My beef with B Corps

logoThere’s lot to like about the fast-growing B Corps movement, and one thing to dislike, as I explain in my latest column for Guardian Sustainable Business US.

If you’re reading this blog, you are probably aware of B Corps. The idea takes a bit of explaining. B Corps are businesses that are certified by a nonprofit organization called B Lab to meet what its backers call “rigorous standards of social and environmental performance, accountability, and transparency.” These businesses win certification much in the way that buildings are certified to have meet LEED environmental standards by the nonprofit U.S. Green Building Council; they have to complete an assessment of their performance, provide documentation and be open a review from B Lab, as the group explains here.

But the term B Corps is also used to describe “benefit corporations,” a corporate legal structure that has been set up by legislation that has now been passed by 20 states, including, most recently, Delaware. Benefit corporations need not be certified by B Lab, although many are.

It’s unavoidably confusing, but my beef with B Corps is simple.

The voluntary certification system makes sense to me, for reasons that I explain in the story–it’s a way to signal employees, customers and investors that a B Corps aims to do better than conventional companies. Most B Corps are small and privately held. Among the best known are Patagonia and Ben & Jerry’s, which is a unit of a conventional C Corps, Unilever.

The legal “benefit corporation” purportedly gives companies more freedom to serve society as a whole than conventional corporations have. I’m skeptical about this claim, to say the least, and I worry that it could be counterproductive–because it implies that conventional companies, which make up the bulk of the global economy, need to pursue profits, at the expense of broader social and environmental goals. This seems wrong on the face of it. After all, if Ben & Jerry’s can be certified as a “good” B Corps, doesn’t that mean that its parent company, Unilever, can be “good” too?

My worry is that the implicit argument — that most of the world’s companies don’t have the freedom to do the right thing for society — undermines faith in capitalism (which is fragile, at best, for good reason) and that it discourage reformers inside and outside of big companies who are pushing corporate America to do business better. It’s a bit smug to suggest that traditional companies can’t do as much good for the world as B Corps can.

Here’s how my story begins:

To the supporters of B Corps - benefit corporations that say they aim to serve workers, communities and the environment, as well as their owners – 1 August 2013 was an historic day. In what B Corps described as “a seismic shift in corporate law,” the state of Delaware, where one million businesses are legally registered, enacted legislation that will “redefine success in business” by giving the owners and managers of legally recognised B Corps protection as they pursue “a higher purpose than profit.”

The B Corps movement has much to be proud of: it has built a brand that stands for good business, attracted hundreds of committed followers and sparked debate about the role of business in society. But claims – sometimes made explicitly, sometimes implicitly – that B Corps have more freedom to take an expansive view of their social and environmental responsibilities is not only mistaken, but potentially damaging to the cause of sustainable business.

After all, if conventional companies have no choice but to focus narrowly on maximising short-term profits, at the expense of workers, communities and the planet, then we’re in a heap of trouble and unlikely to get out, because 99% of US businesses today are conventional C Corps, and most are likely to remain so.

You can read the rest here.

Garment industry deaths in Bangladesh: The end of the beginning?

SAMSUNG DIGITAL CAMERAGarment workers in Bangladesh have  labored in unsafe conditions for years. They will likely suffer for years to come.

But in the aftermath of the Tazreen factory fire last November, which killed at least 117 people, and the Rana Plaza building collapse in April, which killed more than 1,100, European and US retailers–operating on separate but parallel paths–have come together to act. Actually, to be more specific, they have come together to promise to act.

There’s lot of controversy about the US effort, called the Alliance for Bangladesh Worker Safety, because it does not include the meaningful participation of organized labor, at least not yet. But, as I write today in Guardian Sustainable Business, it’s a step forward.

Here’s how my story begins:

At long last, US apparel retailers have joined together to improve safety for garment workers in Bangladesh – most of them poor women, toiling in hazardous workplaces at the bottom of the bottom of the global supply chain.

Gap, Walmart, Target, Macy’s, VF Corporation and a dozen other companies that formed the Alliance for Bangladesh Worker Safety say they will set common safety standards, inspect all their factories in Bangladesh, make the results public, provide loans for repairs and give workers more power to protect themselves.

Is that sufficient? Labour rights groups say no. As the US companies unveiled their alliance in Washington, student protesters gathered outside, chanting “Shame on Walmart” and decrying the plan as a “fake safety scheme.”

It’s not. It’s a serious plan, with some money behind it, that includes a commitment to transparency, and mechanisms to enable workers to speak out about unsafe conditions. It’s not perfect – the alliance’s glaring flaw is a lack of participation from unions – but the US companies hope to bring in Bangladeshi and international labour groups.

