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Through Innovation and Inclusion, Small-to-Midsize B Corps Are Transforming the Business Ecosystem
“Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and crossing each other from a million different centers of energy and daring those ripples build a current which can sweep down the mightiest walls of oppression and resistance.”
This quote comes from Robert F. Kennedy’s renowned Day of Affirmation speech at the University of Cape Town in 1966 — a speech that influenced many, from President Barack Obama to myself and the other co-founders of B Lab. While some of RFK’s language wouldn’t resonate today, his overall message and the imagery of an individual’s actions creating ripples has served as a personal inspiration and a strong basis for B Lab’s theory of systems change. This theory proposes that perhaps the most important ripples a company can make are those that lead to change outside of the business, and that each change, each ripple can grow outward to drive the culture shift and behavior change that will harness the latent power of business to address our greatest challenges. Companies of any size, including those with only a handful of employees, can dip a toe in the water and send forth the first ripple.
In honor of the recent National Small Business Week, I want to give a shout out to some of the purpose-first, ripple-making, small-but-mighty brands that, in fact, make up the majority of the Certified B Corporation community. While each of their impacts may seem minor compared with the multinationals operating around the globe, their cumulative impact is outstanding — and serves as a challenge and a rallying cry to other smaller businesses out there to balance both purpose and profit.
Several small-to-midsize businesses in the B Corp community are leading with some of the most innovative and transformative business practices. These thought leaders are applying their values to their business practices, walking the talk and starting a ripple that affects their entire business ecosystem. Let’s look at a few examples of smaller B Corps that have taken on huge challenges and built a current of ripples as a result.
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As of 2017, 70 million Americans — one in three adults — have a criminal record, according to the American Civil Liberties Union (ACLU). More than 640,000 people are released from prisons each week, but because of the stigma associated with a criminal record, nearly 75 percent of formerly incarcerated individuals are still unemployed a year after release.
What’s more, the №1 cause of recidivism is joblessness. And the limiting effect of a criminal record for African Americans to land a job interview is 40% greater than for whites with similar histories. These statistics underline the reality that mass incarceration and the associated stigmas for formerly incarcerated people create a social and economic reality where we all lose.
As a result of excluding formerly incarcerated people from the job market, the gross national product misses out on between $78 billion and $87 billion. Fair-chance hiring is being embraced by several B Corps, even some companies that only have a few employees to work with at a time.
B Corp Greyston Bakery has been addressing this challenge through open hiring, where potential employees put their name on a list and are hired, no questions asked, when their name reaches the top. The policy creates a fair-chance hiring environment for all who want a job, including those with a criminal record. “Change and social justice need to be on a faster pace than is currently happening,” CEO Mike Brady says, arguing that adoption of open hiring could raise hundreds of thousands of people out of poverty.
In a 2015 TED Talk with Greyston team member Dion Drew, Brady issued a challenge to Fortune 500 companies: If each chooses one vendor that develops the open hiring model, in 10 years 100,000 jobs will be created for the “seemingly unemployable,” returning $750 million to local economies.
Greyston is advancing its open hiring model through its Center for Open Hiring, formally opened in 2018. The center is a collaborative learning space that evaluates, improves and defines best practices; facilitates the widespread adoption of open hiring; and supports innovation in the delivery of community programs for employees and neighbors.
“Open hiring is not a handout or giveaway,” Brady says. “And we’ve been doing it for more than 34 years. What began as a modest bakery on the edge of New York City with the moniker that ‘We don’t hire people to bake brownies, we bake brownies to hire people,’ has emerged today as a globally recognized brand with an innovative business model and value proposition.”
Easing Financial Instability
Of all American workers, 138 million are not prepared for financial emergencies — only 39 percent have $1,000 available to cover an unexpected expense. Many of those people turn to high-interest financing options — credit cards, payday loans or short-term, high-interest loans from big banks — that can put them in an even deeper financial hole (and create profits for predatory lenders).
More companies are seeing this financial strain on employees — and on their businesses’ bottom lines through missed work days or employee resignations — and realizing the need for financial education and services for workers.
Headquartered in the South Bronx and a New York State CDFI, B Corp Spring Bank, which employs fewer than 50 people, focuses on underserved consumers and small businesses in the New York City area. About two years ago, Spring Bank began partnering with businesses to offer its Employee Opportunity Loan program. (A similar program was pioneered by fellow B Corp Rhino Foods.) The program provides loans to employees at participating companies of up to $2,500 with no minimum credit score requirement.
The loan program is free for employers, says Melanie Stern, director of consumer lending for Spring Bank. (Note that employers do not have to be a B Corp to participate.)
Here’s how it works: To start, the borrower opens an account with Spring Bank, which deposits the loan amount into that account. The employee pays off the loan (with a 16 percent interest rate) with automatic deposits from payroll into the Spring Bank account. After the loan is paid, employees can build savings by continuing those payroll deposits into the account. Stern says about 20 percent of borrowers have kept their savings accounts open and funded. The program includes financial training opportunities for participants as well.
“We’ve seen credit scores go up in the program on average 50 points. The outcomes have been great,” Stern says.
Boosting Employee Ownership
Using data from B Lab, which assesses the social and environmental impact of B Corps and tens of thousands of other businesses, the report found these firms outperform their peers on multiple measures, achieving overall “B” scores on average 20 points higher than B Corps that are not employee owned, and 100 percent higher than ordinary businesses.
“Mission-led employee-owned firms embody a powerful model of enterprise design for a new era of environmental sustainability and social equity,” the report predicts.“These companies have much to teach the business world about ownership design for the 21st century and beyond.”
While many of the B Corps highlighted are bigger operations — including Gardener’s Supply, Eileen Fisher and King Arthur Flour — one company mentioned in the report, B Corp media firm Butler/Till, has fewer than 200 employees and is employee-owned. Butler/Till has had healthy growth, claiming revenues are up 33 percent and job growth up 37 percent in a recent interview with Fifty by Fifty.
Butler/Till navigated the purchase of another firm, Verdant (at the time operating as Brand Cool), by bringing in that firm’s employees as employee-owners right away. The employees at Verdant became members of Butler/Till’s ESOP, and later that year Butler/Till became a B Corp. Since then, the firm has consistently scored Best For The World (in the top 10 percent) in the “worker” category on the annual list of most impactful B Corps.
The acquisition has been a positive move in multiple ways: Verdant reported revenue growth of 120 percent and a doubling of personnel as well as an expansion into San Francisco in 2017.
As these three examples highlight, small businesses can and do have a big impact on society, the economy and our planet. In the way that RFK spoke of currents of ripples sweeping down “the mightiest walls of oppression and resistance,” the B Corp community is breaking down and rebuilding the mightiest wall of capitalism.
This article was originally published in Forbes. B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
Small-But-Mighty Companies Create Ripple Effects That Make a Difference was originally published in B the Change on Medium, where people are continuing the conversation by highlighting and responding to this story.