Sustainability’s implications for shareholder value
Just over a year ago the Business Roundtable (BRT), a nonprofit association representing 181 U.S. companies that advocate policy solutions that foster U.S. economic growth, issued a revised statement regarding the purpose of a corporation.
The statement, “Business redefines the purpose of a corporation to promote ‘an economy that serves all Americans,’” is a recognition by leading CEOs that shareholder value is no longer at the center of what corporations are all about.
This fundamental shift away from Milton Friedman’s premise that the sole purpose of business is to generate profits acknowledges that business also has a societal and environmental responsibility. The statement validates the triple bottom line approach many sustainability professionals have been wanting companies to adopt over the years.
While it is encouraging to see that BRT members such as Google recently issued a $5.75 billion sustainability bond through its parent company Alphabet (the largest sustainability or green bond by any company in history), it is also worth noting how smaller companies are building sustainable principles into their business models by becoming Certified B Corporations.
According to the B Lab website, “Certified B Corporations are a new kind of business that balances purpose and profit. They are legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment.”
Among the 3,499 companies with certified B Corp status, there are just three fresh produce companies: AeroFarms, Earthbound Farm and Scott Farm Orchard.
Given that Scott Farm in Vermont has been actively cultivating crops since 1791 and apples since 1911, I was intrigued why this historic farm now owned by The Landmark Trust USA Inc. adopted the B Corp model and how the B Corp certification influences day-to-day management and decision making.
According to Simon Renault, general manager of Scott Farms, it started with Tristan Toleno, member of the Landmark Trust USA board from 2010-17. He and Travis Hellstom, a colleague at Marlboro College, presented the benefits of B Corp certification to the board. As a result of their leadership and hard work, Scott Farms received its certification in October 2017.
Today Scott Farm continues to reap the benefits of its B Corp certification in many different ways, as the B-Impact Assessment originally required for certification purposes is a reference point for all future improvements. This starts with company operations and how its business model impacts workers, the community, environment, supply chain, input materials, customers and even charitable giving being embedded in the DNA of the company.
Scott Farm is rewriting its employee handbook, which was developed following the initial B Corp certification, and will evolve into something even better, as the foundation is firmly set in the values and principles that govern a certified B corporation. I hope that many more fresh produce companies follow the lead of Scott Farm and the Business Roundtable in helping to create a U.S. economy that serves all Americans through all facets of business.
Andrew Southwood is a business development strategist in the Montreal area consulting in the fresh produce sector on business resilience and adaptability.
More from Andrew Southwood:
Sustainability in context
Are sustainability and stewardship the same?
