Here’s How Companies Can Make The Change They’re Talking About, To A Fairer Version Of Capitalism

In 2019, the Business Roundtable issued a statement signed by 181 CEOs, representing 30% of the US economy declared that it was time to replace a narrow focus on maximizing shareholder profits with a more holistic, long-term version of stakeholder capitalism that accounts for all the people and planet impacted by our business activities. This past September was the 50^th anniversary of the Milton Friedman essay largely credited with positioning that stakeholder capitalism. A lot of leaders used that occasion to reiterate the need to shift to stakeholder capitalism. But what is being done? The Founders of B Lab offer their certification as a way to guide companies toward stakeholder capitalism, and hold them accountable for progress.

And now, they are offering a specific path to those companies to match their words with action. B Movement Builders is a concrete way for companies to make the external and internal shifts required to change their culture and behavior to being ‘good for the world,’ as B Lab puts it. Recognizing the challenges of B Corp certification for multinationals (the vast majority of 3,500 certified B Corps are small with less than $1 million in annual revenue), B Lab co-created the program with the most committed multinationals who have made certification work.

I spoke with B Lab Co-founder, Andrew Kassoy, and Tatiana Mendizabal, B Movement Builders Program Manager, to learn more. (Additional background on the program is available on B Lab’s site, and in this Forbes article by Christopher Marquis.)

Nell Derick Debevoise: Why has B Lab created this Movement Builders program for multinationals when the core of the B Lab community is small and privately held businesses?

Andrew Kassoy: From the beginning there was never a sense that this was only a movement for small companies or private companies. It was structured from the beginning as being a big tent, recognizing we needed to change the whole economy, not a sector of the economy. We also recognized in the early days that we were only thinking about certification, and certification with a very high bar. As a result, we ended up with no multinationals. In particular, there was no way a public company was going to go to its shareholders with the element of stakeholder or accountable governance, which was at the time, this cockamamie idea that no one had ever heard of.

We always knew that it was going to be a long road to get to multinationals, but we were never opposed to them. Three years ago, we started to realize there was a lot of interest from multinationals, but we weren't remotely set up to certify them. We put together a multinationals advisory council to really think about what would have to change to serve multinationals, about the standards, our team, and to help those companies go through the stakeholder governance process.

Through that process, we realized that we have a bunch of companies that really would like to be certified. A few of them are on the path, like Danone. Even those most committed companies are five years into the process, and they've done extraordinary things, and they still have years to go! Seeing that timeline, and how many multinationals wanted to be part of this community, is what led us to create something else that can engage these companies on what is a long journey. Without making it ‘B Corp light’.

So B Movement Builders is a transformational opportunity for large multinationals, and an end in and of itself. Some companies are going to do it because they want to get certified and this is a concrete way for them to be engaged over a long period of time on their journey to certification. There are other companies that may not see this as a path to certification, because they'll never quite meet the bar for performance or stakeholder governance. They may see B Movement Builders as an end in and of itself: an opportunity to make an authentic commitment to transformation that doesn't necessarily have to end in certification.

Tatiana Mendizabal: I’m in love with this program because the journey to change can be hard. Making new commitments out loud is a huge opportunity, but also a risk. People will be on top of you watching what you do. And nobody’s perfect – B Movement Builders is a way of helping people answer the question, “How can we become better every day?”

Derick Debevoise: Say more about how will you maintain that balance between rigor and inclusivity and that imperfect progress for B Movement Builders?

Kassoy: B Movement Builders is now a pilot with four companies. So we're going to learn several things about how the qualifications to be a B Movement Builder fit with the qualifications to be certified. We have a set of disclosure questions that we ask all multinationals before they can join the certification process. And the direction we're moving is that some of those baseline requirements are going to be the same for B Movement Builders.

They don't have to be performing at the level of a certified B Corp - the whole point is that it is a journey. We are trying to build buy in to make an inclusive process for companies that can't meet the bar for certification. But we also want to maintain rigor, since the B brand is still being associated with these companies and they're public. We will do that with the baseline requirements and disclosure questionnaire, as well as the actual requirements of the program, like measuring themselves using the BIA, setting targets and showing continuous improvement against those targets.

Further, Movement Builders are expected to make public statements about stakeholder governance, even before they fully adopt this new approach. It’s part of the program that they speak publicly, particularly to their shareholders, about why we need to change the system. We know that this kind of shift in dialogue is a critical part of the change.

