B Lab

The organization has affiliates on every continent and claims to have worked with over 7,200 companies in 93 countries employing approximately 650,000 workers. The organization is funded by left-of-center funders including the Omidyar Network, the Skoll Fund, and the Ford Foundation. ^{1 2}

Founding

B Lab was co-founded by Andrew Kassoy, Bart Houlahan, and Jay Coen Gilbert. Prior to meeting, Kassoy worked in private equity while Gilbert was the co-founder of And1, a basketball footwear and apparel company, of which Houlahan was the president at the time. The company would eventually be sold in 2005 to American Sporting Goods. ^{3 4 5}

The three met several times for discussion, during which they agreed on the belief that modern businesses should move away from profit-focused intent and focus more on adopting “altruistic guidelines,” a concept often phrased as preferring that businesses focus on benefiting “stakeholders” instead of only “shareholders.” In a 2020 interview, Kassoy claimed that “shareholder primacy is the source-code error in capitalism,” and he criticized Milton Friedman’s famous defense of shareholders as the ultimate arbiter of a company’s values. ⁵

However, Kassoy has maintained that he is a champion of free-market capitalism, saying, “it’s amazing what capitalism can produce that other systems have not been able to. It’s pulled billions of people out of poverty and created innovations that have improved many people’s lives. I think we, at our peril, underestimate how much business can do for social good if the system is structured in the right way.” ⁶

Kassoy, Houlahan and Gilbert found no “infrastructure” for guiding companies in their preferred direction, so they founded B Lab as a means of persuading companies through certifications that could produce marketing benefits. ⁶

Background

The group operates nine affiliated B Lab organizations throughout the world including B Lab UK, B Lab Europe, B Lab Hong Kong and Macau, B Lab Taiwan, B Lab Africa, and B Lab Singapore. The group also operates affiliated “market builder” organizations including B Market Builder China.⁷

The B Lab and B Corp certification name stem from the environmentalist slogan “There’s no planet B” which is featured prominently on the organization’s website.¹

B Corp

B Corp certification indicates that a private for-profit company meets certain left-of-center environmental and social-policy goals. Certified companies are required to take a “Declaration of Interdependence” to signify their role in the global economy. Certification is awarded to companies which pass B Corp’s B Impact Assessment. As of December 2021, certification takes 6-10 months on average to complete, and 33% of applicants pass the Assessment. ⁸

B Corp certification requires companies to adopt a legal commitment to change their corporate governance structure that matches a model it calls “stakeholder governance,” which requires that companies “remain legally accountable to all of their stakeholders – workers, communities, customers, suppliers, and the environment – not just shareholders.” The organization also supports changes to national and state and local laws throughout the world where stakeholder governance is not permitted.⁹

B Lab places additional restrictions on companies in “controversial industries” applying for B Corp certification and in some cases does not allow companies in certain industries to apply for B Corp Certification. Restricted or blacklisted industries include conventional fuels, plastics, bottled water, automobiles, construction, fishing, slaughterhouses, and pharmaceuticals.¹⁰

Policy Stances

B Lab campaigns in support of efforts to change national and local laws regarding corporate management and the environment. In the United Kingdom, B Lab UK assisted in launching the Better Business Act which would require companies to be legally obligated to “operate in a manner that benefits their stakeholders — including the environment, communities, customers, suppliers, and employees.”¹¹

In the United States, B Lab has called on the Biden administration to create a White House Initiative on Inclusive Economic Growth, which the organization details would advance “widespread shifts toward stakeholder governance and community investing.”¹¹

Funding

B Lab is funded by left-of-center grantmaking organizations and companies including the Tipping Point Fund on Impact Investment, the Kendeda Fund, Omidyar Network, Skoll Fund, Propel, Prudential, Ford Foundation, Porticus, Robert Wood Johnson Foundation, and Generation Foundation.¹

People

B Lab is led by Eleanor Allen, who previously was the CEO of Water for People. Former Massachusetts Governor and senior advisor at Bain Capital Deval Patrick (D) sits on the organization’s board of directors.¹²