In the last two decades, a new breed of companies and social enterprises have emerged ready to reshape business. These include startups, social ventures, financial and environmental innovators, among others. These enterprises are absorbing the very best from the public, private and voluntary sectors to work for the common good. Every company has an impact on the world; many impact the world in ways they hardly imagine. For every Wall Street “bad Samaritan,” there are many little enterprises that reach around the world to benefit even those in distant and remote parts of the globe.
What do we mean when we say “good company”? What characteristics distinguish a good company from other companies? What principles and practices does a good company follow?
Defining and building good companies is a goal that reaches the highest levels of international diplomacy. The United Nations Global Compact, initiated in 2000 by UN Secretary General Kofi Annan, is a global initiative to promote corporate citizenship through encouraging businesses worldwide to adopt sustainable and socially responsible policies.
A good company has three goals in addition to (but also closely connected to) making a profit. It takes care of its employees by paying fair wages and ensuring good working conditions. It strives to protect the environment in a variety of ways, from reducing energy use and waste to redesigning its products to conserve on shipping costs. And it seeks to give back to its community through donations, service and community development.
You might be asking, “Do these companies profit by giving back to the community?” You better believe it.
Leading for change
A good company also embodies and incorporates a range of practices designed to protect the environment. It’s conscious of its corporate footprint on the planet and takes care to reduce toxic emissions in our water and air. A good company works to reduce or replace nonrenewable resources with sustainable materials. It not only complies with the law but also goes beyond what’s required.
Among the many North Bay enterprises that fit these “good company” requirements are Petaluma’s Labcon, a global producer of plastic products for the medical industry that’s the industry leader in recycling waste and in the share of energy generated from solar; Solarworks, a Sebastopol solar installer; Santa Rosa-based Indigenous, a fair trade manufacturer of stylish clothing; Osmosis Day Spa in rural Sonoma County; and Sonoma Mountain Village in Rohnert Park, which designed its live-work community to minimize its environmental footprint and is one of only 16 One Planet Communities in the world.
A leader in the drive to expand the number of good companies is the nonprofit B Lab, which screens and certifies a growing network of nearly 800 companies in 27 countries that brand themselves as “B corporations,” meaning “beneficial” to society. B corporations are exactly the same as traditional corporations except for three little things that make them game-changers: higher standards of purpose, accountability, and transparency. B corporation laws, inspired by B Lab, have been enacted in 11 states including California and are moving forward in 16 others.
The foundation of the B corporation is a comprehensive ratings system based on a detailed survey of company practices in the areas of environmental policy, social and community action plans, employee welfare principles and global supply chain strategies. B Lab has developed the B Impact Rating System, which assesses corporate impact on employees, consumers, community and the environment. The 200-point rating system is based on a company’s response to 213 metrics about its policies, business practices and strategy.
The B corporation survey includes questions such as:
• Are financial controls in place to ensure the accuracy of reporting and elimination of fraud?
• Does the company actively recycle at least one output material?
• Does the company evaluate its managers in writing on social and environmental goals?
• What is the impact of its product on customers? Does it directly or indirectly preserve the environment?
• Has the company explicitly integrated social performance into its written company mission?
• Does the company use methods of production or service delivery that preserve the environment?
To become a B corporation, a company must embed its commitment to social responsibility in its articles of incorporation.
Leading a good company is good business. When companies treat employees fairly and care for the community and the environment, they reap the rewards of stability and profitability. Sometimes, however, business leaders need convincing. They need to understand implicitly that “doing the right thing” may add little to their costs or, better yet, even have a positive effect on their company’s financial results.
The many inspiring examples of companies that are treating their employees well while successfully meeting our social and environmental needs and making a profit provide us with a working model building and strengthening the North Bay’s business ecosystem.
Robert Girling, Ph.D. is a professor in the School of Business and Economics at Sonoma State University, where he’s taught since 1976. He serves on the boards of several nonprofits and is a co-founder of the Sustainable Enterprise Series. Professor Girling is the author of The Good Company (Hill Press, 2012), which tells the stories of more than 20 companies. The book is available on Amazon and at www.goodcompanys.com.
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