B Lab employees to share
their experiences, inspiration, hopes, and challenges
as they work toward a more inclusive and regenerative
world. This edition of B Lab Voices is from Christopher
Nickelson, Senior Associate of Impact Partnerships and
Programs, and Andy Fyfe, Manager of B Corp Growth
and Activation.
March 2020 feels like so long ago, when everyday life in
our region first came to a halt. And now, four months
later, though an unrelentless pandemic continues and
protesters still march on streets around the world,
many people are reaching a moment in their lives and
work and communities where they can pause, even if
for a second, and more deeply reflect on what we’re
experiencing.
For us at B Lab U.S. & Canada, our impact and
company-facing roles have given us a unique vantage
point to witness true community among Certified B
Corporations and be reminded of how interdependence
is the bedrock of our movement toward a new economy.
23
Many times, with our worlds spinning as fast as they
do, humans require a crisis to really become aware
of community in action. And because of that, when
we do spot community in action, it can even catch us
by surprise. But as activists and community leaders
like Mia Birdsong so poignantly remind us and have
known for so long: Communities are built upon daily
commitments, regardless of whether you’re in a crisis.
“Those kinds of things don’t exist without pre-existing
relationships,” she said in a recent interview with
Forbes.
This has been clear since the first weeks of the pandemic,
as our team heard from our existing community of B
Corps that they wanted to continue to learn from each
other, lean more deeply into impact, cut through the
flurry of light-touch resources, and strategize for the
long term. In response, we led a project to curate an
exchange of actionable B Corp learnings and best
practices around topics as a way for companies to
support and learn from one another:
• Support for Employees in Frontline Settings:
This list of learnings helps companies look out
for their employees who still need to show up to a
physical location for their work. These employees
are often the most at-risk, and it may be necessary to
take additional steps to protect and support them.
• Navigating Layoffs: The way business leaders
handle staff changes is an indicator of how they
consider their stakeholders. This list of practices
shines a light on how to navigate this process with
care.
• What to Consider Before Returning to an Office:
While every city, state, and province are in different
circumstances when it comes to reopening, every
company should be preparing for the long term,
which includes a potential return to the office. This
list provides an outline for what business leaders
should be asking themselves before they reopen
their physical workplace.
In curating these lists, our team was reminded about
what it really means to live in community. So we
gathered some reflections and lessons that came up
along the way.
The Value of Community in Times of
Uncertainty
The businesses in our community continue to uphold
a core B Corp belief: that their purpose is to serve each
and every one of their stakeholders. When it came to
operationalizing this truth, larger companies with a
breadth of resources and others with long-established
impact practices like Income Advance or unlimited
sick time off tended to adapt more quickly to their new
reality. At the same time, other companies at risk of
needing to lay off most of their team or stop operations
indefinitely were seeking stakeholder-focused
solutions. (It’s worth noting that the majority of these B
Corps most financially impacted told us that regardless
of their circumstance, they wanted to do what they
could to help their fellow B Corps and local community
during this moment.)
This created a ripe environment for interdependence in
action, building on the fabric of the community already
in place to share resources and learnings in real time.
While no one company or organization had all of the
answers, B Corps showcased that they could collectively
harvest value by contributing learnings from their own
work and receiving knowledge from the work of others.
Centering the Most Vulnerable
Stakeholders
B Corps, by design, look out for all of their stakeholders,
which means building flexibility, inclusion, and
long-term planning into their decision-making. This
stakeholder foundation often means B Corps can more
easily respond and adapt in a moment of crisis. Take
this example from B Corp Looptworks:
“We have long worked with a dispersed workforce that
employs single parents, refugees, and other adults with
barriers to employment whether they be physical or
mental. Whether it be due to specific work schedule
needs, physical limitations, or family needs, these
employees and partners have home work studios set
up with industrial grade equipment. As a result, we did
not need to ‘retool’ or ask employees to come into a
24
factory setting where there would be greater risk for
virus transmission. Rather, this work force was ready
to mobilize and start producing [masks] immediately.”
Still, in an environment of uncertainty, leaders might
move too quickly, rely only on existing networks, or
leave out valuable perspectives. To address these risks,
any solutions must continually center and serve the
most vulnerable stakeholders.
