Purpose pays – the evidence is clear

The number of purpose-led businesses is growing,  and with it the evidence of a pay-back for business and society.

News breaks this week that the smoothie drinks company, innocent, has become a B Corp.  With its iconic products on most supermarket shelves, this feels like a breakthrough moment for the B Corp movement in the UK.  Innocent joins a roster of some 150 British firms – including Cook, Pukka Herbs, Divine Chocolate and (probably the largest) Danone UK – alongside some 2,500 worldwide.

But isn’t innocent part of Coca-Cola, asked a sceptical colleague in the office; how can they be a B Corp?  While the technical answer to that question lies in the detail of the certification process, the implication is that this has now become a proxy for an all round ‘good’ company – which only adds to expectations about the validation process.

In summary, you can get the accolade if you meet three tests.  Details vary in different jurisdictions, here’s the UK procedure.  First, written into your legal governing documents is an ‘object’ – or corporate purpose – to have a material positive impact on society and the environment, as well as to promote the success of the business for the benefit of its members.  So shareholder value is not the supreme consideration but one among other stakeholder interests that the board addresses in running the business.  Second, you need to meet a performance requirement, as assessed by B Lab, the brains behind the process.  Third, you need to go public, sign a declaration, disclose details about the business – and of course pay your fee.

So yes, the subsidiary of a large multinational can be a B Corp, if the twin purpose is ring-fenced and if satisfactory performance standards are met.  Ben & Jerry’s, part of mighty Unilever, has been a B Corp since 2012, the first wholly-owned subsidiary to be certified. In fact, the good folks at B Lab are currently exploring how to expand the assessment methodology so that large multinationals can get certified in their own right. (Full disclosure: I’ve been giving them a helping hand.)

Most attention focuses on the performance impact assessment side, and of course that’s important.  It allows for the external certification – which comes with the right to use the logo that is especially helpful when put on-pack for consumers who want to know about the company behind the brand.  The definition of what constitutes good practice is a moving target, with expectations growing and the bar raising over time. The minimum score is 80 points out of possible 200.

So what’s really important, I think, is the requirement to codify the twin purpose of the business and embed it into management processes, activity and reporting.  That’s what makes the qualitative change in behaviour, reorientates the business, and drives the enhanced outcomes. The evidence shows that benefit corporations outperform the norm. That pay-back is open to any mission-orientated business, however incorporated.

That’s a finding confirmed last year when the Big Innovation Centre convened the Purposeful Company Task Force, co-chaired by Clare Chapman and Will Hutton.  Their findings identified empirical evidence that ‘purposefulness’ has beneficial effects across the spectrum of business outcomes.  They even tried to quantify it, concluding that performance improvement worth up to 6 to 7% a year, or up to £130 billion a year in increased stock market capitalisation, could be available if applied across British business as a whole.

And it is echoed by evidence from employee-owned businesses.  The Ownership Effect Inquiry – convened by Cass Business School and Manchester Business School – reports this week “an irrefutable consistency of outcomes…. businesses confirm increased performance and unlocking exceptional levels of discretionary effort as a direct consequence of employees becoming owners”.

I’ve written before about purpose – here two years ago about Uber, barely out of the news since – and here about tentative steps by the UK government to look at mission-led businesses, and again more recently here about investors getting in on the act too.

And I rather suspect this won’t be the last time.  The point is simply that being clear about your purpose – if that is inclusive, long term orientated and embedded – means you’re likely to do better, with or without a logo to prove it.

Share 'Purpose pays – the evidence is clear' on Delicious Share 'Purpose pays – the evidence is clear' on Digg Share 'Purpose pays – the evidence is clear' on Facebook Share 'Purpose pays – the evidence is clear' on Google+ Share 'Purpose pays – the evidence is clear' on LinkedIn Share 'Purpose pays – the evidence is clear' on Pinterest Share 'Purpose pays – the evidence is clear' on reddit Share 'Purpose pays – the evidence is clear' on StumbleUpon Share 'Purpose pays – the evidence is clear' on Twitter Share 'Purpose pays – the evidence is clear' on Add to Bookmarks Share 'Purpose pays – the evidence is clear' on Email Share 'Purpose pays – the evidence is clear' on Print Friendly
This entry was posted in Business. Bookmark the permalink.