How to lock in your company’s social purpose with a mission-lock or B Corp

Mission-led businesses — those whose financial objectives are accompanied by a commitment to have a positive moral, social, or environmental impact — perform better and grow up to 50% faster than traditional profit-driven startups.

But as such businesses succeed and scale, how can they ensure their founding principles are not lost at sea?

With growth comes complexity. There are investors to entice, shareholders to please, and supply chains to streamline, with an array of productivity pressures and financial targets in between. In a higher-growth landscape, ‘mission-drift’can become a real problem for young mission-led startups.

Social enterprises — founded to explicitly address a specific cause — are a little different. As such, they often operate within specific legal frameworks that inherently protect purpose, such as a Benefit Corporation in the US, or a Community Interest Company in the UK. But there is another way to safeguard both your purpose and your profit.

One way to address this is to embed a ‘mission-lock’ clause within a company’s governing documents — protecting its social purpose against the tendency of some shareholders to seek to maximise return on investment above all other factors. A mission-lock makes clear from the start that the company has chosen to pursue important social and ethical goals alongside its commitment to profit. Investors and shareholders explicitly understand and accept this when they come on board.

Or, for a more rigorous assessment of a company’s ethical impact, a company can join the 2,457 corporations across more than 50 countries who have committed to operating their businesses in an ethical way via the B Corp movement.

Over the past decade, this global ethical accreditation programme has been changing the way that businesses are held to account, under a new standard of labelling for socially and environmentally responsible companies.

To become a B Corp (which is not the same as a Benefit Corp), businesses are assessed across five categories: environment, workers, customers, community and governance. Certification is not just for startups: big-name B Corps include ten of Group Danone’s 120 subsidiaries, and three Unilever brands (including Ben & Jerry’s and, more recently, Pukka Tea), paving the way for other multinationals to follow suit.

Like other accreditation schemes, the B Corp movement is not without its limitations. Some US states now require companies with B Corp certification to convert to a Benefit Corporation within two years. Already, this has had ramifications: after going public, Etsy announced it was relinquishing its B Corp status rather than embrace what it considered to be a complex structural change.

In the UK, companies that have achieved B Corp certification must reflect this in their Articles of Association and file the necessary documentation with Companies House.

Other questions abound: what, for example, are the implications of having one B Corp certified subsidiary under a not-so-ethical umbrella corporation? But in a world where greenwashing is rampant, and sustainable stories sell — whether they’re rooted in practice or not — holistic rating systems like the B Corp movement help consumers and impact investors identify firms who are walking the walk, not just talking the talk.

For now, Wall Street is somewhat ambivalent and a little sceptical — but these things take time. Public demand for transparency, combined with the fact that B Corps grow 28 times faster than UK national economic growth, are setting the stage for a revolution in business standards.

I for one believe in the B Corp mission. One day, companies will compete not to be the best in the world, but to be the best for the world.

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