July 7, 2012:

By: Rena Avramidis

Has it really been as long as it has since I last posted? Sigh, sigh.

Firstly, I cannot believe it is already JULY which means that we are about halfway through the summer…unbelievable.  However I always get a sense of excitement when this happens, because it allows for reflection on what you have already done, while still giving you time to make changes and initiate new goals.  🙂

The past couple of weeks have been a whirlwind of busy (mostly productive!) days working and spending time with my family and friends who visited me over the Fourth of July!  This was actually my first time truly celebrating the Fourth since before I started college (crazy to think I have been overseas each time!) and it was honestly refreshing to see people donning  their red, white and blue, and of course, the fireworks!

This year, my family and I spent the day walking the streets of San Francisco, basking in the glorious sun and ending the evening with a scrumptious crab dinner near Pier 39 at Fisherman’s Wharf…with what seemed to be the rest of the City– it was packed!  We truly lucked out of the crowds and cold –I know you all in NC must be shocked how chilly it gets here, but as I have been told a million times from natives “The coldest winter I spent was a summer in San Francisco” does actually ring some truth, Mark Twain, old chap.   If he actually wrote it or not is another question, but I digress…  We actually got to enjoy the show from indoors, eating amazing crab, mussels and shrimp while admiring the spectacle in teh sky. Lesson learned:  patience pays off!  We waited over an hour for our table and it was absolutely worth it.

Fisherman’s Wharf

In terms of what I have been up to at my internships…

At Yellow Leaf Hammocks I have just started initial research for what will likely be my biggest project of the summer:  Establishing a metrics system for the social impact of Yellow Leaf Hammocks for the future and comparing it to what has been gathered so far.

This means specifically focusing on the  Mlabri  weavers (the artisans that make the hammocks) and the impact that employment through Yellow Leaf  Hammocks has given to their families and education, health, education and lifestyle in general.

Right now I’m researching more about this indigenous tribe (there are less than 300 in the world!) and reading a lot of literature that Rachel and Joe, the company’s founders, have stored since launching the company.   Although I haven’t gotten too far in, I can already tell one of my biggest challenges is finding a way to share their unique stories in a way that preserves their autonomy and independence.  I have to constantly remind myself that this is not a charity, but a social enterprise, a business with a social mission.  The way I can best explain it to others is that its a “teach a man to fish” approach as opposed to “spoon-feeding.”

Speaking of businesses with social missions, my latest blog post on Yellow Leaf’s Website (I’m keeping a blog on different social enterprises; check out my last entry on the social enterprise, La Fageda here:  http://yellowleafhammocks.com/the-front-porch/ ) will be on a new business classification, the benefit corporation, which legally requires a company to address both people and profit.  It’ll be up live soon, but if you want to get  a sneak peak, you can read the first draft, below:

Is it possible for a company to make money without focusing solely on profit?
A new business classification, the benefit corporation, which legally requires a company to address both people and profit, is attempting to address this question.

I first became interested in this certification when I was researching project topics for my Business and Sustainability course term project the past spring.   It was fascinating to read about companies that were truly implementing a triple-bottom-line approach of people, planet and profit into their business model, and not just throwing around rhetoric  (seriously, if I see the word ‘green’ one more time…).  In many ways, B corps are a hybrid between non-profits and traditional corporations, bridging the gap between profit and nonprofit.  This is promising for skeptics of nonprofits, who have criticized nonprofits for being “unsustainable” in the long run.

More importantly though, this movement, powered by the non-profit, B-Lab is making change where it matters most:  in our legislation.  By working with legislators and businesses themselves, this non-profit is catalyzing a shift in traditional business and if it is possible to measure success beyond dollars.

This raises the question:  what is the purpose of business and for whose benefit is it to be run?  But before we even attempt to dive into this question,  we must also look at what is formally stated in the law.

The formal rules of corporate governance under American law considerably inhibit a corporation from being socially responsible.  The  American Law Institute (ALI), states in its Principles of Corporate Governance: “…a corporation should have as its objective the conduct of business activities with a view to enhancing corporate profit and shareholder gain.”

In other words, the formal rules of corporate governance impose a strict discipline that the purpose of the corporation is to bring profit to its shareholders.

Notice how the ‘public good,’ to any extent at all, is completely left out of the above clause… Are you okay with this?  What do YOU think the purpose of business is?

B-Lab is working to change this.  Because of this new legal protection, (which as of recent has passed in 9 states), Certified B Corporations are protected from being sued by shareholders under traditional corporate law, which requires corporations to consider finances first.

A term coined by B Lab, “Certified B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems. B Corps are unlike traditional businesses because they meet comprehensive and transparent social and environmental performance standards, meet higher legal accountability standard and build business constituency for good business.” (B Lab: B Corps.)

Working at the Hub has its many perks and B Lab actually has one of its offices here in the Hub Soma!  I was lucky enough to talk to a member of B-Lab who stressed that what makes this certification unique from other certifications is that it goes beyond the product level, and looks at all areas of impact, from the supply chain to operations.

What is important to note is that Certified B-Corporations are still for-profit.  These are companies who do make money and also measure their success in lives impacted and dollars earned. There is a profit mission and a social mission, both with at least equal importance. Not only do over 500 Certified B-Corporations exist already, but they exist in virtually every industry!

Some of the big names include sports-apparel tycoon Patagonia and Greyston Bakery, whose brownies are key ingredients in Ben & Jerry’s ice cream flavors.  What makes Patagonia a Certified B-Corp, you ask?  Some of the highlights include a Board consisting of independent members to represent community & environmental interests (governance), health benefits extended to part-time, retail, warehouse staff (workers),  100% of significant suppliers made transparent on website (community), and  75% of materials used are organic or  recycled (environment).

I highly reccommend checking out http://www.bcorporation.net/b-corporations to read about what makes these companies “Certified B-Corporations.”  You can even view their B Impact Reports online!

Becoming a Certified B-Corporation is a lengthy process, and requires a corporation to a complete a through B-Impact assessment, a point system used to assess a company’s accountability, employees, consumers, and impact on the community and environment.  If the corporation scores above an 80, it can then be considered for the legal requirement, which depends on the state in which the company operate and its classifying structure  In either case,  the company will  have to modify its company’s legal structure to institutionalize stakeholder interests in its business.

You may be thinking, “this sounds nice and all, but what is the catch and what is the incentive?”

One potential challenge is a yearly fee to keep the certification, which may be too much of an investment for smaller companies.  In addition to maintaining rigorous standards Companies are also randomly chosen every year to be audited.

But most Certified B-Corps agree:  the classification pushes them to be better companies.  Jeni Bauser, senior account executive at Green Team, said, “B Corporations’ rigorous criteria create a structure for us to improve our sustainable practices, and stand with like-minded businesses that believe it’s their responsibility to meet the highest social and environmental standards.”

Becoming a certified b-corp also shows that you committed to solving social and environmental problems and are part of a movement of people committed to doing business, better.   Currently, special tax benefits only occur if the company operates in Philadelphia, but since the certification is only two years old, some of the greatest benefits may still be to come.

[1] ALI, Principles of Corporate Governance, (St. Paul, Minn., 1994) sec. 2.01(a).

Have a great weekend!