Have you ever felt the need to do something more? To make an impact? If these questions resonate with you, then you’re ready to keep reading about the "Impact Revolution." In my last blog, we explored the concept of impact entrepreneurs, today I will introduce you to impact businesses and their role in making an impact.
There has never been a better time to launch an impact business, in part because the legal and regulatory environment is becoming much friendlier, empowering businesses to go beyond their traditional legal obligation to seek just profit alone. The most advanced effort is in the US, where B Lab – a global non-profit organization that grants private certification to for-profit companies that meet set standards for social and environmental performance – has existed since 2006 “to serve those entrepreneurs who are using business as a force for good.”
The “B” stands for “Beneficial,” and B Lab gives businesses a score according to 180 different measures of impact. The scores reflect a company’s ability to meet standards of social and environmental performance, accountability and transparency. To become certified, businesses must receive a certain base score, and they are assessed for recertification every three years. Currently, about 3,000 certified B Corps exist across 150 industries in 64 countries, and include companies like Patagonia, Warby Parker, Revolution Foods and Ben & Jerry’s. As a result of efforts by B Lab, a new corporate form was introduced in the US in 2010: the benefit corporation.
The benefit corporation’s legal form frees businesses from the obligation to maximize profit, enabling them to simultaneously seek impact without fear that shareholders will take legal action. Without the traditional mandate to maximize financial returns above all, benefit corporations are able to make decisions that also reflect the interests of their employees and customers, as well as the environment, and are provided with legal protection for acting in accordance with their moral purpose.
In the United States, 34 states have already introduced benefit corporation legislation, and six more are in the process of doing so. By the middle of 2019, more than 5,400 benefit corporations were active in America. Patagonia and Kickstarter are examples of companies that are both certified by B Lab and incorporated as benefit corporations.
A similar effort has taken place in the UK, with the introduction of Community Interest Companies (CIC) in 2005. The initiative is directed at small businesses and allows them to use their profits and assets for public good. In the first ten years after its launch, over 14,000 companies registered as CICs. This trend of passing legislation to enhance the status of social enterprises is spreading to other countries too, including France, Luxembourg and Italy.
Impact Entrepreneurial Networks
In addition to organizations like B Lab in the US and CIC in the UK, there is also a trend of kick-starter organizations popping up in recent decades to foster impact entrepreneurship and provide mentorship, seed investment and support for new businesses seeking to make an impact.
The non-profit Ashoka is a good example of such an organization. Founded by Bill Drayton in 1980 with the aim of mitigating income inequality through social entrepreneurship, it identifies entrepreneurs who have large-scale solutions to social challenges, supporting them as they strive to achieve their vision. “Ashoka Fellows” receive a financial stipend that allows them to devote themselves to implementing their social innovation, with the eventual aim of creating a self-sustaining institution. Since its founding, Ashoka has sponsored over 3,500 entrepreneurs in over 90 countries around the world, building one of the largest global communities of social entrepreneurs.
Echoing Green is another leader in the field. Since 1987, this global non-profit has provided seed-stage funding and strategic support to organizations that have collectively served more than 12 million students in 3,700 schools, 3.7 million patients and 270,000 community health workers. Notable Echoing Green fellows include Wendy Kopp, who co-founded Teach For America, a non-profit organization that trains college graduates and professionals to teach for two years in underserved communities throughout the United States and beyond, in support of educational equity.
Another organization encouraging high-impact entrepreneurs is Endeavor. Founded by Linda Rottenberg in 1997, it spans 50 offices across the globe and identifies, mentors and co-invests in the ventures of impact entrepreneurs from its $115 million fund.
Together, pioneering organizations like Ashoka, Echoing Green and Endeavor have advanced the field of social impact entrepreneurship. These organizations have become role models for driving and supporting impact entrepreneurship across the world and ingraining impact into modern business thinking.
A Rising Generation of Impact Entrepreneurs
The state of our world demands that we embrace innovative solutions to society’s most pressing challenges. Across the world, young entrepreneurs are bringing innovative solutions to our most vexing problems by seeking to maximize profit and impact at the same time. By doing so, entrepreneurs define new ways to succeed without sacrificing financial returns, and often turn their quest for impact into a key driver of their success. By placing impact at the core of their companies’ business models, their profits grow together with their impact.
No longer are businesses and entrepreneurs following the standard risk and return model, but rather risk-return-impact. As this new model disrupts prevailing business thinking, and new incentives are introduced to drive impact entrepreneurship, impact entrepreneurs will begin to revolutionize our approaches to improving our world. The first generation of impact entrepreneurs is already showing how to accelerate social progress, make society fairer and reinforce the efforts of governments and philanthropists to improve lives and the planet.
Yet there is one big difference between the past generation of young tech entrepreneurs and the rising generation of impact entrepreneurs: while tech entrepreneurs were able to thrive in only a few rarefied environments, such as Silicon Valley, impact entrepreneurs can thrive wherever there are major social and environmental issues to address.
Turning Inspiration to Action
For those who are bold enough to lead the way, give yourself permission to try and fail, and to above all, set ambitious goals for doing well and doing good at the same time. Your ventures will bring positive change, and you will also set an example in how to achieve a healthier balance between what we do for ourselves and what we do for others.
To learn more about the Impact Revolution, order a copy of my new book, IMPACT, here.
My motto is “Start young, think big and stick with it.” Choose a problem that affects a large number of people and define a product or service that solves it. Put impact at the core of your business and measure it, rather than simply adding it as a parallel, side objective.
Impact will enable you to recruit the best talent, because talent is attracted to companies have a larger purpose than just making profit. The best start-ups are those that solve significant issues, because they are the most successful at attracting the most gifted teams and uniting them in pursuit of an inspiring mission. Finally, as impact investment gains momentum, investors will seek you out, because you are an early leader of an investment trend that will soon dominate financial markets.
To create a positive change in the world, its necessary to change our thinking and the way we look at business. To learn more, read IMPACT: Reshaping Capitalism to Drive Real Change and claim your place in the Impact Revolution.