Derick Debevoise: Is that also what you were after by helping to build Imperative 21 and the RESET campaign last month?

Kassoy: Exactly: Imperative 21 was a critical idea for us, which is why we helped found it, and why Jay [Coen-Gilbert, co-founder of B Lab] has stepped into that leadership role. We recognize that economic systems change isn't going to happen through one organization. The B Corp movement is the special sauce for the change, by building a credible community of leaders who are setting the example of what this New Way can look like.

But all the other organizations in this conscious or sustainable capitalism space are also critical. Having those organizations working collaboratively with the common narrative of the Imperatives makes it much more likely that we will change the culture, expectations, and ultimately behavior of business. And that will ultimately drive changes in public policy and the rules of the game. So we’re super excited about RESET!

Derick Debevoise: Awesome! Back to B Movement Builders, I love the mentorship element between the Mentor and B Movement Builder companies. How did that emerge as a core element of the program?

Kassoy: Just like we want these companies to engage externally, being public about their support of and commitment to stakeholder capitalism, we want to give them the opportunity to engage internally, by bringing their employees in on the transformation. Employee participation is critical for this process of transforming companies. Danone’s CEO Emmanuel Faber is clear about this. He's the willing and aggressive sponsor of it, ultimately the change is coming from below. And it requires an incredible amount of support and training of the entire workforce.

We set it up as cross-company collaboration based on the important learning that multinationals are constantly changing. We already have multinationals in the community who've been certified, and we are seeing what a long and ongoing journey it is. For example, since Natura got certified, they bought The Body Shop and Avon. Those are dramatic changes to their company that will cause them to rethink and even restart the journey toward certification in some ways. So both Natura and Danone are on one hand, way further along than the B Movement Builders companies, and on the other hand, very much also still on the journey.

We realized it would be powerful for the employees of B Movement Builders to learn from folks at the certified multinationals, who still have some of the same challenges, but are a little further along. Plus, it gives other multinationals that are already part of this community a powerful opportunity to pay forward what they’re learning.

Mendizabal: The program is all about helping companies move from awareness to understanding to advocacy. We as B Lab, as well as the Mentor companies, provide a template of the process and content that we’ve found works to engage employees in the hard, but exciting process of making change. Then they work to make it theirs, put it in the voices of their leaders, communicate it through their unique channels in line with their company culture. It’s so inspiring to see how the B Movement Builders are already running with what we’ve provided – it shows the power of this collaborative mentorship approach we’re taking.

Derick Debevoise: Where are the US companies? All of the Movement Builders are based in Europe or Latin America.

Kassoy: Great question. There are a few that are participating a little more quietly. Particularly in Europe, this public commitment to stakeholder governance is an easier one than for many US companies because of government regulation. In Latin America, so many of the public companies are actually still family controlled, and more willing to make that statement about stakeholder governance.

The Americans are coming, but they're coming a little more slowly. A bunch of things that have happened in the last six months have started to change that game. Amalgamated and Danone taking shareholder votes without opposition, for example, or the IPOs of B Corps, Lemonade and Vital Farms. That has all helped to change the game for the US companies that are worried about their investors. They’ll be in the next cohort!

Mendizabal: Indeed - they need to see examples, which is just what Lemonade, Vital Farms, and Amalgamated Bank offer. It’s important to see that this way of doing business can drive long-term success, and even short-term wins. This applies particularly in the context of Covid-19, in which consumers are so focused on companies’ values.

Derick Debevoise: If you had a magic wand and you could change one thing to make this shift to stakeholder capitalism happen, what would it be?

Kassoy: If we want systems change, we need policy change. There are some big things coming in the next few weeks about that! The B Corp movement is setting the powerful example that business can be done like this, but it's still being done in the context of a bigger economic system, full of investors in a financialized economy. And that larger context means that change requires us to think about the rules of the game for everybody, not just this B Corp community, if we want to build a free and fair market.

If you’re interested in joining Kassoy, Mendizabal, and their B Movement Builders in catalyzing the shift to stakeholder capitalism for a way of working and living that’s good for the world, vote. Early this year if you’re an American, and often. Register here.

If you’ve already voted, or have a plan, email me for a free diagnostic tool to see what to do next.