In the business world, something novel has happened in the last couple of decades. Many organizations have deliberately chosen an identity that lies between for-profit and non-profit. Take the popular brand TOMS Shoes, for example. It has donated as many shoes to impoverished individuals as it is has sold to customers. Is, then, TOMS a for-profit or nonprofit business? The best answer might be that it’s neither and it’s both. TOMS is what’s called a social enterprise, meaning that it seeks to both profits and societal benefits.
The proliferation of social enterprises has led to a new third-party certification called B Corps, administered by B Lab. Certified B Corps go through a rigorous process establishing that they serve not just shareholders but also society. The first B Corps were certified in 2007. Today, there are more than 3,400 B Corps in over 70 countries, including TOMS and over 120 businesses operating in Colorado.
Certification isn’t the full story of formalized corporate social responsibility. There is now also the option of legally incorporating as a do-good business. To date, 38 states and the District of Colombia have passed legislation allowing businesses to incorporate as benefit corporations. Colorado is one of them. Here we can not only incorporate a business as C, S or LLC corporation, but also as a “Public Benefit Corporation” (PBC). According to the Colorado Department of State, PBC’s are for-profit businesses that “intend to produce one or more public benefits and operate in a responsible and sustainable manner.”
In summary, today’s businesses are not our parent’s businesses. Increasingly, brands in Colorado and across the world appear to be taking on a role that was formerly reserved for nonprofits and government: helping with societal issues. Socially responsible certification or incorporation is a great option, but it might be too big a first step for many companies. If this is true for you, consider participating in the 2021 The Colorado Civic 50 Colorado recognition program. It’s free and serves as a great road map in the journey toward best-in-class corporate social responsibility, including toward becoming a B Corps or PBC. Plus, your company might end up being officially recognized!