Kathy Miller has outlined the difference between a first order and a second order change for companies to advance in their sustainability journey. Referring to the Business Sustainability Typology (Dyllick-Muff, 2013), she has differentiated between incremental changes with limited impact (first order change) and fundamental change resulting in transformational change (2nd order change). Kathy highlighted the key factors required to achieve such a second order change focusing on the need for a clear vision and a number of clear leadership attributes. Imagine now that a company has an enlightened leadership and a clear vision, how can it measure if the envisioned change will have the desired impact? In this blog we are looking at B-Corps and the Economy of the Common Goods as two solutions to help companies become truly sustainable.
Are there any tools allowing a company to measure their achieved and intended impact?
At Business School Lausanne, this is one of the burning sustainability questions we are conducting applied research on. We see two grassroots initiatives on both sides of the Atlantic that provide very new perspectives on this question: The Economy of the Common Goods, developed by Christian Felber and his “Gemeinwohl-Ökonomie” movement in Austria and The B-Corp movement in North America. Let us take a look at what these two initiatives measure and how they are different:
The Benefit-Corporation, short B-Corporation, movement is best explained in this short video. It was founded in 2007 by 81 organizations looking for alternatives to the for-profit model. An organization can become a B-Corp member by conducting the B-Corp Assessment. There are various different B-Corp Assessments , depending on the country of operations, the number of employees and the industry in which a business operates. The Assessment considers a company’s governance, workers, community, environment, and the type of impact business model an organization runs, e.g.the worker business model, the consumer business model, the community business model, or the environment business model.
Similar to the “negative impact criteria” in the ECG above, the disclosure section considers the negative impact areas of a business. More than 15,000 organizations support the B-Corp movement. The B-Impact Assessment operated by the B-Lab offers not only support in taking the assessment but also countless valuable case studies of companies who have become B-Corps.
The Economy of the Common Good (ECG) was founded in 2010 by a dozen Austrian companies around the visionary thinker Christian Felber. The ECG defines the “Common Good” as the five dominant values featured in all European democracies, namely: human dignity, solidarity, ecological sustainability, social justice, democratic co-determination and transparency. These five values are measured across five stakeholder groups (suppliers, investors, employees/owners, customers/products/services/partners and the social environment) of an organization in the Common Good Matrix. The Matrix also includes a number of negative criteria, including violation of ILO standards, dumping prices, violation of equal pay, gross violation of environmental standards, excessive income inequality within the business, etc. Each element of the Matrix is defined with underlying standards which serve for a self-evaluation, a peer-evaluation or an external audit of any kind of organization. The resulting outcome is defined in a range from -2500 to +1000 points and enables an organization to understand where their strengths and weaknesses lie against an idealized view of how a company contributes to society. The ECG is backed by subject experts in each of the matrix elements who continuously improve and enhance the matrix year by year. The challenge of the ECG matrix is the ambition to have one matrix valid for any type of organization in any industry sector. More than 1000 organizations support the ECG. The English edition of Christian Felber’s groundbreaking book is due in Spring 2015.
What is the difference between these two movements? B-Corps seek to shift from “competing to be the best in the world to becoming the best for the world”, a term coined by the 50+20 movement in its visionary launch of management education for the world at the RIO+20 Conference. The ECG Matrix offers enlightened organizations the opportunity to evaluate their business from the perspective of societal and environmental concerns. In the language of the Business Sustainability Typology, both approaches seek to draw organizations and companies to embrace true sustainability, as typified as the Business Sustainability 3.0. See also “Different Shades of Green” , the May issue of this blog series.
At BSL, we are researching not only the differences between these two noteworthy movements on both sides of the Atlantic; we are also gearing up to help organizations of any form to advance in their sustainability journey. In addition to the two Assessments mentioned above, we find the SCALA sustainability culture assessment, developed by Kathy Miller, of outstanding value when helping a company to understand where they are on their journey from business-as-usual to true sustainability, as the change-strategy depends much on the cultural readiness of an organization for such change. Our consulting activities are based on an in-depth understanding of all three tools:
- We are the first university-type organization world-wide to have been audited as a ECG organization (with +461 points) and thus know the process and benefits inside-out,
- As the Swiss partner of the B-Corps movement we help organizations in Switzerland complete their B-Impact Assessment, and
- Our doctoral research consultants are qualified SCALA practitioners using the cultural survey as part of their first year case study work with advanced sustainability companies world-wide.
In brief, organizations of any type have clear and actionable options at hand to to both evaluate and measure where they are in their journey to embed environmental and societal concerns into their traditional economic-driven perspective. As we all know well, what we can measure, we can improve, and in this sense I would like to invite anybody with a question of how to go about measuring his organization to contact us at BSL to receive free advice on what tool is most suited at the given point of time you are in.
Dr. Katrin Muff is Dean at Business School Lausanne (BSL), Director of the innovative Sustainable Business DBA programand co-directs the world-class Executive course in Sustainable Business jointly with her colleague Thomas Dyllick of the University of St. Gallen. She writes a weekly blog and is actively engaged in transforming business education to serve the world (project 50+20).