Time was when you talked about a company's "bottom line" it could only mean one thing: financials. But in our new economy, two new bottom lines are entering our corporate vocabulary. Companies globally are starting to measure and manage against the "triple-bottom line" of people, planet and profits.
"People" measures an organization's human resource practices. Is it paying a livable wage, does it provide health benefits, are the work force and executive leadership diverse?
"Planet" addresses an organization's social impact. What is its environmental footprint? How engaged are employees in the local community, and is there compensated volunteer time? How directly do the goods or services offered by the organization have a positive social impact in the community?
And "profits" translates not only to maximizing shareholder value but financial transparency and responsible investment practices.
The triple-bottom line trend emerged in the 1980s when the Exxon Valdez oil spill and the Union Carbide gas leak in Bhopal, India, made it clear that long-term environmental costs were not being calculated by short-term profiteering (BP anyone?). Ben and Jerry's became a poster-child for the movement when it promised 7.5 percent of pre-tax profits to help causes such as preserving the Amazonian rain forest. Companies such as The Body Shop followed suit, and corporate social responsibility blossomed.
Today, there are sophisticated assessments to help entrepreneurs, consumers and investors alike measure how socially responsible a company really is. One tool is the Institute for Sustainable Development's Green Plus program. Born out of UNC, Duke and local chambers of commerce, Green Plus has been adopted by more than 160 businesses in 12 states.
Companies striving to bring as much rigor to their social impact as they do to their finances can also go through a B Corporation certification process. "For benefit" companies actually change their bylaws to assert their commitment to creating "a material positive impact on society and the environment and meeting higher standards of accountability and transparency." By adopting these bylaws, entrepreneurs signal to investors that social responsibility will inform every business decision including new investments or liquidity (in other words, they won't invest or sell out in ways that will compromise the integrity of this commitment).
Doing right
One leading example of a B Corp is The Redwoods Group in Morrisville (also a Green Plus organization). Founded by Kevin Trapani, Redwoods is the largest insurer of YMCAs, Jewish Community Centers and nonprofit resident camps in the country. Driven by a deep belief that you can build a highly successful company by doing right by your customers, community and corporate culture, The Redwoods Group was recently recognized in Bloomberg BusinessWeek as one of the top social enterprises in the country.
Part of doing right by its customers includes sharing its wealth of data to help create safer environments within the YMCA, Jewish Community Centers and camp communities. With Redwoods' help, YMCAs nationally have been able to reduce the number of drownings from 13 six years ago to zero in 2009. Similarly, Redwoods urges its employees to make a local difference and provides a week of paid leave for volunteering - which results in more than 4,000 service hours on company time (plus thousands on employees' own time).
The company has also set up The Redwoods Group Foundation, which distributes about $700,000 annually to charitable causes consistent with its mission. All employees and their families have full health care benefits and Redwoods pays for the equivalent of four years of in-state college tuition for employees' children. The result? Redwoods has averaged just 3 percent staff turnover in the past 10 years while enjoying 1,500 percent revenue growth.
Other companies are following suit. E-mail-marketing firm iContact in Research Triangle Park was just certified as a B Corp and gives free e-mail marketing and training to North Carolina nonprofits and paid volunteer time to employees. Technology development firm Relevance from Durham now dedicates every Friday to open-source and community software projects.
14 in North Carolina
And the list goes on. B Corporations now include more than 300 companies representing $1.1 billion in revenue in 54 industries. Fourteen of them are in North Carolina, and the trend points straight up.
And why not? Customers would rather buy from a responsible company and top talent would rather work and stay there. And then there's the bottom line: social responsibility often saves money. B Lab estimates that B Corporations collectively net more than $750,000 a year through environmental savings alone. Legislation has also passed in Maryland and Vermont to recognize B Corporations as a new legal entity - with hopes that tax advantages and procurement benefits will soon follow. Similar legislation is being teed up in North Carolina. Stay tuned as this is one more way for North Carolina to take the lead in corporate best practices.
