The Policy #BehindtheB: How we’re creating new rules for the global economic system
As of January 2022, there are more than 4,500 Certified B Corporations representing 78 countries and over 150 industries. These are high-performing businesses with high standards for economic, social, and environment impacts. Yet they represent a very small fraction of the business community: according to the World Bank, there are more than 125 million companies in the world. One of the major challenges our movement faces is empowering all businesses to behave like B Corps, with the purpose to generate positive impact, accountability to all stakeholders, and transparency to measure, manage, and report on their performance.
B Lab develops tools to support impact management for the 150,000+ businesses that have used our standards to inform their improvement journey. Yet we also believe that we need to change the rules of the game to enable a favorable institutional environment for such businesses to thrive. As a result, we seek opportunities to promote structural, cultural, and behavioral changes at a large scale — including by shifting the legal and policy frameworks that define business norms.
In our Global Theory of Change, we defined a global strategy specifically to catalyze policy change that leverages business as a force for good. Our approach to this is to lead, coordinate, and promote public policies, regulation, and self-regulation of companies and capital markets to enable the adoption of stakeholder governance, while supporting external partners in initiatives focused on enabling and incentivizing the broader impacts of business — all with an end goal of systems change.
Benefit corporation status is a legal structure that gives businesses a solid foundation for long-term mission alignment and value creation. It protects a company’s social impact mission through capital raises and leadership changes, allows for more flexibility when evaluating potential sale and liquidity options, and creates a pathway for mission alignment to continue post-IPO.
B Lab and its global partner Sistema B have advocated for this corporate form through legislation that has been passed in over 50 jurisdictions, including more than 40 U.S. States and the District of Columbia, as well as Canada, Italy, France, Rwanda, Colombia, Peru, Ecuador, and Uruguay. Worldwide, more than 10,000 businesses have adopted the benefit corp corporate form.
A core component of benefit corporation structure is a company adopting stakeholder governance. We define this as a model that makes an organization accountable for an overall public benefit purpose (alongside delivering shareholder financial returns), by establishing rules that bind its shareholders, directors, and management to identify, engage with, and understand stakeholder perspectives in their decision-making. Advancing stakeholder governance is key to promoting widespread corporate behavior change — and the benefit corporation legal form is an important instrument for investors and businesses advocating for a stakeholder economy.
In collaboration with our global network, we have designed principles to align our initiatives across the globe to influence policy change.
We aim at systems change: We focus on changing the economic system. We believe that B Corps are pockets of the future of business — and that policy is how we are going to catalyze systems change at scale.
We seek a positive angle towards impact: Our focus at B Lab is on identifying the positive impact companies have, so our policy focus should be the same. We focus on policy initiatives that foster companies having more positive impact (or requiring them to do so), drawing on B Corps as our strength and our greatest resource.
We believe in changing the rules of the game: Regulation is an important leverage to address structural change and enable a favorable institutional environment that leads us to systems change. We have a sense of urgency and we do not believe that voluntary action alone will enable the urgent need for policy change critical to both our planet and society.
We value transparency and accountability: We also need to be transparent, sharing what we are doing and why. We believe that disclosure and transparency should be principles that guide companies’ behavior, thereby driving accountability.
We are political, but strive to be non-partisan: We see politics as the way to promote and qualify relevant debates, while remaining vigilant for democratic institutions.
Our certification program supports our policy initiatives by identifying business leaders committed to an inclusive, equitable, and regenerative economic system. B Corp Certification is backed by credible, high-level standards that set the agenda for social and environmental performance, and B Corp leaders influence and inspire others to follow in their path.
Our Policy program is focused on building bridges between our certification and the market regulatory regimes and public policies that foster the institutional environment that will encourage both capital markets and businesses to behave with purpose, accountability, and transparency. This transformed business culture becomes a new norm by bringing a set of policies, regulations, and legislations into alignment. Eventually, this leads to mainstream businesses adopting B Lab's standards to measure, manage, and report their triple impact — how they balance their profitability with their environmental and social footprint. The entire cycle is consistently supported by a narrative shift to influence stakeholders.
U.S.: B Lab U.S. & Canada has successfully passed benefit corporation legislation in over 40 states and provinces. Building on this success, in 2020 B Lab U.S. & Canada launched an expanded Federal policy agenda aimed at aligning the rules that govern business and the capital markets with stakeholder impact. To further that goal, B Lab U.S. & Canada works with B Corps and other partners to advocate for economic systems change. Holly Ensign-Barstow from B Lab U.S. & Canada shares more details HERE.
UK: The Better Business Act (BBA) legislation would create a default/mandatory benefit corporation form for every business in the UK — a world-first proposal. B Lab UK has engaged legislators and government, with a parliamentary launch event in April/2021. Chris Turner and Mhairi Littlewood from B Lab UK and the BBA share more details HERE.
Europe: Drawing on the experience of the 600 B Corps in Europe, B Lab Europe and partner organizations are leading advocacy for mandatory stakeholder governance for all European companies through the Interdependence Coalition. Investor duties should also be aligned with these requirements. Katie Hill and Wojtech Baginski from B Lab Europe share more details HERE
Latin America & the Caribbean: The international working group for economic reactivation of impact designed the 1st International Gathering for public leaders to present (i) BIC (Benefit Corp) Legislation; (ii) Triple Impact Public Procurement; and (iii) Legal Frame for Impact Investing. The gathering mobilized over 1,200 participants from 32 countries — 48% of whom were public leaders. As a result of this initiative, Panamá, Argentina, Brazil, and Paraguay introduced proposals for Benefit Corps and dozens of communities of practice are working across the region. Detailed proposal HERE.
Our 2022 game plan for policy is focused on three core initiatives: (i) narrative construction to promote the shift towards a stakeholder economy, and thought leadership aiming at a bold, compelling, and clear communication on WHY, WHAT, and HOW policy change can foster our mission at the global level; (ii) business development to articulate and mobilize resources to build capacity and strategic alliances — this agenda is absolutely about our ability to develop alliances; and (iii) coordination of these different initiatives across our global network.
Stay tuned for more on our policy initiatives. This is definitely a key strategy to enable systems change at large scale, and work towards an inclusive, equitable, and regenerative economic system for all people and our planet.
Marcel Fukayama is the Head of Global Policy at B Lab Global. He is the co-founder of Din4mo, a Venture Builder Certified B Corp focused on investing in businesses aligned with SDGs 3, 4, 10 and 11. He is the co-founder of Sistema B Brazil and former Executive Director of Sistema B International.