By Ted Wachtel
In 1978, after taking a five-dollar correspondence course on ice cream-making, Ben Cohen and Jerry Greenfield opened their first store in a renovated gas station in Burlington, Vermont. Today, Ben and Jerry’s Ice Cream is the world’s fourth-largest producer, selling more than a third of a billion dollars in ice cream each year. Ben and Jerry’s is also a pioneer in what Jerry calls “caring capitalism.”
Since 1985, Ben and Jerry’s has donated 7.5 percent of its profits to charities, and provides its employees with good salaries, profit-sharing, health club memberships, day-care service and college tuition aid. The company seeks organic suppliers, uses environmentally friendly packaging and creates opportunities for economically depressed areas and disadvantaged people.
However, in 2000 the “caring” corporation feared a challenge to its way of doing business when Unilever, the huge Anglo-Dutch conglomerate, decided to buy the company. Although the founders were reluctant to sell, they felt duty-bound to maximize the financial benefit to their stockholders. In fact, under existing law, corporate leaders are vulnerable to stockholder lawsuits and hostile takeovers if they don’t make the stockholder their sole priority.
That is, until “B Lab” was created to help corporations balance social responsibility and profit.
Jay Coen Gilbert and Bart Houlahan, in 2003, sold their sports apparel business for a quarter-billion dollars and joined with Andrew Kassoy—a successful private equity investor—to co-found B Lab, a non-profit corporation they claim “serves a global movement of people using business as a force for good.” B Lab has developed self-assessment tools and a certification process, for companies who want to meet high standards of ethical governance and positive social impact.
In 2012, with Unilever’s support, Ben and Jerry’s went through B Lab’s certification process and in doing so, formally joined the caring capitalism movement that the ice cream company itself had inspired.
In the meantime, B Lab invented the benefit corporation—a hybrid corporation, merging the social goals of the traditional non-profit with the financial goals of a profit-making corporation. Some critics see the benefit corporation as a threat to shareholder property rights, claiming that it’s socialism. But all the ownership and decision-making stays in private hands, and—in the spirit of the free market—investors now have another choice.
Consumers also have a choice. Many would prefer to buy from what they consider ethical companies. Some people believe that capitalists are inherently greedy. But that attitude is contradicted by the growing interest in benefit corporations and in B Lab certification, which suggests that caring capitalism may be coming our way.
Although it was only in 2010 that Maryland authorized the first benefit corporation, 30 states now offer the option. B Lab Europe launched in 2015. Recently, Italy became the first country in Europe to authorize the benefit corporation. There are now almost 2000 B corporations in 50 countries in 130 industries, and more than 40,000 companies worldwide are using B Lab’s free assessment tool.
So, for business people who are interested in building a new reality, to “B” or not to “B” — that is the question.