Hello. Welcome to another episode of Unlocked. Today, we're talking about unlocking the potential of people, and we're doing that in a way that's a little bit different. We're going to talk about unlocking the potential of our corporations and our economy, our global economy, through something called "the B Corp." We're going to talk about what that is.
Chris Marquis is actually probably one of the smartest person I've ever talked to about, well, actually, probably one of the only people I've ever talked to about this topic, so therefore, he's the smartest, so congratulations, Chris. No, seriously, this guy knows a lot about this. He is currently a professor at Cornell, teaching sustainable global enterprise at Cornell. Previous to that, he worked at Harvard, where he developed an award-winning course on social entrepreneurship. His next chapter is he's moving to Cambridge over in England to continue his work in sustainable capitalism and teaching some courses there and educating the young minds over in England, so Chris know some stuff about this topic, the B Corp. What is the B Corp? You're going to find out in this interview, and you're going to find out about why it's so beneficial, why it's setting a trend for the future of our economy and corporations as a whole, so I'm really excited. This was something that I learned a ton about in this interview, and I hope you will, too, so let's get on with it, Chris.
(singing)
Chris, welcome to the show, man. It's so good to have you.
Chris Marquis:
Great, Skot. I really appreciate you having me on. Excited to talk.
Skot Waldron:
You have a book that is out that you've been promoting now for almost a year. You've been talking to global communities about this. You've been doing multiple podcasts, multiple shows, and it is because, I believe, that this isn't at the forefront of everybody's minds and our worldview, right? I think that what you're saying is that we can create a better world and that these B Corps are setting a trend for what we should do for the future.
CHRIS MARQUIS:
Yeah, no, I totally agree, and I appreciate you putting it so nicely. I do think that through business, we can actually create a better world. I think that there's a lot of things that underlie this work that I've done that really point to it being a really positive trend. I mean, actually, the way that I learned about the B Corp movement, I think, is illustrative of that. Actually, it's from my students. About 10 years ago or so, I was teaching at Harvard Business School a class on, broadly speaking, corporate social responsibility, and this student one day said to me, "Why are we studying these companies like IBM and Timberland?" We'd studied Goldman Sachs as well. "These are companies that, sure, they're really trying to do good, we think, but the social impact part is not at the core of the company. We should look at B Corps because those are the type of companies where, really, the social mission is baked in."
I must admit that I had never heard of B Corps at that time. This is around 2009, 2010. But I went back to my office and I googled it and learned a lot and got in touch with the folks at B Lab, which is the certifying organization that certifies B Corps. B Corps, just a quick definition, is a company that is certified for its social and environmental impacts. That started a decade of really researching this movement and understanding it in, I think, hopefully, a fundamental way. I'm sure we'll talk more about this. I don't want to go on too long for this first answer, but I mean, I think that the accountability and governance processes that have been developed within this movement are useful for all companies, so it's really not just about B Corps, per se, but about how can we make all businesses better.
SKOT WALDRON:
'Kay. You hit on what a B Corp actually is. Give us an example. Who's a B Corp out there that we would be familiar with?
CHRIS MARQUIS:
Sure. There's a lot of them. You look in your refrigerator, if you have Danone yogurt, excuse me, Silk soy milk, Horizon organic milk, look on the back, there'll be a B logo. Danone North America is the largest B Corp, actually, in the world. Companies like Patagonia that are really, really well-known for their environmental impact, Ben & Jerry's, really well-known for their social impact. There's been a variety of really hot public companies recently that are B Corps. If you look in the past year or two, some of the best-performing IPOs, well-known, mostly direct-to-consumer brands, like Warby Parker, Allbirds, Lemonade Insurance, these are all also B Corps.
One of the reasons I wrote the book, I think these are so many companies that people know, but the lines connecting these dots hasn't been made yet. This is one of the things I hope the book can do is show there's a lot of companies actually out there that are doing it in the world and there's actually a commonality they have. They've actually focused on this system of accountability and governance to really help create a better business.
SKOT WALDRON:
'Kay, because I have been in the corporate communication space for a long time. In my prior career of doing a lot of annual reports, we did a lot of corporate sustainability reports, and there was always that message being put out there of, "Hey, we need to report out," whether it was for Chiquita, Sesame Workshop, or any of those organizations, it was, "Hey, we need to make sure that we are talking about the good we are doing in the world and make sure that that message is put out there."
