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Editor's Plate: I Hope B Lab Shows its Teeth

Nov. 10, 2022
This is an opportunity to keeps the organization relevant…and sincere.

I think it was 2017 when I first took notice of public benefit corporations. Then, it was a relatively new form of incorporation that encouraged companies to operate in a responsible and sustainable manner, balancing shareholders’ financial interests with the benefits the company brings to people, the planet and broader society.

“Encouraged” was too weak a word. Companies that wanted to claim that distinction were required to meet certain quantitative scores on issues such as the treatment of workers, oversight of suppliers and the environment.

While most forms of incorporation put an emphasis, even a legal requirement, on maximizing shareholder value above all else, this new legal tool protects a company's social mission. Corporate law in Delaware, where many companies are incorporated, and in many other states now recognizes the public benefit form of incorporation. The company's social mission remains in effect even as that company raises capital and changes leadership and even ownership.

Take a step further up the ladder and there are "certified B corps," with the certifying body being B Lab, a nonprofit organization that sets the rules and certifies if companies are living up to them.

Every B Corp is a public benefit corporation first, but not every public benefit corporation is a B Corp. Public benefit corporations self-report their performance; B Corps must prove their performance to B Lab.

But when push comes to shove, how really powerful and binding are B Lab’s requirements? I first questioned their teeth when, in March of 2021, Danone SA fired its chairman and CEO Emmanuel Faber for sagging sales and, most egregiously, because activist investors were calling for his removal. Faber was transforming Danone from a dairy and plastic bottle-proliferating company into a do-good, plant-based food firm. Part of that transformation was to apply for B Corp status, which already was held by some business units of the company but not the whole company. To be honest, the application process was not completed in time to save Faber’s job—but could it have? Should it have?

A more recent dust-up was B Labs’ certification of Nestle’s Nespresso business unit this May. A month later, a handful of member companies and a watchdog organization sent a letter to B Lab questioning Nespresso’s certification because of concerns over human rights violations on farms that grow its coffee.

These may seem like tempests in teapots, but if B Lab and the public benefit form of incorporation are to be taken seriously, they must act seriously. Otherwise, it’s no different than “greenwashing,” when a company says it’s saving oceans of water or addressing human rights violations among its suppliers without really doing either.

Back in December 2020, B Labs announced it was time for a semi-regular review of its rules. The revisions took on more urgency with the Nespresso certification, and now stakeholders have until Nov. 15 to comment on draft revisions of the future standards for B Corp Certification.

B Lab said the review “was to understand whether more specific and mandatory performance requirements on key topics could ensure that B Corp Certification continues to differentiate leading companies using business as a force for good.”

At last count, there are 5,660 B Corps around the world, including Ben & Jerry's, New Belgium Brewing Co., Plum Organics (now a part of Sun-Maid Growers), Cabot Creamery and Fetzer Vineyards.

“We won't stop until all business is a force for good,” is a motto right on B Lab’s home page. But it all starts with B Lab itself being a force for good. I hope B Lab does what it claims to require of its members: doing the right thing.

About the Author

Dave Fusaro | Editor in Chief

Dave Fusaro has served as editor in chief of Food Processing magazine since 2003. Dave has 30 years experience in food & beverage industry journalism and has won several national ASBPE writing awards for his Food Processing stories. Dave has been interviewed on CNN, quoted in national newspapers and he authored a 200-page market research report on the milk industry. Formerly an award-winning newspaper reporter who specialized in business writing, he holds a BA in journalism from Marquette University. Prior to joining Food Processing, Dave was Editor-In-Chief of Dairy Foods and was Managing Editor of Prepared Foods.

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