With many companies using charitable donations or go-green initiatives to promote themselves as good corporate citizens, it can be difficult for consumers to know which businesses are just phoning it in -- and which are truly committed to change.
What if companies had to prove it?
That's the question that inspired Philadelphia nonprofit B Lab. In 2007, the organization began to offer a stamp of approval to businesses that could demonstrate that they embrace not just one bottom line, but three: profit, people and planet. Those that get the nod are called B Corps, and the hope is that they'll change the way people define success in the business world.
Five years after the program's launch, there are 533 B Corps in the U.S. with combined revenues totaling more $3.11 billion, according to the nonprofit.
The Big Idea Bookstore and Cafe, in Bloomfield, became one of them early in June. It is one of just two certified B Corps listed in the Pittsburgh area; the other is Seeds, a green printing and design company. There are 55 B Corps in Pennsylvania, according to the nonprofit's website.
The program adds some credibility to the feel-good claims that so many companies make, in the way that earning LEED certification on environmental impact and energy efficiency offers a legitimacy to claims that buildings are environmentally friendly.
"If you allow businesses to self-report and self-govern on these standards, you end up with a problem," said Eric Davis, managing partner at Pittsburgh law firm Elliot & Davis and the attorney who represented the Big Idea Bookstore in its certification effort. "A third party, like B Lab, is really necessary."
Back in 2007, the nonprofit's "founding class" of 81 companies was made up mostly small businesses. The list has since expanded to include several big names: outdoor clothing company Patagonia, handmade e-commerce website Etsy and Seventh Generation, a manufacturer of environmentally-friendly household products.
Beyond offering reassurance to consumers and investors, the benefits can be tangible for participating companies. In recent years, companies with the certification also have earned a slate of benefits ranging from tax breaks in some states to discounts and loan forgiveness.
In the city of Philadelphia, B Corps receive a $4,000 tax credit.
B Corp status also offers companies a way to protect their social responsibility ideals. While many businesses are beholden only to their shareholders, those in this program are required to write responsibility to their employees, suppliers and communities into their corporate DNA.
For example, limited liability corps, C corporations and sole proprietorships all must amend their legal documents to offer protection for social and environmental interests. It's a distinction, said Katie Kerr, a communications associate at B Lab, that can mean a big difference for companies' futures.
In 2000, one of the country's most well-known triple-bottom-line businesses -- independent ice cream maker Ben & Jerry's -- was bought out by corporate giant Unilever. Ben Cohen and Jerry Greenfield were resistant to the sale, worrying it might damage their commitment to their workers and the environment. But they were legally bound to shareholders to take the highest bid, and the sale went through.
Had Ben & Jerry's been a B Corp, they might have been able to sell to a company that offered less money yet more social responsibility commitments.
To earn the designation, companies undergo a rigorous certification process through B Lab. It begins with a detailed, 200-question "Impact Assessment" that asks questions ranging from the kind of healthcare services a company offers employees to the metric tons of waste it produces. Companies are scored in four categories -- government, workers, community and environment -- and a score of more than 80 out of 200 allows applicants to move onto the next step.
After doing the assessment, the nonprofit reviews the results with companies. The staff offers suggestions and modifications, asking companies to offer proof of some of the claims made on the impact assessment. Then the company must adopt the legal framework that makes them legally obligated to consider parties other than shareholders and pay a yearly fee based on annual net sales, ranging from $500 for those with revenues of less than $2 million to $25,000 for those whose sales exceed $100 million.
Impact assessment results for each certified company are available online as part of a commitment to transparency. Patagonia, for example, received a total score of 107.1, with distinction in three out of four categories -- governance, workers and environment. Within those categories, a breakdown shows it received near-perfect marks in areas of work environment and corporate accountability, among others, but did poorly in community job creation, local involvement and civic engagement.
B Corps are part of a growing trend of social entrepreneurship nationwide, Ms. Kerr said: "As the world changes, it's getting clearer and clearer that short-term capitalism isn't going to cut it. Consumers are demanding more from business."
Mr. Davis, the attorney who represented The Big Idea Bookstore, thinks there's something to that argument.
"I very much believe that in the next five years, it would be pretty rare for there to be a business that is not a B Corp in some way," he said.
The Big Idea Bookstore has never thought of profit as its primary motivation. It has always been a "labor of love," said Anne Marie Toccket, the store's membership coordinator.
The store, which started in 2001 as a traveling book table in Wilkinsburg, moved into its current Bloomfield location in 2011. In the front of the Liberty Avenue building, a small cafe serves only organic foods and fair trade coffee using beans from a Pittsburgh nonprofit.
In 2010, The Big Idea came up what they like to call an "even bigger idea" to become a worker-owned cooperative. Today, all business decisions, from how to distribute profits to what kinds of events they play host to in their cozy storefront, are made by their seven worker-owners.
Shelves are filled with new and used books that they believe have social value, though that means their displays vary from tomes on Marxism to copies of the popular teenage novel "The Hunger Games." Outside, the bike rack is always occupied -- most workers ride to work.
B Corp certification, said Ms. Toccket, "is a validation of what we've done already." And it's a motivation to do more.
Correction/Clarification: (Published June 22, 2012) Legislation is pending in Pennsylvania to legally recognize benefit corporations, but a story Thursday incorrectly said it would provide tax incentives.
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Molly Hensley-Clancy: email@example.com or 412-263-1410. First Published June 21, 2012 5:15 AM