Whether it was for obligation purposes or whether it was just because that's what everybody else is doing, we need to do it, too, or whatever it was, what do you think is the difference between some of the companies that put that message out? I'm not going to say if they're authentic or not, right? That's not for me to judge. But some of these B Corps, because they could be inauthentic in what they're doing, right? Who's to say Warby Parker's being authentic in what they're doing? We want to believe they are.
CHRIS MARQUIS:
Sure.
SKOT WALDRON:
But does it matter? What's the difference between those companies that were doing the corporate sustainability reports that aren't filed B Corps and the companies that are and what is the, I don't know, the dynamics between those two? Do you see a difference or ...?
CHRIS MARQUIS:
Sure. I think that in this comparison you just made, I think there's a really important difference. That is that many companies, and many companies are doing great work, so I don't want to say that everyone's greenwashing, or just putting out a glossy report with a lot of nice pictures, they're not actually doing good things. I think there's a lot of great work being done. I mean, many of these companies I mentioned that I used to study, IBM, Timberland, even Goldman Sachs, who I think doing really high, high-impact work.
But where the B Corps are different than that is, I think, in two to three dimensions. One, companies that are B Corps, they've actually gone through a certification process, so they have been assessed on their social, environmental, and employee impact and other stakeholder impacts by an independent nonprofit third party against a framework that has been defined and evolved over 10 to 15 years now by world-leading sustainable business experts, so there's actually, in some ways, a scorecard that these companies have been rated against and they have to score above a certain threshold in order to be certified. There's a lot of verification, random audits that are involved, so very different than a sustainability CSR report. This is actually an assessment of these companies by an independent third party.
The other key element, I think, is that these companies that are B Corps have actually changed their articles of incorporation, the legal form of the company, so that they act actually have written into the bylaws that they're putting as much emphasis on their stakeholders, like employees or community, as they are in shareholders. I think that this has been, over the past 50 years, a trend has occurred where companies have increasingly focused on their shareholders and actually rebalancing things through these accountability processes, through these governance processes so that all stakeholders are equally considered, I think, is what makes the difference between B Corps and just general CSR reports a pretty important difference.
SKOT WALDRON:
Okay, I get it now. It's kind of like the companies that come out there and they're certified organic.
CHRIS MARQUIS:
Right.
SKOT WALDRON:
Or they are certified paleo companies, right? They go through that rigorous process and they have to meet a certain standard in order to keep that badge of whatever it is, right?
CHRIS MARQUIS:
Exactly, yeah. I think that's a good way to think about it. I mean, most certifications are around various type of products, like organic or fair trade or LEED-certified buildings. B Corp you can think of as a certification of entire company. Sometimes it's a little bit difficult for people to wrap their head around because companies, they're made of different brands, there's subsidiaries, or whatever, so actually, what that means sometimes, I think, can be difficult. But I think that there's really increasing awareness among the general public of this B logo and that it actually means the company has been assessed on its sustainability, equity, other metrics.
SKOT WALDRON:
Yeah. That makes a lot of sense. I like that whole, I guess that idea, and that clarification is really powerful. What do you feel like that B Corp label does for the culture of that organization?
CHRIS MARQUIS:
Yeah, good question. I don't know if it's so much the label as the process that they've gone through. The assessment has about 200 questions and it varies by where the company is, so actually, 70% of B Corps are outside the US, so you have to take in, things are very different in different countries around the world, emerging markets versus developed markets, the industry the company's in, so if you're manufacturing tile, as an example, a really well-known B Corp, Fireclay Tile, manufactures these beautiful handcrafted tiles, or if you're an investment firm, actually, a number of impact investment firms, these are totally different businesses, so there's different materiality and assessment for different types of industries and size. If you have a two or three-person startup versus Danone North America, which is a $6 billion company, so depending on geography, industry, and size, the number of questions may vary in the follow-up questions.
Companies, of these 200 or so, about a quarter are actually on, broadly speaking, employees, of various kind of benefits, various metrics around diversity, equity, and inclusion, so I think that actually having gone through that, and so many of the companies that have gone through it have told me that, "This is a learning tool. Wow. We didn't realize that our paternity leave policy was lagging other peers in our industry. We actually believe in this, but we just didn't know." I mean, so much, I think, of actually practices that companies do are just from maybe some accident that happened when they started and they actually want to do better, and actually seeing that benchmarking actually helps them, so I think that actually going through this process is what really helps companies build an effective culture.
