“Beyond Financials” Sheds Light on Sustainable Business Assessments

When asked about how they achieved B-Corp certification, Mary O’Neil, Atomic Object’s Business Manager said, “It’s in our DNA”. Mary, along with Wendy Schlett, Vice President at the Sustainable Research Group, were the presenters at SMSBF’s, “Beyond Financials” event.  Held at Washtenaw Community College on Thursday evening, November 8th, “Beyond Financials” gave attendees a unique glimpse into the world of sustainable business assessments and B-Corp certification.

The evening began with introductory remarks by SMSBF Executive Director, Mike Shesterkin. Mike talked about the importance of maintaining the spirit of “the forum” – a market place for ideas – in all the SMSBF does.

In this age, a period of human history dominated by Friedman’s shareholder value and Jensen’s agency theories, the purpose of businesses has been co-opted. Many believe businesses exist is to simply create wealth for ownership (Friedman) and that managers are motivated solely by greed (Jensen); yet nothing could be further from the truth. This is why the work of the SMSBF is so important. As a forum, the SMSBF provides space for examining business leadership concepts and bringing about the transformation to sustainable business practice.

Profitability, which today defines business performance, is measured in well-established ways (e.g., by laws, regulations, Certified Public Accounts, Generally Accepted Accounting Principles etc.). These established measures of profit lead to near universal agreement on what constitutes a profitable business, versus one that isn’t. When it comes to measuring the people and planet value of business performance, things can be ambiguous and not so well defined. This is where assessments – industry standards and certifications – come in.

Wendy Schlett’s presentation on industry standards gave attendees insights into how these tools contribute to advancing sustainable business practice. Industry standards, as applied in this case, define management practices that lead to sustainable business. Industry standards are also nearly universally established by consensus. Representatives of industry stakeholders convene and reach a consensus on what constitutes the protocols and rubrics that make-up the standard. In fact, the American National Standards Institute (ANSI) publishes a document titled, “Essential Requirements”, which establishes the means for creating consensus standards. Industry standards are used to set benchmarks, accepted by industry professionals as “leading age” and that generally go well beyond any federal, state or local regulations.

Sustainable business standards, such as the BIFMA e3 Standard for the furniture industry, establish the measures of performance that lead to triple bottom line value creation. There are numerous standards and practice guidelines, such as those issued by the International Standards Organization (ISO), that delineate the ways in which management systems that lead to sustainable business practice can be implemented. Other related standards and guidance documents include the Global Reporting Initiative (GRI), Carbon Disclosure Report and B-Corps Certification, among many others.

After Wendy’s presentation, and a short networking break, attendees entered into an intimate conversation with Mary O’Neil. Mary described the way in which Atomic Object’s culture – the company’s DNA – made achieving B-Corps certification relatively simple. As the saying goes, the company was already “talking the talk, and walking the walk”.

Atomic Object’s value system – the things in which its leadership believes – fundamentally aligns with the notion of “business as a force for good”, which is B-Labs’ tagline. B-Labs is the non-profit that formulates and administers the B-Corp certification standard. Not unlike the industry standards Wendy discussed in her presentation, the B-Corp certification standard assesses triple bottom line value creation.

Atomic Object’s core business is software development; therefore, the company’s negative environmental impact is, by comparison to other industries (e.g., manufacturing), relatively small. The B-Corp assessment takes this into account, and “bins” businesses according to their respective industry and what ought to be expected from that particular industry in terms of environmental and social impact. The assessment is based on a scoring system, so a software development business with a relatively low environmental impact can score enough points for certification through its creation of social capital.

Mary discussed ways in which Atomic Object’s leaders treat the company’s 60 plus employees, including an equitable compensation program, employee ownership and a team focused processes for decision making. Additionally, Mary discussed a number of initiatives Atomic Object undertakes to develop the community, including a mentoring and education program aimed at encouraging young women to undertake careers in software development. Atomic Object’s progressive approach to human resources and the community outside of the business exemplify and set a benchmark for the ways social capital can be created.

Assessments are the means through which emergent, sustainable business practices are measured and valued. They establish benchmarks and inspire the innovation necessary to advance business beyond the narrow-minded and unfit shareholder value and agency theories. Through assessments, buyers can base their purchasing decisions, not on price alone, but on what creates enduring people, planet and profit value. Without assessments, the advance toward sustainable business would remain ambiguous and poorly defined.

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