When I learned that Bill Gates could have ended up in jail for giving.
A reasoning on the B-Corp movement
I tend to be quite doubtful and cynical about businessmen saving the world. At this point of my career, I’ve realized that I haven’t empathized enough with CEOs and entrepreneurs. Today I look at them in a different light.
This reflection comes after a discussion I recently had with Christophe Fauconnier, CEO and Founder of Innate Motion. It was a little confrontational, as only we can be because we were talking about the things business can really do for the world. He pointed out to me how risky it was for business leaders to put ‘giving’ on their agenda, let alone at the core of their company’s purpose. Even just listing “giving” in the goals of a ‘for-profit’ company is a risk.
It was a revelation to me that in the United States, CEOs who wanted to give back could be put in jail. Bill Gates, whom we now all admire, had to open a Foundation in order to reinvest in the social programs he believed in. It was illegal for Microsoft to give in this way as a for-profit company. Charity organizations are equipped to do that, while non-charity organizations are dividing the world into the “good ones” and the “bad ones”.
Despite how crazy this may sound, entrepreneurs, the people who could have the biggest potential to give back and make an impact on society, couldn’t do it. They were discouraged by the law itself. Giving back would have violated the pact made with their shareholders: maximizing their (and not others’) profits, leading to them being sued and going to jail. Simple.
Luckily the story has changed in recent years, as enlightened founders of companies are making stakeholder values as equally important as shareholder value. These are the brave entrepreneurs I have learned to empathize with. They have built a legal framework for giving, for those who have the most to give. This framework (as of today) is not enforced, but it’s voluntary. It is a new law, a Renaissance that has the power to change the economy and the way we look at it. At least, it has already changed the way I look at it!
How did this Legalization of Giving start and where is it heading?
There’s a new business paradigm growing in the world and we are in the middle of a major economic transformation process. It’s not easy to spot because we are in the jetstream right now. Trust towards the world of business is at an all time low, but it is undoubtedly happening.
Up until now, the production scenario has been operating on models able to produce revenue: ‘the state’, entering and participating in public enterprises, and ‘the market’, pure private capitalistic enterprises. Apart from these two systems, almost in opposition, there has always been the ‘not for profit’ sector. But while production produced wealth, the not for profit sector were only distributing it. So, the capitalistic enterprises were producing value, and the non-profits were receiving a portion of this in the name of philanthropy, and then redistributing it.
The big revolution we are witnessing started within the last 20 years, when the non-profit groups understood that if they wanted to be effective, they had to intervene in the moment of production, and not only in post-production distribution. This is why the current climate is more has more social enterprises or social businesses than ever, they are for-profit enterprises operating with non-profit goals, driven by objectives of a common nature.
For-profit enterprises with a social mindset, are the latest news in the economic scene and they are well represented by the B Corp movement.
What is the B Corp movement?
B as in Benefit, Corp as in corporation. The B Corp movement started with three men who gathered together around a simple idea: giving (back); through business to do the most good, for as many people, for as long as possible.
Jay Coen Gilbert and Bart Houlahan were already friends and co-founders of the basketball shoe and apparel company AND 1, along with Andrew Kassoy, their longtime friend and former Wall Street private equity investor. They were the people who created the concept of a Certified B Corporation (also referred to as just B Corporation, or B Corp). A system that would have attracted and certified all those companies that not only wanted to be the best in the world, but that also wanted to be the best for the world. But the three partners also understood that in the US, in order to give, they needed a legal framework built around the original mission and values, and credible standards to help them distinguish their businesses in a crowded marketplace where everyone was claiming to be a “good” company. They needed to legalize giving.
The vision they share is of a global economy using business as a force for good. An economy to include a new form of company, the B Corporation, with a purpose that brings advantages for all the stakeholders, not only the shareholders. As leaders of this new economy they believe that we can, and have to, be the change we want to see in the world. That all companies should be managed so to create well being for the people and for the planet, through products, services, practices. This because we are all dependent on one another, and therefore responsible for one another; and for the generations to come.
