In the future, will businesses need to be agents of change?
That’s the question posed by Nathan Gilbert, executive director of B Lab Europe, at Ever Evolving Talks hosted by Calik Denim last month in Amsterdam. There, Gilbert shared how a new generation of consumers and mounting environmental concerns are driving companies to “redefine success in business” and how the nonprofit’s B Corp certification is lighting that path.
“We recognize that there is a historic global culture shift underway around how business is being conducted—the idea that business can be a force for good, and creating a more sustainable and regenerative economy,” Gilbert said.
Certified B Corporation represents this community of companies that are trying to pave the way and create a more sustainable economy for all. The idea of B Corp Certification, Gilbert said, is to provide a comprehensive evaluation of a company’s impact that goes beyond products. B Corp Certification measures a company’s entire social and environmental performance, assessing how a company’s operations impact workers, the community, the environment and consumers.
Therefore, achieving B Corp certification requires a company to meet a “high bar” in its commitments and to be transparent about its performance. More than 3,000 companies have earned the certification, including players in the denim space like Saitex and Mud Jeans, both of which became certified this year.
This concept, Gilbert added, has been percolating for some time and is not unique to B Corp.
“This is a movement that has been evolving over many decades, and you can point to a lot of other organizations, initiatives or movements such as organic or Fair Trade that have been trying to push the needle and move boundaries to pioneer new ways of thinking about our trading, our markets, and of course, our companies,” he said.
Many of the pioneers, he added, are in the fashion industry, which all promote sustainable practices and the use of organic, recycled and upcycled materials that consider circular design. “All of these organizations and efforts and companies together really are contributing to this new wave that we’re seeing, and our role is really to help accelerate that trend… we know the challenges,” he said.
Through the B Corp certification process, which includes an online assessment, a series of required documents and commitments to stakeholders, B Lab serves as a guide to help companies overcome those roadblocks. More important, the nonprofit encourages companies to challenge old ways of business.
“Business as usual” has not been working, Gilbert said.
“The way we’ve been practicing business over the last 50 to 100 years by focusing on shareholder back value and maximizing profits has led to many externalities,” he continued. “[We know] some of the statistics about the wealth inequality, where the richest few own more than half the wealth on this planet, the decrease in wildlife populations, the environmental degradation, the plastics in the ocean, and most alarming, the carbon emissions and the climate emergency that we’re all facing.”
The pressure is on, he added, pointing out that “we really only have 10 years to start to turn around our behaviors.”
If a ticking clock on the environment’s future isn’t enough for companies to wake up, perhaps demands from the biggest consumer cohort globally will.
At 61 million strong, the teens, tweens and young adults of Gen Z are activists who care about their future and now are taking action through global protests like the Climate Strikes that took place during the UN Global Assembly in September and continue to mobilize each Friday in major cities.
And they are adamant about supporting brands and companies—be it with their dollars or time—that reflect their values. “People, more than ever, want to buy from companies that aren’t just selling good products or services, but rather truly, at the whole, are trying to focus on purpose, and being more sustainable,” Gilbert said.
And they want to be proud of the companies they work for. Gen Z and millennials “are people that want to go to work with companies that share their values,” Gilbert said. “They don’t want to just check their values at the door. They want to bring their whole selves to work. So, the idea of embracing purpose and values and sustainability is really going to become a magnet for employment of companies that want to employ better talents and be attractive to these young workers.”
Businesses are tuning in and taking action by trying to create more positive social and environmental benefits with their business than just focusing on financial return. Gilbert said he’s encouraged by some of the trends that he’s seeing in the marketplace, particularly in the investment community.
“More and more investors are trying to allocate capital and put it into companies that are not just focusing on profit maximization, but also on creating stakeholder value,” he said.
However, the majority of the B Corp community is small to midsize private companies. To move the needle in an impactful way, large global companies need to adopt B Corp’s definition of success, Gilbert said. “To change the system, [you have to] change the rules of the game,” he added.
Or, to put it in simple industry terms, the current definition of a corporation is out of style.
Whereas the 20th century version of a corporation works against the notion of “business as a force of good” because the framework prioritizes shareholder value and maximized profits, Gilbert said the 21st century version of stakeholder capitalism needs to look at a bigger picture.
“The new economy that we’re all hoping to emerge into is for all, for the long term and is inclusive,” he said.