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|Articles - May 2014|
|Monday, April 28, 2014|
Page 3 of 5
III. Redefining business
Portlanders who shop at New Seasons have probably noticed the B Corp logo (a circumscribed B) stamped on the grocer’s shopping bags — and employee buttons. Indeed, in Oregon, the B Corp logo is cropping up everywhere: in the offices of remodeling firm Neil Kelly, the investment firm Equilibrium Capital and Eugene-based Good Clean Love, which sells sexual health products.
But what is a B Corp exactly? Since 2007, a Pennsylvania nonprofit called B Lab has been certifying for-profit companies that demonstrate sustainable business practices, such as reducing energy and water use and employee profit-sharing. Certified B Corps must also change their articles of corporation to take into consideration the environmental and social impacts of business decisions.
By contrast, the traditional corporation (C Corp) has a single mandate: maximizing profit for shareholders. Changing the company’s legal structure is one of the key differences between B Corp and other green-business certifications; the idea is B Corp status offers more flexibility for businesses that might otherwise be required to focus on the demands of shareholders.
In Oregon there are two pathways to becoming a B Corp. Businesses can pursue certification through B Lab — a process that requires meeting social, environmental and accountability standards. Companies can also register as benefit corporations under a state law passed in January. As of mid-April, there were 46 certified B Corps and 52 benefit corporations in Oregon, with 12 companies qualifying as both.
The B Corp files
This past January, a quiet revolution took place in Oregon’s banking community. Following unanimous approval by its board, Portland-based Capital Pacific Bank became one of only two publicly traded banks and one of six public companies in the country to achieve certified B Corp status.
The key to convincing the board was emphasizing the value of certification to shareholders, says CEO Mark Stevenson, who comes across as at once mild mannered and intensely passionate about the cause. “I have two institutional board members and two who are business owners,” he says. “If this had been a plan to make less money, it would not fly.”
Stevenson says months of investigation — including attending the annual SRI Conference on Sustainable, Responsible, Impact Investing in Colorado — convinced him that B Corp certification would not only yield stronger shareholder returns, it would actually strengthen the bank’s financial standing. Capital Pacific could use more liquidity, Stevenson says. “The question is what can you do to expand interest in your stock? B Corp allows you to have a conversation with people you would otherwise not have access to.”
Although the number of registered B Corp businesses continues to grow — more than 900 companies have become certified worldwide — the B Corp movement is largely a private-company phenomenon. Bringing publicly traded firms onboard is no easy task; at the very least, explaining the complexities of the B Corp process to shareholders is a huge logistics problem. “How do you do that in a proxy statement?” Stevenson asks.
But as time goes on, more public companies will make the switch, he believes. And even as he plugs the financial benefits, Stevenson can’t help but describe the intangible rewards. Capital Pacific employees led the push for B Corp certification; when their boss delivered the good news regarding the board vote, a cheer reverberated around the office. “How is that not great for shareholders?” Stevenson says. “I’ve got an engaged staff. That’s gold — even if you’re a money manager.”
The benefits: “We have received some marketing impact but that’s not why we became a B Corp. The benefit is we now have a comprehensive assessment tool, a set of best practices measuring us against other firms, and we use that to drive our thinking. We just went through reassessment and made some adjustments to our purchasing policies, travel policies that have been good for the environment and save budget.”
The big picture: “There is an expectation that business is going to move to a place that provides a blended benefit to shareholders and all other stakeholders. There are hard-core economic realities, increasing shortages of water, energy, that are going to drive that shift. It’s not about being a good person. The market has moved to a place where companies that are looking at ways of monetizing solutions to key societal problems are considered companies that are good to invest in.”
The benefits: “B Corp is a great mechanism for pushing corporate social responsibility to more companies that may not have the resources of a Nike. For us, the real benefit was the presence of a defined assessment giving us a score ranking our practices on the triple-bottom-line front.”
The limits: “For large companies, a barrier to becoming a B Corp is that change to their articles of incorporation. There may come a day when institutional investors are interested in that.”
The big picture: “Our generation of B Corp tech companies is not driven by tax benefits but livability to help retain and recruit workers.”
Next: “B Corp is a start for the conversation, and I’m keen on seeing this grow as a movement. But the most exciting CSR pieces are social enterprises that solve a community or environmental problem but generate a profit doing so. In terms of scaling some of the solutions to these problems, businesses can play a unique role.”
Friday, October 31, 2014
BY LINDA BAKER | OB EDITOR
Why are there so few transportation startups in Portland? The city’s leadership in bike, transit and pedestrian transportation has been well-documented. But that was then — when government and nonprofits paved the way for a new, less auto centric way of life.
Wednesday, October 22, 2014
BY JESSICA RIDGWAY
Most smartphones come equipped with speech recognition systems like Siri or Cortana that are capable of understanding the human voice and putting words into actions. But what if smartphones could do more? What if smartphones could register feeling?
Thursday, October 02, 2014
More than 5,500 employees from 180 organizations throughout the state participated in the 100 Best Nonprofits to Work for in Oregon project.
Thursday, November 20, 2014
BY JASON NORRIS | OB CONTRIBUTOR
Each month for Oregon Business, we assess factors that are shaping current capital market activity—and what they mean to investors. Here we take a look at two major developments regarding possible rollbacks of the Affordable Care Act (ACA).
Monday, October 06, 2014
BY LINDA BAKER | OB EDITOR
Intel's manufacturing way station; Merkley's attack dog; Diamond Foods gets into the innovation business.
Wednesday, October 22, 2014
BY JON BELL
Oregon tribes still bet on casinos.
Monday, November 10, 2014
BY KIM MOORE | OB RESEARCH EDITOR
A market for low-carbon transportation fuels has a chance to flourish in Oregon if regulators adopt the second phase of the state’s Clean Fuels Program.
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