By Douglas Hileman, FSA, CRMA, CPEA

The Los Angeles Times reported on controversies swirling around the “coveted ethical and eco-friendly seal” last month[1].  The article mentioned celebrities and well-meaning companies who are among the 7,800 certified B Corps worldwide.  The article highlighted several controversies, including:

• Nespresso is awarded B Corp status, despite poor track record on human rights, including child labor [aside: not to mention over 20 billion plastic pods, the vast majority of which go to landfills[2]].
• Over 30 certified B Corps accuse B Corp of greenwashing.
• B Corp scoring is opaque, and does not consider negative factors.

As insightful as the article is, there is more.  The LA Times article cited members as saying B Corp “isn’t a marketing gimmick – it’s a movement.”  Douglas Hileman Consulting LLC (DHC) wonders if it’s something else.   Is B Corp a benefit, a brag – or a boondoggle?   

• “Benefit” it’s not. The LA Times article says “… B Corps – short for ‘benefit corporations’ …”  This is not correct, but a common misperception.   When companies obtain charters (from states), they must indicate if they are for profit or a non-profit organization.   For-profit organizations exist to make money for shareholders – full stop.  Non-profit organizations exist for a purpose.  At for-profit companies, environmental and social issues were met via regulatory compliance requirements.  Many considered budget for Sustainability, social issues, etc. to be “extra” – if not contrary to their state charter.  What about companies that wanted to do both?  In April 2010, Maryland became the first state to allow companies to register as benefit corporations – a hybrid, if you will.  (Read More)

[1] “Nespresso, Dr. Bronner’s and the Battle over B Corp Certification” by Jie Jenny Zou, published in Los Angeles Times, December 13, 2023. 

[2] See https://repodder.com/1-the-problem-with-nespresso-coffee-pods#:~:text=In%202022%2C%20it’s%20estimated%20there,than%2070%25%20entering%20global%20landfills., accessed 1/11/2024.