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The Future of B Corporations is Big


25 March 2015 at 9:28 am
Lina Caneva
We could soon see larger and more influential companies stepping into the B Corp space but some barriers must be overcome for that to happen, says James Meldrum, co-founder of the first Australian food business to be certified as a B Corp, Whole Kids.

Lina Caneva | 25 March 2015 at 9:28 am


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The Future of B Corporations is Big
25 March 2015 at 9:28 am

We could soon see larger and more influential companies stepping into the B Corp space but some barriers must be overcome for that to happen, says James Meldrum, co-founder of the first Australian food business to be certified as a B Corp, Whole Kids.

Late last year, Natura, one of the leading cosmetics companies in Brazil, became a certified B Corporation and, in doing so, also became the world’s largest B Corporation.

Much of the rapid rise in the B Corp movement has come from smaller companies deciding to become certified as a way to formalise their social and environmental missions and goals, and to provide a recognisable framework to “measure what matters”.

The certification of Natura has truly changed the B Corp landscape. With around 7,000 employees and global annual sales of around $US3 billion, Natura seems to have answered the question of whether a large public corporation can become a certified B Corporation.

Indeed, the outlook for the B Corporation movement is optimistic.  

The CEO of Unilever, Paul Polman, recently suggested that it may consider becoming a B Corp as a way to communicate a powerful signal that the “purpose of business is not just profit, but to have a positive impact on society and the environment”.

One view is that Natura becoming a B Corp was a natural extension of the way it operates anyway, but Unilever is an entirely different kettle of fish.  

According to the Triple Pundit:

Natura, founded in 1969, has always beaten a different drum compared to its competitors within the cosmetics sector. The company’s products are generally based on native Brazilian flora, provided such plants can be harvested in a sustainable manner as required by the company’s “bioprospecting” policy.

The same products have long been encased in packaging made from recycled or at least recyclable materials. Natura is also a founding member of the Union for Ethical BioTrade and has been praised for including everyday women in its advertising campaigns instead of supermodels.

That’s not to say it was an easy process. Best intentions can go only so far. Natura’s institutional investors were the key to getting the B Corporation certification passed.  Jay Coen Gilbert, the co-founder of B Lab, said that “the investors [in Natura] found it a non-issue as it was not a material change from how Natura was already operating. With some of that spade work being done by a pioneer, it now makes it easier for the next publicly traded companies … we are in conversation with a number of larger multinationals to go through the assessment tool, and they are pretty interested in becoming officially certified.”

So would a company the size of Unilever, the world’s second largest consumer products company and which generates around 50 billion euros in revenue, really make the transition to a certified B Corporation?

Jostein Solheim, chief executive of Ben & Jerry’s, is currently negotiating with B Corp on behalf of Unilever and says:

They are rapidly scaling up the movement and finding ways to apply their assessment in a time-efficient way to big companies like Natura. With the Unilever Sustainable Living Plan and

Paul [Polman]’s strong leadership within the sustainable business movement we have been interested in assessing how to apply the B Lab assessment to a company of Unilever’s scale.

At the first stage we would be looking to assess how the certification could be applied to Unilever and the cost and complexity of getting it done. Paul is very supportive of B&J’s B Corp participation and the way we are leveraging a common standard to grow the overall movement and develop our values-led supplier network.

This is certainly a space to keep an eye on. It sounds like Unilever are heading in the right direction. For a company that operates across multiple countries, multiple laws and multiple cultures, there would be significant challenges to address in becoming a B Corp.

I suspect, however, the biggest challenge of all that Unilever faces is convincing its institutional investors and largest shareholders that becoming a certified B Corporation is in their interests.  

Companies like Natura, and other larger B Corporations such as Green Mountain Power and Kickstarter, already have like-minded investors on board – and already understand the purpose-based operating models these businesses are based on.

About the Author: James Meldrum is a co-founder of Whole Kids. Whole Kids is the first food Australian food business to be certified as a B Corp and one of the founding members of B Corporation Australia. The company aims to bring about long-term sustainable change in the way food is sourced, manufactured, distributed and ethically marketed to children (and families).

 

Lina Caneva  |  Editor  |  @ProBonoNews

Lina Caneva has been a journalist for more than 35 years. She was the editor of Pro Bono Australia News from when it was founded in 2000 until 2018.

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