Making Corporations Responsible: The Parallel Tracks of the B Corp Movement and the Business and Human Rights Movement

• DOI: http://doi.org/10.1111/basr.12118
• Author: Elizabeth Umlas,Joanne Bauer
• Date: 01 September 2017
• Published date: 01 September 2017

Making Corporations

Responsible: The Parallel

Tracks of the B Corp

Movement and the Business

and Human Rights Movement

JOANNE BAUER AND ELIZABETH UMLAS

ABSTRACT

The business and human rights (BHR) movement shares

several goals with the Benefit Corporation (B Corp) move-

ment: corporations respecting human rights; maintaining

a “wide aperture” so that all impacts of a company on

people and communities are addressed; and creating rig-

orous standards of conduct and means of accountability.

This paper argues that nonetheless the movements are

traveling along parallel tracks and thus missing an oppor-

tunity for mutual learning that can improve their effec-

tiveness. The BHR movement can look to B Corps for

concrete examples of viable companies that value human

rights intrinsically and not just where there is a “business

case” to do so. The B Impact Assessment, the B Corp cer-

tification tool, can better ensure that B Corps are in fact

respecting human rights by adopting BHR standards.

Joanne Bauer is Senior Researcher of Business and Human Rights in the Institute for the

Study of Human Rights and Adjunct Professor in the School of International and Public Affairs,

Columbia University, New York, NY 10027, USA. E-mail: jjb71@columbia.edu. Elizabeth Umlas

is a Lecturer at the University of Fribourg, D

epartement d’

Economie Politique, Fribourg, CH

1700, Switzerland. E-mail: liz@lizumlas.com.

V

C2017 W. Michael Hoffman Center for Business Ethics at Bentley University. Published by

Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington

Road, Oxford OX4 2DQ, UK.

Business and Society Review 122:3 285–325

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And both movements must give greater consideration to

the potential contradiction between unlimited scaling—a

key goal of B Corps—and the ability of large multinational

corporations to respect human rights.

INTRODUCTION

The past 15 years have seen the rise of two new corporate

responsibility movements: the business and human rights

(BHR) movement and the “B Corp” movement (the “B”

stands for “benef‌it”). Proponents of the BHR movement seek to

hold companies accountable for their impact on human rights. The

work of this movement has centered on a new framework and set

of principles produced under the aegis of the United Nations—the

UN Guiding Principles on Business and Human Rights. Proponents

of the B Corp movement seek to advance a new corporate form, the

benef‌it corporation, which requires companies “to create a material

positive impact on society and the environment and to meet higher

standards of accountability and transparency.”

1

In addition to this

new legal entity, now allowed by laws passed in over 30 states in

the United States as well as in Italy, the non-prof‌it organization B

Lab, the engine of the movement, provides “certif‌ied B corporation”

status to companies “having met a high standard of overall social

and environmental performance.”

2

Certif‌ied B corporations now

number over 2,000 and have spread to several other countries and

regions of the world.

The two movements share similar goals for corporations, namely

that they will: respect human rights; address all of their social and

environmental impacts, not only those of their choosing; and create

solid standards of conduct and transparency, and means of

accountability. The BHR and B Corp movements appear, however,

to be traveling on parallel tracks, with little knowledge of the other

by either movement, much less interaction between them. As the

BHR movement can benef‌it from the codif‌ication of social responsi-

bility norms in law, and the B Corp movement can benef‌it from the

more coherent and effective approach to human rights that the

BHR movement offers, this is a lost opportunity to strengthen both

efforts.

286 BUSINESS AND SOCIETY REVIEW

This article seeks to identify the potential for the B Corp move-

ment and the BHR movement to accelerate each other’s efforts to

make corporations responsible. To date the B Corp movement,

with a few exceptions, consists primarily of newly-formed, micro-,

small-, and medium-sized enterprises (MSMEs). B Corps do not

include within their ranks major oil, gas, and mining compa-

nies—among the worst perpetrators of human rights abuses—or

large investment banks or hedge funds, which have barely put

their toes in the social responsibility waters.

3

Are B Corps truly

scalable, as the B Corp movement’s rhetoric implies, and how

prepared are its proponents to address the human rights risks

that come with being a large multinational company? On the oth-

er hand, how relevant is the B Corp form, premised on ensuring

a positive social impact, to the BHR movement, which was born

in the aftermath of human rights violations connected in particu-

lar to extractive companies’ operations in countries with corrupt

or weak governance and to mega brands and their vast

manufacturing supply chains?

First, we examine the underlying theories of change and goals

of each movement. Whereas the B Corp movement, with some

exceptions, is relatively unif‌ied in its objectives, there are divi-

sions within the BHR movement regarding means, strategy and

goals, which we identify and seek to explain. Next, we delve into

the B Impact Assessment for B Corp certif‌ication and f‌ind

potentially promising human rights-related elements, but also

shortcomings in how it captures human rights impact. In fact,

we discover that a company can be granted B Corp certif‌ication

status or be a legally incorporated benef‌it corporation while at

the same time neglecting important negative human rights

impacts. We then look at B Corps’ stated ambition to scale up

and the implications for human rights, as seen through the lens

of BHR’s experience. The article concludes with ref‌lections on

the opportunities for the two movements to cross-fertilize. Note

that, for ease of reference, and taking a cue from B Corp move-

ment leaders, this article generally uses the term “B Corps” to

refer to both certif‌ied B Corps, which are not a legal entity, and

benef‌it corporations, which are. The exception is in the section,

“The B Corp Movement: Benef‌it Corporations and Certif‌ied B

Corps,” where we describe the differences between the two types

in detail.

287BAUER AND UMLAS