Hi, we're talking about first projects this week. We stressed that the good first projects to be won and save money for the company. The notion was that, this were the easiest to get approved, and show that they were effective. That the project really did what you said it would do. Next week we talked about Financial Analysis. These are tools to help you build a strong business case for your proposal. It's all about money, money, money, you know. We want to switch gears though, away from all this talk about money and profit and introduce you to a different way of doing business. The standard corporation operates under a huge casebook of laws and generally business decisions are supposed to be made to increase the wealth of shareholders. That means that profits drive decisions. But this is starting to change. We're lucky to have on our managing for sustainability MBA Program Advisory Board. Kiera is the Community Development Manager for B Lab. B Lab is the organization that certifies B Corporations. Now, B Corporations are Benefit Corporations. They can be set up to have a mission other than maximizing profits. We talked to Kiera about B Corporations. We hope you find this exciting because if you're thinking about starting a company or you're working in a company with owners who share your values about people in the planet, you should really consider shifting to the B corp model. >> I am in charge of community growth. And what that means is that we are really helping to spread the word and support companies that again are using their businesses a force for good. They're using B Labs tools to be impact assessment which is a free tool that over 40,000 companies around the world are now using to measure and compare their social and environmental impacts. And they're also moving on to join this community of leaders, that community of certified B corporations. One of the questions that comes up most commonly is whether companies actually by law, have to maximize profits. At the end of the day the answer is yes. If you look at corporate law in the US we have seen time and time again in courts of law that a company sole purpose actually is and must be to maximize profits to shareholders. This comes up most importantly at times of sale. So what you'll see happen is that a company might go to sell and have a few offers on the table. And quite often the choice of the current ownership might be to sell that company to a set of shareholders that have aligned values. However, if that set of shareholders with aligned values is not bringing the maximum price per share, they are actually going to be mandated. If it makes it to a court of law to sell to a different bidder, to the highest bidder, regardless of whether that highest bidder aligns with the company's values or not. And so, in fact it is incredibly important for companies to think about their legal structure, as they are thinking about their long term commitment to their broader set of stakeholders and not just their shareholders. In order to address this challenge, along with a community of certified B corporations, has actually been working to pass laws. So, around the of the country there is now a corporate forum that is available in 31 states and the District of Columbia, including importantly Delaware, as well as California and many other states that are common for corporate incorporation, has passed laws allowing a new kind of corporate structure called the Benefit Corporation. Benefit Corporations are a type of corporation that is similar, really identical to a traditional corporation in every other way, except that it gives directors symbol of the right and the obligation to consider other stakeholders other than just shareholders in their decision making. So if we go back to our example, around the company that is going to sell, that that company actually could make a decision to sell to a values aligned investors or set of shareholders, instead of simply being forced, essentially having their hands tied to sell to the highest bidder. So, as companies are thinking about how to better take into consideration a broader set of stakeholders, the question may arise, how can we actually measure that? What is it we should be focusing on if it's not solely profits? In order to address this challenge, which understandably can feel like a really broad universe of different indicators, and projects, and companies often times have trouble figuring out where to put their focus, B Lab has worked to develop an assessment and it's called the B Impact Assessment. It's a free online tool that any company around the world can use. And this type of assessment is one of the ways that companies can actually go about measuring their broader set of impacts. So, if you're not thinking solely about measuring your profits, it's incredibly important that companies are thinking about how to measure their broader set of impacts. And these impacts range from the way that employees are compensated to the environmental impact that your supply chain has, and really everything in between. And those key performance indicators are very important for companies to think about as they're thinking more broadly about that set of stakeholders. As companies are trying to determine where they should focus, it's very important that they reflect back on the company's core products, and the company's core mission. The universe of things that a company could think about in terms of maximizing their positive impact on the world are incredibly broad. In fact, with B Lab's assessment, there are over 200 possible points, across that spectrum of governance, workers, community and the environment. And so as companies are thinking about where to