Plan B is the new Plan A.
Brands like Danone and Patagonia are redefining business success.
The bottom line has a conscience.
Until recently, shareholder profit was the only true metric that counted. Today, there’s a triple bottom line that’s being defined as profit + people + planet.
The change is inspired by younger consumers who are drawn to brands that demonstrate higher transparency and ethical behavior. Altruism is now a boardroom discussion that’s reshaping business models and strategy.
Smaller, niche brands have catered to affluent customers for years, promising good deeds along with good products. But it’s big news when Danone, a French global food and beverage company with business in 130 countries, decides to shift its purpose from shareholder value to societal benefits.
Danone, like earlier pioneers Patagonia, Clif Bar and Ben & Jerry’s, is building social responsibility into the company’s DNA. CEO Emmanuel Faber is pushing for B Corporation certification for almost every business unit. This is yogurt and bottled water with a mission.
B Corporations (short version: B Corps) are for-profit companies certified by the nonprofit, B Lab, that meet rigorous standards of social and environmental performance, accountability and transparency. In order to become certified, a company must complete the B Impact Assessment – a comprehensive audit of a company’s practices and policies and earn a minimum score of 80 out of 200 points.
Like coffee’s Fair-Trade and green building’s LEED, a B Corp certification is a statement to consumers that the company holds itself to a higher standard. In a time of greenwashing and pretend activism, it’s the kind of truth and transparency that millennials respect.
Today there are over 2,500 certified companies in over 50 countries and over 130 industries. Ice cream buddies Ben and Jerry and Patagonia’s founder Yvon Chouinard set the standard and Danone, Allbirds, Eileen Fisher and Seventh Generation have followed. The benefits can be extensive: brands with a B Corps seal differentiate themselves from rivals, attract investors, hire smarter talent and create loyal customers.
It’s turning out to be the fashionable thing to do. Athleta and Patagonia are examples of two certified B Corps who are redefining success in business. The woman’s fitness and lifestyle brand makes 40% of its apparel from recycled and sustainable materials. The company showed 20% sales growth in 2017, giving Lululemon a run for its money.
Patagonia practically invented corporate activism. They donate 1% of their sales to environmental NGOs, 75% of their materials are environmentally preferred and sales reached a new peak of $750 million in 2015. They made huge waves with their headline “Don’t Buy This Jacket” which asked people to consider the environmental impacts of over-consumption.
Even though apparel from these two companies carry a higher price tag than fast fashion brands like Zara and H&M, they’ve developed strategies to attract customers in new ways – much of it built on social responsibility.
Seventh Generation describes their B Corps status as “mindful business” and promise “radical transparency.” Best known for environmentally-friendly cleaning products, the Vermont company dedicates ten percent of its pre-tax profits to non-profit organizations “working for positive change.”
By 2020, Seventh Generation intends that all its plant-based products be composed of 100 percent renewable materials, as well as reduce its greenhouse emissions by 80 percent. On their website, they’ve even created Generation Good, a place where like-minded individuals can participate in Seventh Generation projects.
B Labs, the people behind the B Corps certification, believe the evolution in priorities is inevitable – “one day all companies will compete not only to be the best in the world, but the best for the world.”
Ultimately, it is consumers, not enlightened CEO’s, who will decide how much B Corp benevolence matters. Are people happy to shell out twice the money for a shirt made from a transparent supply chain? Can you pitch yogurt with a backstory on dairy farm ethics, biodegradable packaging and carbon offsets? For a major global enterprise like Danone, the answer is yes.