Business leaders wishing to build a world-changing business are best served when they embed those intentions in their corporate structure; otherwise, the world may change their business.
Failing to embed purpose into their legal DNA may threaten their mission or independence, especially in the public markets under the continuous pressure of short-termism. Skeptics might read what Chief Justice Leo E. Strine, Jr. says in The Dangers of Denial.
While public companies have unique challenges in pursuing adoption of the benefit corporation legal structure (which Etsy was required to do to maintain its B Corp Certification), in general global institutional investors have already accepted the benefit corporation structure for public companies. Laureate Education (NASDAQ:LAUR) raised $490 million in an initial public offering earlier this year using the benefit corporation structure. Prior, an existing multi-billion dollar publicly traded company in Brazil, Natura (BVMF:NATU3), amended its governing documents to the same effect, and later acquired UK-headquartered The Body Shop for ~$1 billion dollars. More recently, the CEO of the French Fortune 500 food company, Danone (BN:EN) announced at his 2017 shareholder meeting that Danone was committed to pursuing B Corp Certification, and Danone’s $6 billion dollar North American subsidiary, DanoneWave, has already adopted the benefit corporation legal structure. A Credit Suisse analyst pointed to Danone’s commitment and its legal ramifications as one reason Danone was unlikely to be forced to accept an unwanted takeover offer from 3G/Kraft-Heinz. In addition, more than 5,000 private companies have adopted the benefit corporation structure, many with significant venture capital and private equity investors, from Andreesen Horowitz to Mark Zuckerberg, who expect a public exit. More on How Investors Really Feel About B Corps.
B Lab is grateful for the contributions Etsy has made in the past to the accelerating momentum of the B Corp movement. B Lab hopes that Etsy will continue to use the B Impact Assessment as an internal tool for impact management and employee engagement. B Lab looks forward to exploring with Etsy the possibility of developing a new tool for external communications and public accountability by companies seeking to engage meaningfully with the B Corp movement but are not Certified B Corps. The B Impact Assessment is the global standard for impact management, currently used by more than 15,000 businesses to assess, compare, and improve their social and environmental impact. Many companies use the B Impact Assessment to build the trust and affection of their customers, suppliers, and employees through the use of credible, comparable, comprehensive, and transparent third party standards by which their stakeholders can assess their impact.