September 2, 2019 Dawn of a New Era?
Outdoor B Corps Patagonia, Klean Kanteen and their allies call on executives of Apple and Amazon to put their words into action: Shareholder Primacy must die.
‘A firm’s only responsibility is to its shareholders, and its sole purpose is therefore to maximize profits for said shareholders;’ the Friedman Doctrine of business “ethics” has formed the backbone of corporate America and global capitalism for nearly half a century and can largely be credited for the spectacular acceleration of social inequality and environmental degradation witnessed during this time. A time that may be coming to an end.
This August, the Business Roundtable, an influential lobby group composed of 181 CEOs from the largest US businesses including Apple, Coca-Cola and Amazon, announced they would change their á la Friedman definition of the “Purpose of a Corporation” to embrace “Stakeholder Capitalism,” ensuring all stakeholders (e.g. workers, local communities and their environments) get a share of the value.
This is a radical redirect that could change the world as we know it. Or not. The thing is, the Business Roundtable statement has no legally binding implications whatsoever.
Enter B Corp
Following the Business Roundtable announcement, 33 B Corp CEOs, including Patagonia, Klean Kanteen and Cotopaxi, put out a full-page ad in the New York Times on August 25th titled “Let’s Get to Work.” Here, they called on Business Roundtable business leaders to not just talk the talk, but walk the walk of stakeholder capitalism and join the benefit corporation club:
“…We operate a better model of corporate governance – benefit corporation governance – which gives us, and could give you, a way to combat short-termism and the freedom to make decisions to balance profit and purpose.”
In the ad, B Corp then acknowledged that this new definition wouldn’t be an easy sell and that helping investors see the value that stakeholder governance brings would take some work. It then concludes by offering a hand:
“Let’s work together to make real change happen.”
About B Corps
A B Corp, or Benefit Corporation, is a legal governance structure and certification “for businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.”
In other words, just as regular corporations are legally required to put the profits of its shareholders first, B Corps are legally obliged to ensure value for stakeholders based on the “triple bottom-line” accounting framework of social, environmental and financial performance.
With a mission like this, it’s no surprise that outdoor brands are over-represented among its growing ranks and include among others Klean Kanteen, Sole, United By Blue, Sympatex, TenTree, Cotopaxi and Patagonia.
The B Corp movement is now comprised of over 10,000 certified B Corps and benefit companies across 150 industries and 60 countries.