The story goes on to describe the key role played by Gap and its executives in bringing the US retailers together. Gap has been deeply engaged in Bangladesh since December 2010–before Tazreen and Rana Plaza–when a fire at one of its suppliers’ factories killed 29 workers. [click to continue...]

Gestation crates: Not exactly hog heaven

pig_gestation_crates1Lately, I’ve been thinking about animal welfare. That’s partly that’s because I met Josh Balk of the Humane Society of the United States at the Fortune Brainstorm Green conference in May. Josh’s title is Director of Corporate Policy, Farm Animal Protection, at HSUS; his job is to work with big companies to get them to treat animals better.

Among other things, they are trying to get the pork industry to end the practice of confining m0ther pigs in gestation crates for most or all of their lives. These crates are designed so that the pig cannot turn around; their use has been compared to asking one of us to spend our lives in an airline seat.

Their battle with pig farmers is the topic of my story this week in Guardian Sustainable Business, headlined Why the US pork industry wants to shut down the debate over pig crates. Here’s how it begins:

Don’t try to convince the American pork industry that the customer is always right. Thousands of hog farmers and one of the industry’s big producers, Tyson Foods, want retailers, brands and supermarket shoppers to mind their own business and stop telling farmers how to raise pigs.

The issue? Gestation crates that confine mother pigs into metal enclosures so tightly that they cannot even turn around. The pork industry raises most sows in gestation crates, and says they do no harm.

But in the last year or so, about 40 companies – including fast-food chains McDonald’s, Subway, Burger King and Wendy’s, supermarkets Costco, Target and Albertson’s, food-service firms Compass Group, Sodexo and Aramark, and brands including Hillshire, which makes Jimmy Dean sausages and Ball Park Franks, and Kraft, which makes Oscar Mayer – have said that they will require their suppliers to eliminate the use of gestation crates by a certain date.

The industry is resisting, saying there’s no scientific basis to get rid of the crates. Dave Warner of the National Pork Producers Council told me that activist groups like HSUS have wrongly put pressure on the retailers and brands. [click to continue...]

David Griesing: “Everyday low prices” hurt us all

Griesing-Medium-003Today’s guest post comes from David Griesing. A student of religion and ethics, David has been a non-profit manager, a caregiver, a corporate attorney, a teacher in a school for autistic kids, a company executive, retail clerk (of women’s shoes!), an arbitrator, and an entrepreneur. If nothing else, his peripatetic career has made him an expert on work–particularly how we can make it more productive and satisfying for ourselves and for those impacted by it. From his home base in Philadelphia, David helps parties to resolve their commercial disputes when he’s not writing and speaking about how all of us can do a better job of bringing our values into our work. He’s a regular on Twitter @worklifereward and blogs at http://www.davidgriesing.com/

David writes today about the downside of the “everyday low prices”  offered by discount retailers like Walmart, one of which is the inability of many of its workers to earn a living wage. A week or so ago, Business Week did an excellent cover story on Costco that complements David’s arguments here. Having said that, the counterargument is that Walmart’s low prices puts billions of dollars of savings into the pockets of the low and middle-income people who shop there, and even those of us who do not, since rival retailers reduce their prices to compete with Walmart.

Our expectation that we’ll always pay less for consumer products has an impact on the people in the supply chain who bring us those products—and it’s not a good one.

I’m talking about those who mine the metals in your cell phone, pick the cotton in your socks, process the rubber in your running shoes. Workers in places like Indonesia or Peru put your toaster together, stick the pins in your dress shirt so it looks good in its package, or pack the parts you’ll assemble into an IKEA bookcase. American sales clerks, stock boys and checkout girls get the final product into your hands.

To bring you “everyday low prices,” the people in these supply chains are paid as little as their labor markets will bear so that the factory owners, shippers and retailers can make a profit. With fewer dollars to go around and cutthroat competition between the on-line and bricks & mortar stores, every link in the consumer product supply chain is squeezed. This includes workers along the arc of production—including those in America.

How is our addiction to cheap stuff making the work that many of our neighbors do everyday a losing proposition—and why should we care? [click to continue...]

What’s for breakfast? Time to get Beyond Eggs.

Next time you dig into a breakfast of fried eggs, or enjoy a cupcake from your favorite bakery, or boil some egg noodles, don’t stop and think about the chicken that laid those eggs. You may lose your appetite.

