Grow-ducation, Episode 1: B-Corporations

By Nicole Schlichting

Published in

Grow Investing

4 min readJan 6, 2017

Welcome, pals! Today we’re going to talk about B-Corporations (a.k.a B-Corps) and their relevance to sustainable investing as well as the future of business.

The Beginnings — From Basketball to B Lab

In the 1990’s, a ‘streetball’ movement swept the nation when an apparel-slash-entertainment company became extremely popular — and lucrative, too. It was called AND1…maybe you’ve heard of it.

“A Look at the History of the B Corp Movement”

After realizing much success with their street-style basketball videos and apparel and shoe sales, cofounders Jay Coen Gilbert and Bart Houlahan found themselves asking the question, “What next?”

From basketball (and Wall Street) to B Corps, Gilbert, Houlahan and Kassoy had a general sense of what they wanted to do next: the most good for as many people for as long as possible. — TriplePundit.com

After some trial-and-error, they found their niche. At the time, everyone seemed to be making claims that they were a “good” company, when in reality there was no way to tell for sure. Gilbert, Houlahan, and Kassoy became abundantly aware of this problem and sought to help the companies that were actually doing better distinguish themselves; thus, the trio hatched B Lab. They purposed their new company to provide the much-needed legal framework to certify “better” companies, help them grow while maintaining their original mission and values, and set credible standards to abide by.

What is a B-Corp Exactly?

According to their website, a B-Corp is a “for-profit company that is certified by B-Lab (non-profit) to meet rigorous standards for social and environmental performance, accountability, and transparency.” That sounds strikingly similar to a company with a good ESG score… Yes! Good, you get the picture. But B-coming a B-Corp is a far more demanding process than simply receiving a good ESG rating — let me explain:

First, a company must complete the B Impact Assessment, a test that evaluates the company’s impact on its stakeholders, and score at least 80 points out of 200. That score — as well as supporting documentation — will then be reviewed by the B-Lab. If everything adds up, the company will then be subject to a background check before receiving their B-Corporation certification; the certified companies also need to renew their certification every two years to ensure that they are keeping up the good work.

…Seems like a lot of effort. What makes it worth it? I will TELL you!

Why do companies want to become B-Corps?

According to the website, many companies choose to become B-Corps for the following reasons:

Achieving B-Corp certification is essentially confirming that a given company has reached the highest possible standards of social and environmental performance, and that is awesome. So far, there are over 2,003 B-Corp companies in 50 different countries, and all of those companies are changing the way society views a ‘successful’ business by showing that financial success and healthy social / environmental policies can go hand-in-hand.

Moral of the story:

If you stumble across a company that is a certified B-Corporation, that means they have gone the extra mile to prove to their stakeholders (and to their customers) that they are wholly dedicated to changing the world through good business practices. These are exactly the kinds of companies that we, conscientious young investors, should be investing in during the coming years — they are going to be the ones to catalyze a movement with one ambitious end goal: to completely redefine success in business.

How can my company become a B-Corporation?
Check out the B Lab website for more details!

Sources:

About Grow

Grow is the leading provider of automated investing solutions focused exclusively on environmentally sustainable, socially responsible companies with good governance practices. Our products — including Grow Invest, for mobile devices and Grow Capital Management, a full service investment management firm — are powered by our proprietary analytics engine Grow Analytics. Grow works to empower investors across generations and income levels by providing guidance that allows them to align their personal values and investments. Based in San Francisco, California, Grow makes powerful and impactful investments accessible to all. For more information please visit www.growapp.us, www.growanalytics.io, or www.growcapital.us.