B Corps Make a Legal Commitment to Stakeholder Governance for a Sustainable Future

A Look at the G in ESG: Strategies and Advocacy Partnerships for Purpose-Driven Businesses

Through B Corp Certification, businesses commit to a stakeholder governance model that legally requires them to consider the impact of their actions on all stakeholders. By incorporating responsibility to stakeholders into their company’s legal DNA, B Corps aim to protect the environment for future generations and uplift the people who contribute to their success. A legal commitment to stakeholder governance also involves greater accountability and transparency, and helps facilitate creativity and innovation as B Corps create new and different ways of doing business. 

With environmental, social, and governance (ESG) impact improvement as a strategy for using business as a force for good, B Corps broaden their focus beyond maximizing profit. Instead, the stakeholder governance model places workers, customers, community, and the environment on the same plane as shareholders. Stakeholder governance provides a structure for a company’s social and environmental impact — the foundation for actions that benefit people and the planet.  

More than 10,000 companies worldwide have signed on to a legal structure known as the benefit corporation that incorporates creating value for all stakeholders. The specific legal requirements for a company differ based on the company’s type, size, and location. (Learn more in the “How the legal requirement works” online tool.) 

During a recent webinar on the ESG policy landscape, Holly Ensign-Barstow, Policy and Programs Senior Director for B Lab U.S. & Canada, said B Corps have a history of advocacy for governance-related policy change and impact improvement. “We have worked together to pass over 50 laws in jurisdictions around the world to enable stakeholder governance,” Ensign-Barstow said. “The business voice is powerful. B Corps are powerful, and if we wield that voice effectively, we could create true change.” 

Learn more about stakeholder governance strategies, practices, and advocacy in the B Corp community examples that follow.

Stakeholder Governance to Help Keep Purpose at the Core

For each company, a stakeholder governance framework can mean different things. The common thread is creating positive impact for people the business affects and for the environment. At B Corp Realize Strategies in Vancouver, British Columbia, CEO John Kay leads the team at the cooperative with a unique stakeholder governance structure. While most cooperatives are owned by their workers, Realize Strategies is owned by a group of nonprofits and cooperatives in British Columbia that now number about 170. “It does have a really significant bearing on how we think about everything we do,” Kay said. “It sits at the core of why we exist.” 

The original focus of Realize Strategies has evolved since its founding 25 years ago as an organization to help nonprofits aggregate their buying power. “We went through quite a journey to try to figure out where we can make a difference,” Kay said. Now, the B Corp provides professional services including organizational design, leadership development, executive searches, and change management. 

Realize Strategies is governed by an eight-member board with five cooperative members and three independent directors who share their expertise and perspectives to help guide the organization. “They help keep our purpose at the core of what we do and keep our values alive,” Kay said. “They understand that their role is to try to think about why we were created in the first place and, 25 years on, keep those values and core principles alive.”

Taking a long-term view grounded in purpose and stakeholder representation also reinforces the B Corp values that Realize Strategies embeds in its work with partner organizations.

“It’s really about considering how we center the organization and its people and understand the environment in which it operates. And then we can really be able to deliver a package of responsive solutions rooted in all realities: the stakeholders that it works with and the people in it.”

Through its services, Realize Strategies aims to help partner organizations build their impact and enhance their sustainability so they can tackle challenges now and in the future. It’s somewhat of a parallel path of impact improvement that B Corps take, he said. The independent, third-party verification helps guide and inspire the team at Realize Strategies. 

“We didn’t have anybody who could independently verify that what we claim to do is what we really do, and that was important to me,” Kay said. “B Corp Certification makes us think in everything we do, are we reflecting those core principles of being a B Corp? … It really pushes us to think about how do we continually improve ourselves and strengthen our commitment to being an organization that uses business as a force for good.”

He encourages other purpose-minded companies to join the B Corp community and make a legal, lasting commitment to stakeholder governance. “It makes a considerable difference in how as an organization of people dedicated to a mission — whatever it is, whether it’s selling ice cream or working with solving community problems — think and lead and show up together. It’s a good organizing principle for any business.”

A Partnership for Stakeholder Governance Advocacy Around the Globe

As part of its policy work to build the B Corp movement, B Lab and partners around the world advocate for legislation that makes stakeholder governance, or its regional equivalent, more accessible. To date, 44 states and the British Columbia province in Canada have adopted legislation that provides a stakeholder governance structure known as benefit corporation.

Learn more about the differences between benefit corporations and B Corps. 

B Corp advocacy for stakeholder governance involves partner organizations, including The Global Alliance of Impact Lawyers (GAIL). In September 2022, B Lab Global partnered with GAIL to launch the GAIL B Lab Advocates Program. Through the program, lawyers around the world who are GAIL members are able to connect with B Lab Global. They have the opportunity to get involved with analyzing local laws, adapting the B Corp requirements to local legal contexts, and developing resources to aid businesses through the certification process.

GAIL’s inaugural president, William H. Clark Jr.,  served for many years as pro bono legislative counsel to B Lab and drafted the model legislation that has been the basis for benefit corporation legislation enacted in U.S. jurisdictions and in nine other countries.

“The creation of the legal language often begins with a partnership between B Lab and a law firm in the relevant jurisdiction. Working together, B Lab and the law firm create legal language that works within the context of the business law of that jurisdiction,” Clark said. “In this way, lawyers have always played an important role in partnership with B Lab, to promote structural change towards a stakeholder economy.”

The GAIL B Lab Advocates program develops that collaborative history to enable a wider pool of lawyers around the world to engage with B Lab’s work. This includes advising on matters in specific jurisdictions, creating how-to guides, and sharing other information. 

“Lawyers throughout the GAIL network have often played foundational roles in bringing benefit corporations or the B Corp legal test to their jurisdictions,” Clark said. “Over time, we hope to expand the GAIL B Lab Advocates network to jurisdictions where B Lab does not currently have a presence, so that lawyers become change agents by bringing benefit corporations or the B Corp legal language into newer jurisdictions.”