Published daily by the Lowy Institute

Business aid and aiding business

A growing recognition is that business value can be measured by being accountable to non-financial stakeholders.

The UN Global Compact featured in advertising at New York’s Times Square (Photo: UN Global Compact/Flickr)
The UN Global Compact featured in advertising at New York’s Times Square (Photo: UN Global Compact/Flickr)
Published 27 Jul 2018 

This article is based on episodes 7 and 8 of the Good Will Hunters Podcast with Georgina Camp, CEO of Huber Social, and Andrea De Almeida, CEO of B Lab Australia.

B Corp certification is to businesses what Fair Trade certification is to coffee.

In Australia, there are just under 250 certified “B Corps” that receive support from B Lab, the not-for-profit division of the B Corp empire. Last week, I interviewed Andrea De Almeida, CEO of B Lab Australia, on the rise of B Corp certification in Australia and how to build a socially and environmentally conscious private sector.

There are B Labs throughout the world, and Australia’s is the fastest growing outside of the US, where the concept originated. There has been an upsurge in interest in B Corp certification in Australia in recent years, particularly in the wake of the Financial Services Royal Commission. Increasingly, businesses view independent certification as a means of distinguishing themselves as socially and environmentally conscious organisations.

A growing number of countries have passed legislation to legally enshrine the social and environmental mission of business.

Since the inception of B Lab in Australia, more than 2000 organisations have undergone the certification assessment, with 240 meeting the requirements. Globally, there are 2564 certified B Corporations across 50 countries and 130 industries.

B-Corp Certification is dependent on five core areas of an organisation: governance, workers, community, the environment, and the business model. Once an organisation is certified, it joins the community of B Corps in Australia, receives operational support from B Lab, and retakes its certification every three years.

Beyond being an encouraging trend in the private sector, the upsurge in B Corp certification is indicative of a broader realisation that businesses must become more accountable to non-financial stakeholders. The value of a business can be measured outside of quantitative assessments, in the realm of social value.

Such is the premise of Huber Social, an innovator pioneering a new approach to measuring social value. Georgina Camp, CEO, uses the metaphor of longitude and latitude to explain the importance of social value assessments. 

For a long time, only the measure of latitude existed. As merchant shipping increased and too many lives were being lost, it became unacceptable that longitude could not be measured. Looking for longitude was shorthand for doing the impossible. However, measuring longitude became absolutely necessary.

Similarly, there is no universal measure of social value. Huber Social uses a framework to measure the social value of a product or service, predicated on three core areas: the contribution it makes to wellbeing, need for the service, and its reach. 

Although Huber Social’s work has primarily been with the not-for-profit sector, the organisation is experiencing increased interest from the private sector. Increasingly, businesses which have a social and environmental impact want innovative ways to quantitatively and qualitatively measure this impact.

Also worth considering are calls from the UN Global Compact for the private sector to incorporate the Sustainable Development Goals (SDGs) into their own internal processes and frameworks. The not-for-profit sector alone cannot achieve the SDGs, especially considering the majority of capital needed to achieve them is situated in the private sector.

It is possible that momentum on this topic will grow in the wake of the recent High-level Political Forum on the SDGs held in New York. Australian businesses, including B Corps, have shown considerable interest in the SDGs so far.

Furthermore, a growing number of countries have passed legislation to legally enshrine the social and environmental mission of business. At present, company directors in Australia face legal uncertainty if they choose to take non-shareholder interests into account. B Lab is advocating for the Corporations Act 2001 to be reformed to include a new corporate structure, known as the “Benefit Company”.

Companies that adopt this structure will be able to legally enshrine their mission into their constitution, which would require directors to consider the interests of both financial and non-financial stakeholders. De Almeida is hopeful that the legislation will be passed in the not too distant future.

As society recognises the unparalleled importance of the private sector in catalysing social and environmental progress, it is of great importance that the requisite law reform occurs, alongside support for innovative mechanisms of social value measurement. Both B Lab and Huber Social are organisations to watch as the realm of corporate social responsibility continues to expand.

You may also be interested in