The importance of social change in business

I’m guessing that if I said to you that you ran a Grade A company you’d be quite pleased, but if I referred to you as a ‘B Corporation’ you might think I was damning you with faint praise?  Not any more – if the ‘B Corporation movement’ becomes established in the UK.

Briefly running as a ‘B Corporation’ means conducting your business in such a way that it is not only a successful and robust business but it also operates as an agent of social change and thus chimes with one of my own ideals – the key value of a generous social conscience, which means being aware of our responsibility to the wider community and our environment.

The idea of certifying companies as B Corporations came from the United States, where it is already well-established, and two years ago the first B Corporations appeared in the UK. In September 2015 some 60 UK companies got behind the launch of the B Corporation movement in the UK.  So what makes a B Corporation different?

The movement’s mission is “to redefine success in business so one day all companies will compete to be not just the best in the world but the best for the world”. The point is that a certified B Corporation has to live up to much higher standards of corporate governance and transparency.  It must have in its constitution a commitment to pursue broader social goals than simply profit for shareholders.

Although this may sound fairly easy to achieve, in fact certifying as a B Corporation is anything but! The company first has to undergo an exhaustive (and exhausting!) assessment which measures its impact on the communities where it operates.  This includes its relationship with employees, its impact on the environment, and its governance.  Then you must change the legal constitution – the Memorandum and Articles – to state that the directors are legally obliged to run the business for all these stakeholders, not just for maximising financial return for the shareholders. And then of course you have to make sure you go on complying with all of this.

As you’ll know, changing the legal constitution of a limited company requires the consent of 75% of the shareholders – so why should they agree to this?  Well, apart from appealing to their own social consciences as individuals, research shows that good corporate governance can improve a company’s bottom line. It is possible to operate a profitable business which at the same time involves the business owners in taking a broader view of responsibility to the wider communities in which they operate and to society as a whole.

So, instead of making your money however you can and then indulging in a bit of philanthropy if you feel like it – why not embed social ideals in your business model? The day may be coming when this will be one of the most important criteria for choosing who you do business with. In fact many clients already do this now!

I’d love to hear what you think, so do get in touch.