This is what so many of the companies that I've interviewed, I've now interviewed over a hundred companies that have gone through this process, and I was just on the phone yesterday with one, a marketing company called Fors Marsh Group, which is in DC, and they were very excitedly telling me about how employees want to come work for them because their reputation has become so good because of going through the B Corp process. Actually, young folks, maybe my former student that tuned me onto this, they want to work for B Corps, so I think it's an effective way to really understand for your industry, sector, location, a way to build a world-class culture.
SKOT WALDRON:
Because I can see where the values, it's a real value-based type of, I guess, I'm going to call "certification," right, or level of incorporation because of the...
CHRIS MARQUIS:
Right.
SKOT WALDRON:
When you set that standard and say, "Hey, this is what we believe," then me as an employee, I want to work for a company that believes what I believe, right?
CHRIS MARQUIS:
Right.
SKOT WALDRON:
Therefore, you're going to get more out of me. If I'm more passionate about the cause, I could be putting bottle tops on cans all day long in a manufacturing line, but as long as I'm aligned in my belief system with what you're aligned to, sign me up. If I feel like what I'm doing to contribute to the greater whole of something is making an impact, that's cool for me, and I can see where the recruitment efforts are probably much more effective for that.
CHRIS MARQUIS:
Totally, and retention, too. Again, a number of things I've heard from many of the companies is that their retention is generally at a much higher level than their industry peers or other companies they know of and they think that this is a big reason why is that they've really tried to build this culture around purpose of the company that actually treats employees equitably.
SKOT WALDRON:
Because you see a difference, right? There's this idea of we're going to set a value standard for who we are and what we believe and what our mission and our vision is and it's going to be real because we've gone through this process. There's this idea of, like you said, where, "Oh, I didn't know where, that my paternity... We want this to be something, but we just..." It's a real cool way to maybe put themselves in check and make some changes in there. Once they do that, they get people that believe what they believe, they work harder, they're more engaged, and they stay longer, which, at the end of the day, is going to make you more profitable, right, it's going to build customer loyalty with that because now you're getting customers that believe what you believe and that want to buy what you have to offer because they believe that they're doing good in the world.
CHRIS MARQUIS:
Totally. It's a real virtuous cycle and I think one comment that really stands out for me around this attraction and the retention area is that one of the companies in a unique industry to be a B Corp, actually, I'd interviewed them, and someone said, "Oh, my competitors and partners ask, 'Why are you the B Corp thing?'" Their answer was, "Because I never have to think about HR." Said, "No one leaves. If I'm growing and we need to hire someone, I have a line of people outside the door," so I mean, I think that puts it in a very succinct way.
SKOT WALDRON:
That's awesome. I love that. That's really great. Man, to think of an executive at some company saying, "I never have to think about HR," I mean, isn't that a dream?
CHRIS MARQUIS:
Right.
SKOT WALDRON:
I never have to think about people problems and a lot of the things that you manage are people problems. If there's something I can do to alleviate that pain, that's awesome. Let's talk about the book a little bit.
CHRIS MARQUIS:
Sure.
SKOT WALDRON:
The core message of the book, you've educated us on the B Corp, the philosophy, the idea behind it.
CHRIS MARQUIS:
Yep.
SKOT WALDRON:
What's the core of the book? Why did you write that?
CHRIS MARQUIS:
Sure. A lot of times, we've been doing this, too, actually, I mean, I talk a lot about actually the B Corps because they are this really inspiring group of companies, but actually, what I think is more inspiring, it's a little bit more difficult to wrap one's head around, that what they have created is not just a system to certify B Corporations, but it's actually a set of principles, processes, tools for all companies to become better. I mentioned this assessment that companies had to go through to become a B Corp and they have to get over a certain threshold, and threshold's actually 80 out of 200, which as a professor, that's about 40%, that doesn't sound that great, but actually, that's a really tough number to get, from what I understand, people telling me, but this is a set of tools that any company can use.