According to the Animal Welfare Institute:

More than 95% of the approximately 280 million egg-laying hens in the United States are confined to barren battery cages where they are crowded and deprived of the ability to perform natural behaviors such as exploring, nesting, perching, dust bathing, or simply stretching their wings. Birds endure painful beak trimming, stand on wire floors that cripple their legs, breathe toxic air, and live their entire lives under unnatural, dim lighting.

A chicken lives its life on a footprint no bigger than an iPad. Imagine living the rest of your life just where you are sitting right now, crowded on every side by other humans, unable to move. You’d go insane, as Bruce Friedrich of Farm Sanctuary argues in this excellent essay. He calls eggs from caged hens “the cruelest of all factory farm products.

If you’re indifferent to the suffering of animals, consider that factory-farmed chickens have a big environmental footprint, albeit not as big as beef or pork. I couldn’t find any peer-reviewed life cycle analyses of eggs but, according to Slate, egg-laying hens are fed lots of grain, they’re pumped with antibiotics and they generate a lot of waste.

(And, if you want to get really grossed-out, read this long story that the Washington Post published just last week about the use of toxic chemicals to kill bacteria in plants that process chickens for meat.)

Josh Tetrick

Josh Tetrick

Josh Tetrick, the CEO and founder of Hampton Creek Foods, is convinced that there’s a better way. He wants to take America Beyond Eggs.

Beyond Eggs, according to Josh, is a healthier, safer, environmentally-friendly, plant-based ingredient for egg-based food products. And unlike the pricey, all natural, organic, free range eggs on sale at Whole Foods, Hampton Creek’s egg substitutes cost less than most of the eggs on the supermarket shelf. [click to continue...]

Warren Buffett’s coal problem

Warren Buffett

Warren Buffett

Last winter, I traveled to southeastern Montana (brr!) to report on a battle over a coal mine being proposed by Arch Coal, America’s second-biggest coal company, and a coal-carrying railroad that’s needed to transport the coal from the mine to coal-burning power plants, either in the U.S. or in Asia. The railroad, called the Tongue River Railroad, is owned by Arch Coal, by the BNSF Railway, which is a unit of Warren Buffett’s Berkshire Hathaway and by the candy billionaire Forrest Mars Jr.

It’s a fascinating story, for a bunch of reasons. The coal mine and the railroad are interdependent; both will be built, or neither will be. They need the approval of state and federal regulators. And opposing them are an unlikely coalition of Montana cattle ranchers, members of the northern Cheyenne tribe, a small Amish farming community that recently moved to to the state in search of peace and quiet, and some very determined environmental activists from the Northern Plains Resource Council, the National Wildlife Federation and the Sierra Club.

My story was as just published in the May/June issue of by Sierra, the magazine of the Sierra Club, under the headline, Warren Buffett’s Coal Problem. Like the Sierra Club, I think this coal mine is a bad idea–a very bad idea–and that’s one reason why I wanted  to write the story. [click to continue...]

John Mackey: Hippie, libertarian, CEO

imageThe top executives of big publicly-traded US companies, in my experience, tend to be rather drab fellows (nearly all are men) who choose their words carefully, hew carefully to the middle of the road in their thinking and rarely say (or do) anything outrageous.*

Not John Mackey, the founder and co-CEO of Whole Foods Market. For better and occasionally for worse, Mackey is an original, who doesn’t run his company by any conventional management book.

Instead, he has written his own book, called Conscious Capitalism: Liberating the Heroic Spirit of Business, with co-author Raj Sisodia, an academic affiliated with Bentley University. It’s a good read, especially because of the insights it delivers into the unusual culture and practices of Whole Foods, as well as into Mackey’s own evolution.

Some examples from the book: [click to continue...]

John Mackey, and the paradox of profits

conscious capitalism_book coverI’m reading an advance copy of new book  called Conscious Capitalism: Liberating the Heroic Spirit of Business by John Mackey, the founder and co-Ceo of Whole Foods Market, and business school prof Raj Sisodia. It’s very good, with useful insights on almost every page so far. (I’m only 70 pages in.)

Mackey was a liberal hippie. He’s now a libertarian entrepreneur and cheerleader for capitalism. He’s also a vegan who meditates and practices yoga. Not your typical CEO of a FORTUNE 500 company.

One reason I like the book is that I agree with much of what Mackey says. This passage, about what Mackey and Sisodia call the “paradox of profits,” comes  from a chapter about how purpose, and not profits, is what drives all great companies:

Just as happiness is best experienced by not aiming for it directly, profits are best achieved by not making them the primary goal of the business. They are the outcome when companies do business with a sense of higher purpose, build their businesses on love and caring instead of fear and stress…

If a business seeks only to maximize profits to ensure shareholder value and does not attend to the health of the entire system, short-term profits may indeed result; perhaps lasting many years, depending upon how well its competitor companies are managed. However…without consistent customer satisfaction, team member happiness and commitment, and community support, the short-term profits will proved to be unsustainable over the long term.