B Lab partnered with B Corp Provoc to identify which
topics to consider for the best practice lists and the
specific solutions elevated within those topics. This
meant pushing companies to consider questions like:
If you are planning a return to the workplace, how are
you providing flexibility to employees who might be
at a higher risk of contracting COVID-19 or who serve
as a caretaker for someone at a higher risk? How are
you accounting for employee support for those whose
partner or family member lost their job?
Actionable Insights Versus Endless
Resources
As public health and economic uncertainties continue
to unfold, you don’t have to look far to find lists on
lists of links to link-filled COVID-19 and justice, equity,
diversity, and inclusion.
One B Corp told us:
“There are too many ‘help’ resources focused on the
‘here and now’ and short term. ‘Create a shared and
durable prosperity for all’ is our mission-critical true
north star, and we, like all B Corps, must frame all our
actions with this in mind. I’d like to see B Lab remain
our guide and guardian to this mission.”
As a convener and a curator in this work, B Lab focused
on creating resources that lead to long-term shared and
durable prosperity for all while also being actionable in
the current environment.
For example, in the Supporting Frontline Workers
best practice list, instead of simply saying they’d
implemented a COVID-19 screening protocol to
protect employees and their families, Cabot Creamery
Cooperative shared the step-by-step process for how
they screen employees and suppliers on-site at their
factories. And for New Seasons Market, this meant
sharing their updated time-off policy that built in more
flexibility for all employees, so that other companies
could easily adapt for their own needs.
Balancing the Current Moment with the
Need to Prepare
Finally, it is important to remember that being
a community of practice does not mean being a
community of homogenous practices. As our B Corps
are spread across the United States and Canada, they are
navigating different local and regional realities, varying
reopening timelines, and the need to continually evolve
their response for whatever comes next.
So while the community-driven solutions in these best
practice lists were specific, they also provide a range
of opportunities for B Corps to make the appropriate
decision for their own stakeholders and circumstances.
Through all of this work, each of us much recognize our
dynamic role in helping our communities thrive, as Mia
Birdsong noted in her interview with Forbes:
“... that when you are giving that you are also receiving
something — and that when you are receiving you’re
also giving something …”
When Birdsong noted this, she was referring to
neighborhoods and community groups that sprung
into action during the pandemic, supporting each
other with grocery runs and health care visits. But her
point translates so perfectly to the new interdependent
way of doing business that B Corps model every single
day that’s centered on giving and receiving. And it’s
that new way of doing business that will help us build
a more resilient future.
25
(Photo by Priscilla Gyamfi on Unsplash)
How Companies Can Move From Words to Action to
Address Systemic Racism
B Impact Assessment Provides a Framework for Evaluation and Progress
Years ago, I decided to dedicate my professional career
to creating a more just and equitable society. I chose
to do this by focusing on the private sector, by helping
companies to operate in ways that are more socially
and environmentally responsible.
Much of that work has involved helping companies to
operationalize abstract concepts into practical changes
that can be made within their organizations. It’s great
to have ideals — I’m an idealist at heart — but at the end
of the day, it’s actions that make a difference.
If we want to be conscious capitalists who use business
as a force for good, what exactly does that look like in
practice? What does a mission-driven business that
wants to help people and protect the environment do
differently compared to one that is focused solely on
profits?
These are the questions that I’ve been drawn to and
that I have made the focus of my work. As I survey the
landscape of where our society stands at this point in
time, I still come back to them and ask myself, “What
actions can individual companies take to address
systemic racism?”
The suggestions below reflect specific practices that
we as business owners can implement to change our
26
organizations from within. If you’re not the business
owner, you can still raise these issues within your
company.
For all those companies and organizations that have
issued statements denouncing systemic racism, I offer
these as follow-up actions that can make a difference.
Using a Framework for Improvement
The best framework that I’ve found to help
companies evaluate their impacts and make practical
improvements is the B Impact Assessment (BIA). It
presents best practices that can be implemented by
sole proprietors up to multinational corporations to
evaluate and improve their company’s operations.
This is a free tool that can be used by anyone,
regardless of whether you want to become a Certified
B Corporation.
Among the many practices listed on the BIA are some
that can help a company to take meaningful action to
address systemic racism. They can be implemented by
all companies, regardless of size, to begin to rectify the
myriad societal problems that we face.