There's a lot of discussion in the news and the financial press nowadays around ESG reporting and metrics, environmental, social, and governance. This is essentially an ESG measurement and management tool, and actually, nowadays, hundreds of thousands of companies, so not just B Corps actually use this tool to manage their management matters, so to speak, in the ESG space. A number of lenders, banks, BC companies use this as part of their due diligence. They want to invest in X, Y, and Z company, they have to fill out the B impact assessment because that's a way for the investors to really understand how the company is actually run, so I think this is something all companies can use.
The second element is governance. Traditionally, in the US and many other jurisdictions, shareholders have a legal privacy. There's this fiduciary duty. I think this is always so amazing to me because there's also this idea of social license to operate where companies get all kinds of benefits from society, but then the shareholders are the ones that legally get all the benefits, basically, and so this new type of company, it's called a benefit corporation, and it basically puts the other stakeholders onto same legal plane as the shareholders, so it balances things out so the companies can be authentically stakeholder-driven. This is a legal innovation that, actually, when my students told me about B Corps, didn't exist yet, so this is something in the past 10 years. People don't realize it's spread throughout the globe.
Now, over 40 US states, including, most importantly, Delaware, have this type of law, places like Italy have passed it, France, a variety places in South America, Columbia, Peru, Uruguay, Rwanda in Africa recently passed this law, British Columbia, so there's now tens of thousands of these benefit corporations now that exist. Again, they're not B Corps, but they've actually a type of company that is legally obligated to meet all stakeholder interests, not just the interest of shareholders.
You asked about the core argument of my book and I gave you a very long-winded answer, so now let me boil it down. All companies can do better for their stakeholders and these accountability and governance mechanisms are the ways to connect the dots between today and tomorrow.
SKOT WALDRON:
Key steps to doing that?
CHRIS MARQUIS:
Yes.
SKOT WALDRON:
How do we move in that direction? Premise, love it, right?
CHRIS MARQUIS:
Yep.
SKOT WALDRON:
But I'm a thousand-person organization, or a 5,000-person, how do I move the behemoth of what I've built for decades, and I've operated this way forever, and now changing all this would be ...? I'm interested, but it seems like a big undertaking.
CHRIS MARQUIS:
It is tough. I'm not going to downplay the difficulty of it. I do think, though, that there are a few baby steps, so to speak, that companies can do. First of all, I mentioned this assessment. There's actually a quick version of the assessment that takes about a half an hour that companies can just get the quick barometer. That's a very useful first step.
Another thing that so many companies that I've talked to have said is really useful is that the networks that exist around this, I mean, it's a community. That's why, actually, I frequently refer to it as a "movement." I use the term "movement" in the title of the book because the people that are involved in this are so passionate about helping others get involved, sharing their expertise, so within the location of whatever company it is, probably there's something called a "B local group," where they can actually connect to local B Corps, or they can connect the B Corps within their industry.
One of the famous examples I've heard about so many times is the former CEO, she stepped down now, Rose Marcario of Patagonia, she was someone who's really passionate about helping other companies become better, so to speak, through the B Corp processes. A lot of people would just call her, basically, and she would take the time to explain to them how Patagonia had done this and Patagonia's a big company and why it made sense for whatever company it was. I think that doing the quick assessment and connecting into the community are two ways to just take a baby step to learn about it and see if it makes sense for your company.
SKOT WALDRON:
Why is it? I'm curious about this, you mentioned 70% of the B Corps are outside the US.
CHRIS MARQUIS:
Right.
SKOT WALDRON:
Why is that?
CHRIS MARQUIS:
I think that's a good question. I think that there's a couple reasons. One, I mean, the world is big. We have very much a US focus frequently, and obviously, there's a huge amount of economic power and large organizations in the US, but I mean, there's a ton of companies in Europe, South America, Asia.
I also think that the two areas where it has really been growing probably the most rapidly are Europe and Latin America. I think that some of the reasons why that is is that perhaps capitalism is in those regions is maybe more naturally stakeholder-focused. You have in Europe with this Rhineland capitalism model where there's unions involved in the governance of the company. There's a lot more thinking about broader community and environmental effects. Latin America also has a lot of family-owned businesses. One of the things I've really found is that if your name, so to speak, is on the door, people really actually care about the values and giving back in a way that other companies I've experienced do not. I think that actually family ownership also is another thing that, it's big in Latin America and pretty big in Europe, too, that also contributes to helping with this.