The No. 1 competitive advantage of purpose driven companies (or values-driven companies, if you prefer) is that their workers are engaged, as I wrote in my own book, Faith and Fortune: The Quiet Revolution to Reform American Business, back in 2004. Mackey and Sisodia put it this way:

The difference in business impact and personal happiness between a team member who is inspired, passionate, and committed and one who merely shows up for a paycheck is enormous. The blame for this does not lie with ‘lazy and unmotivated’ workers but with companies that fail to create workplaces in which people are given the opportunity to find meaning, purpose and happiness…

They note that people devote enormous amounts of time, money, and effort to causes that often have nothing to do with their narrowly defined self-interest, and say:

To tap this deep wellspring of human motivation, companies need to shift their emphasis from profit maximization to purpose maximization. By recognizing and responding to the hunger for meaning that is a quintessential human companies, companies can unlock vast sources of passion, commitment, creativity and energy that lie largely dormant in their team members.

Makes sense, no? People who care a lot about food, health and the environment can pursue their passions at Whole Foods or Stonyfield Farm. People who love the outdoors can be fulfilled at Patagonia or REI.

Of course, a strong sense of purpose isn’t, by itself,  enough to assure profits. (Look at the newspaper industry.) But it  helps.

This book reminds me that there’s a big opening out there for a bank that is really, truly committed to serving its customers and workers.

Who’s responsible for factory conditions in poor countries? Has CSR gone too far?

garment-factoryJust who is responsible for the fire in a garment factory in Bangladesh that killed more than 100 workers in November?

The factory owner? The government of Bangladesh? US and European brands and retailers who bought the clothes made there? Shoppers who demand the latest styles at low prices?

And who deserves credit for the improvements in working conditions at Foxconn, China’s largest employer and Apple’s biggest supplier?

Apple? The Chinese labor market? Journalists at The New York Times?

Similar questions could be asked about paint factories that discharge pollution into rivers, toy factories that use dangerous chemicals or factories everywhere that run inefficient equipment or burn dirty fuels.

For nearly two decades, a core belief of the social-responsibility movement  has been that western brands and retailers must take responsibility for the social and environmental performance of the factories in their supply chain. This has created an immense infrastructure–an industry, really, of consultants who write codes of conduct for those factories, inspect the factories, report on them and deploy a combination of carrots and sticks that, at least in theory, bring about improved performance.

In essence, US and European brands have become quasi-governmental, undemocratic standards setters and enforcers of social and environmental norms.

So how’s it working? The year just past put a spotlight on a glaring failure of that system–the fire in Bangladesh, where factory conditions in the garment industry are widely deemed to remain unsafe–and on what has been cited as one of its successes–the new transparency of Apple’s supply chain, and the improved conditions at Foxconn, which supplies HP, Sony, Dell and other electronics companies, as well as Apple. [click to continue...]

Amazon’s a great company. But good? Nope.

amazon-logoLike millions of people, I like to shop at Amazon. But the more I learn about the company, the less I like it.

Amazon’s  performance on environmental and social issues has been truly dismal, as a I wrote in a story posted today on Guardian Sustainable Business. Here’s how the story begins:

Jeff Immelt, the chief executive of General Electric and one of American’s most influential business leaders, likes to say that “if you want to be a great company today, you also have to be a good company.”

Another celebrated chief executive named Jeff — Jeff Bezos, Amazon’s founder and CEO– is putting that proposition to the test.

Amazon is, in many ways, a great company. But good? Nope.

Amazon doesn’t publish a sustainability report, probably because it would have little to say. It doesn’t respond to the Carbon Disclosure Project. (More than 80% of big companies do.) It’s ranked very low by Climate Counts, which rates companies on their efforts to mitigate climate change. Amazon’s  data centers get low marks from Greenpeace.

Nor does Amazon do well on social and political issues. Until Bezos agreed to install electricity last year, warehouse workers literally toiled in sweatshops where the temperatures could top 90 degrees. The company has fiercely fought efforts by states to collect sales taxes, using bullying tactics at times. If you believe the Seattle Times, and I do, the company gives less to charities than other Seattle companies and “cuts an astoundingly low profile in the civic life of its hometown.” For more, read the rest of the Guardian story. [click to continue...]