I believe that it’s just the right thing to do, but if you
need more of an incentive, it’s worth noting that
customers across political lines are asking brands to
take a stand against racial injustice.
Put Stakeholders First
Capitalism and racism grew up together in our country.
We have inherited a system that prioritizes shareholder
benefit and profits for a few, but not for all. The entire
approach that B Corps take upends this by prioritizing
stakeholders, not shareholders.
B Corps challenge shareholder primacy and instead ask
companies to consider all stakeholders impacted by a
company, including customers, employees, suppliers,
and community members.
By engaging stakeholders, companies can begin to
understand their needs and concerns and work to make
sure that the impact they’re having on those individuals
is a positive one.
In this case, a company can engage stakeholders in a range of ways,
from having them represented on a non-fiduciary advisory board to
publicly reporting on stakeholder engagement and results.
Like so much of the BIA, this abstract concept of putting
stakeholders first is then operationalized into specific
practices that a company can adopt. The options range
from small but worthwhile steps to more impactful
commitments.
The BIA specifically mentions having mechanisms for
reaching out to underrepresented groups, which can
involve working with local community members and
organizations. This ensures that the company is not
operating in a silo with only one set of voices is being
heard.
Listening to the concerns and needs of People of Color
in the community is a start. Addressing those concerns,
designating someone to be responsible for following-
up, and reporting on those results is more impactful.
Pay Living Wages
Black, Indigenous, and People of Color (BIPOC) tend
to be more highly represented in low-wage jobs and
can be disproportionately affected by low wages. This
has been laid bare during the pandemic, as BIPOC
individuals are more likely to be essential workers
who don’t have the luxury of sheltering in place yet are
putting their lives at risk for low wages.
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This question on the Impact Assessment creates an opportunity for
companies to take an objective look at whether their employees are
earning a living wage.
If you find that fewer than 75% of your employees are
earning a living wage, that becomes an opportunity to
make a change. The BIA is designed to help companies
identify those potential opportunities, benchmark
progress, and set specific goals to make improvements.
This particular practice can help a company move from
vague statements about taking care of their people to
ensuring that workers are being paid a wage that they
can actually live on.
Review Hiring Practices and Conduct a
Pay Equity Analysis
Including a statement on your job descriptions about
your company’s commitment to diversity, equity, and
inclusion is a good start, but it’s not enough.
Data shows that racism is apparent in hiring practices,
to the point of determining who even gets called for
a job interview. This has not changed over time, and
racial discrimination still persists. Even after getting
jobs, there is a significant wage gap between white and
Black employees (and also between white employees
and other people of color).
Companies can take direct action to address this
problem in a number of different ways. A statement
is better than nothing, but concrete, tangible steps to
remove pay gaps and unconscious bias from the hiring
process are better.
Implementing policies for blind reviews of resumes, ensuring
that job descriptions have inclusive language and provide salary
information, and conducting a pay equity analysis can all help to
address the systemic inequities that exist and instead ensure a fair
and equitable hiring process and compensation structure.
In addition, providing training about diversity, equity
and inclusion is important. Particular attention can be
paid to educating employees about anti-racism. The B
Corp community has compiled many useful antiracism
resources.
Ensure Diversity in Management
Having diverse perspectives has been shown to boost
a company’s profitability. The World Economic Forum
has laid out the business case for diversity, noting that
companies with diverse management teams have a 19%
revenue increase compared to less diverse teams.
The reason is simple: A diversity of perspectives can
present greater opportunities for innovation in a
dynamic business environment. Good leaders know
that listening to other perspectives challenges their
own thinking, prevents groupthink, yields creative
solutions, and builds empathy.
Despite the many benefits, however, Black people,
People of Color, women, and others are less represented
at higher management levels.
If your company has a statement on equity, diversity,
and inclusion but finds that there’s no diversity among
workers, in management, and at the board level, this
reflects a discrepancy between words and actions. As
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An objective look at diversity in the management ranks can shed
light on a company’s true commitment.
the old adage goes, you can’t manage what you don’t
measure.
If there isn’t much diversity at the management level,
the company has an opportunity to set a goal to increase
that percentage and identify specific strategies to meet
that goal. This may include addressing hiring practices,
creating an inclusive environment, and providing
professional development opportunities.