SKOT WALDRON:
'Kay. I can see a little bit of that. You said this has been the trend for the past, I guess, 10-ish years now, or have these been around for a long time?
CHRIS MARQUIS:
Yeah. The benefit corporation has been 10 years. This is the legal type of company. B Corps are now about 15 years old. B Lab, the certifying body, was founded in 2006. That's not been that long.
I think one of the other things I want to mention is that this last year has been really special as well because of the public market takes on this. I mentioned a lot of these high-performing IPOs, but also a number of existing public companies have actually taken shareholder votes to transition into a benefit corporation. You mentioned this thousand-person company, that they want to get started on it, and so some of them have said, "Okay, we're going to study actually converting our legal form and educate our investors and our shareholders about why this is important, why this aligns with us."
One example of this is a company called Viva Systems. They're a cloud computing company that really powers a lot of organizations in the pharmaceutical healthcare space. They felt that because their clients are healthcare companies, they have a mission of helping alleviate disease and problems in the world, that they have a deep social mission, and that they really should convert to this new kind of company because it just fit with the values and the objectives better, and so yeah, that was the first company that actually converted from a C Corp to a benefit corp as an existing public company, and like I mentioned, it passed with 99% vote.
SKOT WALDRON:
I don't know, there may be, there may not be, but I'm just throw this at you, is there a possible negative side to not doing this? Is it for everybody?
CHRIS MARQUIS:
Yeah, good question. I do think that the world is increasingly moving in this direction. I mean, you look at all the scrutiny on oil companies around carbon emissions, this engine number one example where they challenged the shareholder vote at Exxon and got three people put on the board. The Glasgow cop meetings, I think, really highlighted the dangerous state we're in as far as climate change and potential, like irreversible damage to the planet and humanity, so I think that climate is a ticking time bomb that is coming into view. I think things like inequality, systemic discrimination, things like that are also things that people are really understanding business has a role to play, both in the past, maybe perpetuating these issues, but actually also has a really positive thing that they can do to help make those things better, so I think whether or not every company will convert to be a B Corp, I'm not saying that, but I do think that these issues of environment, employees, are things that all companies are going to be needing to think more and more about in the future.
SKOT WALDRON:
Because you're mentioning these things, and that's great, and I think that there's a lot of people out there that are going to say, "Sure, I believe in doing good by the planet and I think that people deserve equity in the workspace and whatever," right? It's saying it, but when I look at the financial side of the things, right, because a lot of people, the naysayers may say, "Oh, that's the touchy-feely stuff, and that's great that people are doing that, but that's not our business model. That's not where we are. There's no point in me doing that. I don't even market to those type of people, anyway, right?"
CHRIS MARQUIS:
Yeah.
SKOT WALDRON:
It's like, why would an organization that really cares about just profit bottom line care about doing anything like this?
CHRIS MARQUIS:
I think, I mean, you may have pegged me as some, I don't know, I just want companies to do good in the world, so I won't use my own words at first, I'll use, actually, one of the largest and most successful investors in the world, Larry Fink, founder, CEO, chairman of BlackRock. He writes these letters to his CEOs every year. In the last three to four years, every year, he has emphasized the core theme of these is that the company should have a purpose beyond meeting shareholder needs because this actually, like we've discussed, gives value to employees, and actually has a long-term benefit then because of these attraction/retention elements that we discussed, around climate, saying all companies should have some carbon-neutral plan. They should track and report their ESG metrics because this is mitigating long-term risk.
I think from a financial standpoint, these are things that may look like, "Okay, going through this process or increasing some benefit for employees or figuring out ways to go net-zero may appear to be costs," and in the short term, they are, but even the world's most successful investor is telling companies to do this because it's a long-term process, and actually, the way the world is moving is suggesting these things are only going to be more and more important.
SKOT WALDRON:
It takes me back to a thought of Simon Sinek's newest book, The Infinite Game, where he is talking about that infinite mindset versus that finite mindset. The finite mindset is the profit of the quarter, winning the quarter, winning, right, that next milestone of hitting profit, hitting our sales, hitting RPA, whatever it is, but that infinite mindset that's rooted in the mission, vision, the values and the purpose of what we're driving, because in the end, we may not win the quarter, but we're actually going to win at the end of it, right?
