Social Enterprises and B Corps in the Philippine Context
In the early 90s, Nanette was cast for the role of the Filipino superheroine Darna. Nanette retired from her long career in acting to do more advocacy work.
She realized she could leverage her popularity as a celebrity to help a social cause. And that was origin of HOPE (in a Bottle).
HOPE (in a Bottle)
HOPE partners with establishments like Starbucks, UCC, Coffee Bean and Tea Leaf, WildFlour, among others, to sell bottles of water.
It seems underwhelming to view HOPE as a company that merely sells bottles. What matters is the mission: “to empower consumers to vote with their purchases about what was important to them”
“We measure our bottomline by how much we improve our country”
HOPE improves the country by using 100% of its profits to build public school classrooms. To date, it has built 95 classrooms all over the Philippines. The classrooms are built with eco-bricks, made of a mix of cement and recycled plastic waste.
I venture to say that HOPE is the kind of company that many students were looking for at the job fair.
Those kinds of companies are social enterprises. They can be formally certified by the non-profit B Lab as Certified B Corporations.
Certified B Corporations
B Lab is a nonprofit organization that aims to help companies quantify the social and environmental impact. The objective of B Lab is to provide impact measurement tools and legal protection for entities with strong social values.
The B Lab’s purpose is two-fold: B Lab provides certification to companies looking to demonstrate their commitment to social and environmental good; and two, it lobbies state governments to create laws that are more conducive to social business. It has key metrics that ensure companies have met rigorous standards of transparency, accountability and environmental sustainability.
B Lab defines Certified B Corporations as “businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.”
Since 2007, over 2,000 companies in over 50 countries are certified as B Corporations.
Identifying as a B corporation is a way for entities to clearly distinguish themselves from traditional firms. A B corp publicly claims that it is interested in both shareholder and stakeholder interests.
Shareholders versus Stakeholders
Shareholders are the owners of a company whereas stakeholders are those who have interests in company other than ownership. An example of a stakeholder are employees, which rely on the company to earn a living. Another example are members of the local community, including families relying on the salaries of the company employees. Finally, there is the environment which is impacted by the waste generated by company operations.
Social enterprises commit to a purpose other than making money and have in mind the welfare of the stakeholder as well as the shareholder.
The Gap Filled by Social Enterprises
Social enterprises fill an important need. They can emerge out of very different contexts and due to many reasons. They address a social problem or concern in which for profit models usually are not able to solve.
The conventional model of business follows a simple formula. Consumers get value out of the product, that’s why they buy it, and the profit is the value capture for the owners or the shareholders of the business. The product is a means to an end – that of boosting the bottom line.
Businesses pursuing more profitability in the interest of their shareholders is good for the shareholders and the customers. But it can ignore stakeholders. How many times have we heard of businesses that treat their employees poorly or who are insensitive about where waste material ends up. Over the past few decades, companies have become involved in outreach programs in their local communities. Some advertised sustainable sourcing, of coffee beans for example, while others advertised the humane treatment of cattle in the ranches where meat processors source beef. This is an example of corporate social responsibility (CSR).
You can consider CSR programs as non-committal and can be a one-off thing. Certification as a B Corp happens when CSR practices are regularly practiced and officially become part of the DNA of the company. Efforts to acquire B Corp certification is the company saying that it commits itself to serving its stakeholders and wants to be accountable for that commitment by making it official – placing it in corporate by-laws and governance structure.
Why Get Certified as a B Corp?
Working towards a social purpose can boost employee morale and retention rates because of the sense of being involved in something that goes beyond addressing narrowly defined customer needs. Many employees want to contribute to the conservation of the planet or at least be more engaged in the local community.
Certification as a B Corp means the company has to follow through on its commitments. A company that loses its certification is bad for its public relations. That is why business owners should be genuine in dedicating their company to serve a social good. As a business owner or executive, you have to be sure that your company can follow through and maintain certification.
Certification as a B Corp opens doors to funding and networking. The people who run social enterprises are fueled by enthusiasm. There is this feeling of being part of a revolution in how we think about and run businesses. The goodwill created by the company between shareholders and stakeholders, the sense of purpose, helps to make for a vibrantly functioning business enterprise.
Options for Filipino Businesses
There is currently no way to incorporate as a benefit corporation in the Philippines. Our laws allow doing business in only three ways: as a sole proprietorship, partnership or corporation. Corporations can be stock or non-stock. Non-profit corporations and foundations do not count as doing business.
Sole proprietorships can register with the SEC to gain the status of a corporation while existing corporations can file for amendment of their articles of incorporation and by-laws. These and other corporate documents can be made to reflect a new mission, vision and commitments to the social good.
The company can then develop a track record and identity as a social enterprise. It can later become a Certified B Corporation through B Lab. There is currently only one Certified B Corporation in the Philippines: HOPE (in a Bottle).
Changing the Face of Capitalism
Companies consciously working towards a purpose in addition to making a profit can go a long way in changing the values of the capitalist system.
Social enterprise is an exciting area with lots of room for creative problem solving. It is a way to contribute to the commons in a society lacking in trust that served as the glue for collaboration, volunteerism and civic action in the past centuries. It is an ecosystem for dreamers and also practical people who need to see their vision manifest in the world.
Capitalism can be more humane, if capitalists–and entrepreneurs– make it so.
Helpful links to the knowledge base:
- B Lab
- B The Change
- Social Change Central
- Stanford Social Innovation Review
- Yunus Social Business
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Kenneth writes about life and law. He is a lawyer with experience in intellectual property, labor, civil and criminal cases.
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