focus, they can and really should reflect back on what's most important. And so some examples might be that, the company that produces and manufactures a product, is likely to have pretty significant environmental impacts within their manufacturing and supply chain. And so that's likely to be an area where they want to think a lot about how to really reduce impact in each step of their supply chain, whether that's a manufacturing process that actually reduces energy use or reduces water use, or whether that is thinking actually about heir supply chain and who they are sourcing from throughout that supply chain. On the other hand, a service company may have a much lower environmental impact through their everyday operations but may have very high impact when it comes to their workers. So oftentimes you see a service company with a lot of focus on who they hire. Perhaps hiring from more diverse populations and creating pathways to employment for folks that may not have those opportunities. Or it might be simply focusing on a flexible workplace and excellent benefits and a really strong governance structure that keeps employees really engaged and productive over time. As companies are thinking about how to continue to be efficient and innovative, in this new world of stakeholder impact versus just shareholder impact, there are some key things to keep in mind. The first is that, companies that are thinking about their stakeholders are not necessarily throwing out profits. Profits are still incredible important to these companies, of course they're for profit enterprises. However, they're shifting their focus from a short term view to a long term view, recognizing that their impacts on their stakeholder have an impact on their profits over the long term. Second, these companies are truly finding ways to innovate because of their consideration of other stakeholders, in a way that companies that were operating in the old fashioned paradigm of simply looking at quarterly profits really, weren't able to identify the finding innovations and their doing that by digging deeper. If we go back to an example of a company that is trying to minimize environmental impacts throughout their supply chain, that company may find innovations in places that were considered previously outside of their purview of quarterly profits. They may be able to go back into their supply chain and by working closely with those suppliers as a part of their community. Actually, be able to identify efficiency is that improve the performance of the product for customers at the end of the value chain that actually reduce cost both for the company and for that supplier and create a more positive long term relationship between the company and that supplier. So as you see they are end up being benefits in thinking about that broader set of stakeholders all through the value chain which impact profit, which also impact innovation and help the company to stay ahead of the market. We certainly believe that as our economy moves forward and we are more accurately pricing, all the externalities of our businesses, those externalities on the environment, on communities, that all companies will begin to act more like a B Corp. Interestingly, just in 2015, Fast Company actually pinpointed the B Corp movement as one of the 20 movements that have mattered over the last 20 years. Along with the iPhone and the Human Genome Project. It's pretty amazing to see this shift already happening. And those business leaders of most Fortune 100, even Fortune 500 companies are saying now that in fact, sustainability and stakeholders are incredibly important to their organization. And I think we are going to see that trend continue into the future. So that hopefully one day, instead of having 1800 Certified B Corps, we have tens of thousands and eventually, we don't need to have that certification to differentiate, because all companies will be operating as if stakeholders really did matter. Business truly is one of the greatest levers for change in our society. Particularly as we sit within this time of political gridlock, we're making changes at a national level can be incredibly difficult. And we're thinking about some of the absolutely essential changes that need to happen in our society to get to a place where we have a really shared prosperity in the long term. Business really is one of the most effective, certainly one of the most nimble, tools that we have in that kind of long term cultural shift. And business in fact has one of the greatest impacts. If we look across our economy at all of the different ways that we create positive and negative impacts on our environment and on our communities, business really is one of the key sources of both negative and potential positive impacts. Business has the ability to impact people's lives in a way that often times government and even nonprofit organizations can be pretty distance from in providing high quality jobs that provide meaning to people. In providing those pathways to community resiliency by really building a local economy, by sourcing from local suppliers, by partnering with other nonprofit organizations within the community or even nationally. We're really able to build those allegiances and those bridges that otherwise without business's support, and without business really playing a key role, truthfully, I'm not sure how we're going to get there, how we're going to get to that place where we really do have a shared prosperity. >> Thanks Kara, that was great. So there are progressive business models out there. We still have to pay attention to profits as well as people on the planet. And next week will begin to talk about finance and money. Thanks.