Today, an authority called “B Lab” certifies the companies through its “B Impact Assessment”, a survey which measures the ability of a business to create value for its customers, employees, community, and the environment. Every two years each company needs to be reassessed through this survery, which raises the bar each time.
In the last few years, a handful of entrepreneurs have raised the profile around purposeful business within the ecosystem and even influenced politicians. In the USA there are already 30 states with a law that confers legal status to B Corporations, and that puts positive impact among the legally defined goals. Since December 2015, the Italian Parliament has introduced a new type of for-profit corporate entity named Società Benefit, a virtual translation of the US description, thus making Italy the first country in the world to make this legal status available on its entire territory.
The B Corp Global Movement is growing stronger and the B Corp label draws a marked line between companies that want to embrace an holistic vision, that want to have a positive impact, that want to be the change they hope for the world; and everyone else.
What is the type of culture and the impact created through this movement?
Today the economy is changing us and our perspective of the world and on our role within it. This made us think of two significant cultural movements that have marked the history of human thinking and flowering. The Reformation and the Enlightenment. How different they were! If we think of these movements we see how the first one was more a reframing of an existing structure, providing new norms; whereas the second one has been, for us all, a cultural blessing. A revolution from one way of looking at man and the world, to a completely transformed one.
Through the B Corp Movement; are we operating a tentative Reformation, accusing and trying to renovate the world of business as well as the system of production and consumption. Are our efforts aimed at setting new limits, improving the existing rules, or offering better ones? Will we end up being excommunicated like Luther, because we changed the structure of the home but not the residents’ minds? Is the B Corp movement declaring that they will not acknowledge the authority of the production and consumption system today in place, just like Luther didn’t identify anymore with the command of that Church?
Also, with its system of certification and maintaining of the label in points spread over thematic areas, is it truly changing the mindsets of partners before limiting some of their practices?
Alternatively, is it the B-Corp movement producing a revolution like that of the Enlightenment for the years to come? Are we shaping a new Age of Reason, hoping to be close to those thinkers, like Rousseau, Voltaire and Montesquieu? These visionaries of the 18th century redefined the whole idea of progress, always linking it to that of fraternity, peace among men, tolerance, and common good. They dared to promote questioning rather than acceptance, therefore secularizing our way of thinking and learning.
Ultimately, are we creating a new culture, adopting a new set of notions and feelings, and new eyes through which conceive a renovated higher idea of success in the work we do and in the way we live? Are we longing for a new heaven and a new earth?
We have always sensed the powerful impact that business could have in shaping a better world. But today, a better world needs to be dramatically different from the path we are on. A better world needs a revolution, not an adaptation. A better world can only happen if the force of production and consumption forges a radically whole new system in the world. Once we have legalized giving, we must mobilize participation, as a positive domino effect.
Marketing is (also) about questioning. Opening discussions to find better answers.
Participating in the B Corp movement is already an integrity pact. Today, we must get beyond questioning the challenges the world faces towards the actions we are all called to take. We at Innate Motion feel the urge to shift the movement from a mindset of (I am) doing good, to a mindset of activism. From a culture of doing good ourselves, or doing our part, to a culture where we also engage the world to contribute and do good.
It’s time for a global awakening around how we are interdependent on this planet, with people and the environment. We feel that the only paradigm possible is that of a business where businesses AND their people want to answer are my actions good for society, good for the people and good for the environment? It is a more civilized paradigm where business sense goes hand in hand with human sense.
We are optimistic about business. We truly believe it can be the great force of social change that politics is failing to be. It needs however to become a leading activist and an aggregating force, so it can fulfill the expectations of many and its highest role, the progress of people and the environment they insist in.
From June 20th – 22nd we will be joining our fellow European B Corporations in Cascais Portugal for the B Corp Summer summit. The program will be guided by one main theme, “Interdependence as a force for good”. Together we will sign the Declaration of Interdependence, unifying us in our core value that business must be a force for good.
See the event page for further details.