Focus Charitable Giving Practices
Many calls to action, including the one issued by the
B Corp Women CEOs in support of Black Lives Matter,
have asked for financial contributions to organizations
that are actively working in support of the Black
community.
Options to consider include developing a formal
statement about your company’s philanthropy, so that
Your organization can build on this by clarifying the impact that you
want to have through your charitable giving. Will this be a one-time
donation or an opportunity for greater impact?
you’ve considered how to align your charitable giving
for a specific outcome. For example, if your company
is committed to dismantling systemic racism, you can
develop a formal statement around that and screen the
organizations that receive your donations so that you
select ones that are advancing that work.
You can take that a step further by making a formal
commitment, such as a percentage of annual revenues,
a monthly contribution, or a set amount per sale.
Another opportunity is to allow your employees
to select the organizations that your company will
contribute to and matching their donations. This could
be particularly meaningful for employees to donate to
organizations that they are personally connected to
or believe in. (Resource Generation provides a helpful
resource for employees who may want to move beyond
charitable giving to wealth redistribution.)
Support Underrepresented Suppliers
Choosing to explicitly support underrepresented
suppliers, including those that are owned by BIPOC,
women, queer folks, and those who may be differently
abled, can shift the flow of capital in our society,
helping to bridge the wealth gap.
Is your company working with local businesses or
are you buying from corporations that have no stake
in your community? Are you intentionally choosing
to work with business owners who may not have had
equitable access to opportunities?
Two basic practices that anyone can start with are
tracking supplier diversity and establishing a policy to
support suppliers from underrepresented populations.
These are important steps because they will help you to
set a benchmark that you can track over time and then
establish guidelines that your company can follow to
diversify your supplier base.
Beyond that, you can set targets, which will help
to actively seek out diverse suppliers. You may also
consider establishing a formal supplier diversity
program for your company.
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 involve identifying specific changes that they can make
to reduce their emissions. Every company can monitor
and record their emissions and set reduction targets,
ideally working towards a Net Zero commitment by
2030.

Getting Started

These examples are just the beginning. So much needs

Just as consumers can vote with their dollars, so too can companies
choose to spend their money in ways that align with their values.
Commit to Addressing the Climate
Crisis
The climate crisis is deeply intertwined with racial and
environmental justice.
People of Color are more likely to be adversely affected
by global warming, they’re more likely to live in areas
with higher pollution rates, and they’re more likely to
suffer the effects of air pollution.
A Black environmental activist coined the term
intersectional environmentalism, which centers racial
and social justice work within environmental work,
ensuring that our most vulnerable communities are
protected alongside our natural resources. A Black
climate scientist has also eloquently pointed out that
racism derails our efforts to save the planet.
Bottom line, if you and your company care about the
environment, you must address racial justice. It is not
a separate issue.
To reduce greenhouse gas emissions, companies need
to begin by calculating their carbon footprint so that
they can measure and manage their emissions. Beyond
that, they can then set reduction targets, which will
to be done.
The practices listed here can, and must, work
alongside numerous other efforts that are underway
and desperately needed to end systemic racism.
Policymakers, activists, educators, parents, religious
leaders, consumers, investors, and everyone who cares
about justice has a role to play.
As Co-CEO of B Lab U.S. & Canada Anthea Kelsick made
clear: “We cannot credibly build an inclusive economic
system without addressing the fundamental injustice,
inequity and violence that disproportionately impacts
Black people and other People of Color.”
We can start by doing this work within our own
organizations. As business owners, we have the
responsibility to set the course for our companies.
Employees also have a role to play, by advocating
within your organizations for change. Ultimately, as
a Black tech CEO points out, we need to “change our
company blueprints.”
I believe that we’re at a watershed moment in our
country’s history, and we have the responsibility and
obligation to ensure that all the words and statements
that were made in the heat of the moment do not
evaporate over time, only to be forgotten.
The fear, anger, and despair that we feel at the injustice
around us can be channeled into our work, to rectify
the wrongs of the past and present. Let’s get to work.

B The Change is a publication built as a collaboration of B Lab, the community

of Certified B Corps, and the movement of people using business as a force for
good. Read the stories at bthechange.com.

B Lab is a nonprofit that serves a global movement of people using business as a force for good. B Lab’s vision
is of an inclusive, equitable, and regenerative economic system for all people and the planet.
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