CHRIS MARQUIS:
Right, exactly.
SKOT WALDRON:
Nobody really wins the game of business, anyway, and it's all about how can the thing that we're doing, the mindset that we have, carry us on to make sure that we're doing longer-term good instead of just that short-term mindset.
CHRIS MARQUIS:
Yeah. Oh, yeah, you think you're right. I mean, people don't win, but people can most definitely lose, and if you look at, yeah, companies that are maybe going buyer-to-business in the future, it might be the ones that actually are unable to meet their employees and climate commitments.
SKOT WALDRON:
That's right on. Yeah, I mean, that's an interesting perspective, thinking about, well, winning as one theorem or mind byte, but yes, losing as a... You saw that during the George Floyd uprising and a lot of those things that were happening. Where were the value systems of those companies at that point? Were there all of a sudden companies stepping up going, "No, no, no. We care. We swear we do. We care about all this stuff"? It's like, well, and then you had people really calling them out and just saying, "Yeah, I've worked there. No." Right? They say it, they don't really live it.
CHRIS MARQUIS:
Right.
SKOT WALDRON:
You saw a lot of that come out during that time, too. It made people a little bit more aware. I think people now during the resignation, right, the great resignation we're having, is kind of like this, "Well, I don't need to more there, right? I can go somewhere else and work somewhere else and they're going to pay me more and it's more aligned to what I want to do, anyway." The power of the people is really taking hold, I think, on the way we're thinking about work and where we want to work and the companies we want to be affiliated with.
CHRIS MARQUIS:
Yeah, totally agree.
SKOT WALDRON:
At the end of the day, I love the message, I've learned a lot. I honestly, before even meeting you, had no idea about this B Corp thing, 'kay, so I appreciate you educating me and everybody else out there about this. If people want to get in touch with you, they want to get ahold of the book, they want to get in touch with you, have you come speak, promote an event, do whatever, how do they get in touch with you?
CHRIS MARQUIS:
Sure. It's very simple. My email, C-M-A-R-Q-U-I-S, my first initial, last name, @cornell.edu. I'm actually moving to Cambridge in January, but that email will be working for the next year-plus, so they can email me there. That's the easiest way.
SKOT WALDRON:
Okay. All right. Fantastic. Super cool having you. Congratulations and good luck in the next chapter at Cambridge. Harvard, Cornell, Cambridge, I mean, seriously, man, well done. Proud to have you on the show and thanks for all your insights.
CHRIS MARQUIS:
Great. It's been super fun talking, Skot. Really enjoyed it.
SKOT WALDRON:
If you haven't been able to tell from other episodes that we've been on that I'm big believer in aligning vision, mission, values, purpose to what you are doing as a whole inside an organization, to also make sure that the people you are hiring believe what you believe, to have clarity around that so that when you are hiring, you're hiring the right people. They stay longer and they work harder for you. That is what we need right now. That's what we probably always need.
We talked about the B Corp, right? Chris was mentioning a lot and we talked about this idea of people, planet, and at the end of the day, it's profits. Companies aren't building themselves to go out of business, right? We need to make a profit. The way these companies are doing that, though, through sustainable efforts, through the goodwill that they're trying to create in the global economy is their idea of how to make that happen. There's a lot of successful companies out there doing it. He mentioned those on the show.
If you don't have that mindset, if there is something blocking you from making progress in that world, he labels a few simple steps that you can do in his book, Better Business, so go ahead, get ahold of that book, take that assessment, and just see where you're ranking. He says there's a really quick assessment you can find to do that and see where you rank and see if there's some things that you can adjust. Maybe it's not full-on becoming the B Corp, but there's some things that you can implement in your organization right now to help you attract the right people and to represent the values you want to be noticed in the world, so thank you very much, Chris, for being on the show. Good luck with the rest of your book launch and the next book that's going to be coming out. We didn't mention that, but that's happening, everybody. Get ready.
If you want to find out more about me, you could go to skotwaldron.com. I got a lot of information and things there about what I do. You can also just like, subscribe, comment onto my YouTube channel. Find a lot of helpful tips and leadership culture exercises on there for you as well, as well as all these shows. I'm really grateful for you and thanks for being here. See you next time on another episode of Unlocked.
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