Nonprofit Group Devises Credentials
for Socially Conscious Businesses
By Nicole Wallace
IceStone, a building-supply
business in Brooklyn, N. Y., is focused on more than just making
money. The company also wants
to use its enterprise to help protect the environment and improve the lives of its workers.
The company manufactures
countertops, vanities, and flooring from recycled glass and concrete. More than 30 percent of
its employees and more than 25
percent of its suppliers are from
low-income neighborhoods.
B Lab, a nonprofit group
based outside Philadelphia, also
believes in the power of business to do good. And it has a
big goal: to help define and promote a new breed of companies,
like IceStone, that care as much
about creating social and environmental benefits as they do
about earning profits.
SOCIAL-PURPOSE BUSINESSES:
QUESTIONS THEY MUST ANSWER
B Lab, an organization that certifies businesses for their
efforts to help society, asks companies to consider issues
such as:
n What multiple is the highest compensated individual paid
(inclusive of bonus) as compared to the lowest-paid full-time
worker?
n What percentage of your company’s significant suppliers are
independent and located in the same community as one of
your offices?
n What was the average annual percentage of net profits or
net revenues that your company gave to charity in the last
two fiscal years?
n By what percentage has your carbon footprint been reduced
on a per-capita basis over the last 12 months?
Recent Victories
B Lab won a very public victory this spring when at its urging the State of Maryland created a new legal structure—called
a benefit or B corporation, for
companies that blend business
with social and environmental
good. Vermont soon followed
suit.
Efforts are gathering steam
elsewhere, notably in New York,
where a bill to allow the creation of benefit corporations has
passed the Senate, and Pennsylvania, where a bill is expected
to be introduced in the coming
weeks.
But some critics question how
much a new corporate form will
do to promote socially responsible business.
Jay Coen Gilbert (clockwise from left), Andrew Kassoy,
and Bart Houlahan founded B Lab four years ago.
“It’s increasingly difficult for consumers to tell
the difference between good companies and just good
marketing campaigns,” says Mr. Coen Gilbert.
The other primary tool in B
Lab’s drive to promote socially
responsible business: a certification program. The group’s rating system scores companies on
how their products and business
practices affect their employees,
customers, suppliers, the towns
and cities where they are located, and the environment.
So far, more than 300 com-
panies—that together generate
annual revenue of more than
$1-billion—have been certified
by the organization as B cor-
porations. Most are traditional
for-profit companies, but a few
are businesses started by char-
ities to generate revenue and
further their missions, such as
the Greyston Bakery, in Yon-
kers, N. Y.
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Celebrating 75 Years
Redefining Success
Founded just four years ago
and fielding a staff of only 16
employees, B Lab has accomplished a lot.
The organization credits its
success to strong local partners
and being aggressive when opportunities present themselves.
A case in point: When Maryland State Sen. Jamie Raskin
asked one of B Lab’s co-founders
how soon the group could provide draft legislation, the group
had a bill, tailored to the state’s
corporation law, to the senator
within a week.
The effort represents a very
different second career for the
group’s three co-founders. Jay
Coen Gilbert and Bart Houlahan built AND 1, a $250-mil-
lion basketball footwear and apparel business. Andrew Kassoy
spent 16 years in the private-equity industry and was one
of AND 1’s first investors. The
three men have been friends
since their college days at Stanford University.
“Our hope is that the community of B corps redefines success in business, and that companies will begin competing not
just to be the best in the world,
but to be the best for the world,”
says Mr. Coen Gilbert. Helping
companies stand out in a marketplace where more and more
businesses are claiming to be
good corporate citizens is one of
the biggest benefits of certification, he says.
“It’s increasingly difficult for
consumers to tell the difference between good companies
TREVOR DIXON
and just good marketing campaigns,” says Mr. Coen Gilbert.
Mission-driven companies say
the work B Lab is doing is critical to the future of their industry.
Pointing to a third-party certification is important, says
Brandon C. White, founder of
Lateral Line, a company in
Easton, Md., that makes high-end fishing apparel.
Certified in 2007, the company donates 2 percent of its pre-tax sales revenue to grass-roots
conservation projects.
Mr. White says that it’s gotten to the point where customers are automatically skeptical
when he says that his company
is socially responsible.
“They roll their eyes, because
everybody in the freaking marketplace is saying that,” he says.
“At least I can say, ‘No, no, really. Here, we’re certified.’”
An Advertising Push
B Lab has negotiated other
more tangible benefits for the
companies as well.
The Yale School of Management forgives loans to students
who take a job at a company
certified as a B corporation, potentially a powerful tool for the
companies’ recruiting.
Philadelphia recently passed
modest tax breaks for companies that are certified, and more
than 40 companies, including
technology firms and headhunters, offer discounted rates to B
corporations.
This holiday season, B Lab
will run its first advertising
campaign to introduce B corporations to consumers.
The organization expects
the campaign to reach 17 mil-
lion consumers. Advertisements
will appear both in print publi-
cations, such as Mother Jones
magazine, and online at Web
sites such as Care2.com, which
promotes health and environ-
mental conservation.
Passing the Test
The B Impact Assessment is
free and available online. In all,
nearly 5,000 companies have
used the tool to measure their
social and environmental performance. Companies that seek
and receive certification pay an
annual fee based on their rev-
The Yale School of
Management forgives
loans to students
who take a job at
a B corporation.
enue that ranges between $500
and $25,000, and their assessment scores are posted on the B
Lab Web site.
Fees make up 20 percent of
the organization’s $2-million
annual budget. The rest comes
from foundation and corporate
grants.
To earn certification, companies must answer a series of
questions on how they run their
businesses and how they help
the communities in which they
work. They must score at least
80 on the assessment’s 200-
point scale.
The questions that companies are asked and how their
answers are weighted varies
depending on the size and type
of business.
“It may be wonderful that
the law firm says, ‘Please
don’t print this e-mail’ on the
bottom of their e-mail signatures,” says Mr. Coen Gilbert, of
