5 Nathan Gilbert

B Lab Europe

Nathan Gilbert is the executive director of B Lab Europe. B Lab is a non-profit organisation aiming to prove that businesses can help society with its greatest challenges. Through the so-called “B Corp Certification”, they measure a company’s social and environmental performance.

Together with the whole B Corp community, Nathan is reinventing business, enabling leaders to use their company as a force for good and creating viable solutions for a more inclusive economy. In this conversation, we dive deep into B Lab’s mission, the power needed to transform our economy and how the ideal future looks like.

Simon: Across the Western world, many people have the feeling that our current economic system is not working as well as it could. Growth is sluggish, inequality is too high, and the environment is suffering. A growing number of people call on business companies to help address these challenges. Companies that do not solely exist to maximize shareholder value but use their power as a force for good. That's the mission of B Lab. B Lab is a non-profit organization that wants to prove that businesses can help society in its goals. One of the initiatives is the so-called B Corp certification. It measures a company's social and environmental performance through an online platform. Also, a legal framework is part of the certification process. Some of the better-known B Corps are outdoor brand Patagonia, ice cream giant Ben and Jerry's but also startups like ethical underwear producer Organic Basics. Welcome to The Idealists. I'm Simon. And as always I'm here with my co-host Silja.

Silja: For this recording, we travelled to Amsterdam. We met Nathan Gilbert at the Royal Tropical Institute where B Lab has its offices. Nathan has worked with the B Corp movement for over eight years. He supported its growth from a small community of a few hundred companies in the US and Canada to a global movement of over 3,000 B Corps worldwide. His work is to provide a framework for a new type of business that balances purpose and profit. Sounds like a fantastic job, doesn't it? So we asked him to paint a picture of the journey that led him to become the Executive Director of B Lab Europe.

Nathan: My journey has been pretty exciting. First and foremost, I love working for B Lab. I truly believe in what we do in the mission that we have. But I joined almost nine years ago, and I worked in the New York City office. At the time, there were only a few hundred certified B Corps, mostly in the US and some in Canada. Canada was sort of our next country. It was a really exciting idea that was being introduced. It was a new concept. We were mainly attracting more of the smaller, sort of SME type companies focusing on sustainability or those that are social enterprises. There was always this desire and intent to make this a global community — a global movement. But obviously, it was just getting started. We had to root it in some location and really start to introduce it into the market and see where it goes. And having built up a proof of concept and getting some attraction and interest, steadily, we've started to get more and more interest from companies all over the world. So it started to flow in, and we had to figure out: "How do we actually build a global movement?" We're a non-profit based in the United States. We were approached by people that wanted to partner with us — and really help make this a reality in their different parts of the world. And so I was tasked to oversee those global partnerships. Five years into that work, I was asked to come over to Europe, where we had been setting up an office here in Amsterdam.

Silja: Why, Amsterdam?

Nathan: Partly just because the people that approached us who wanted to bring the movement to Europe were based here. They were Dutch, actually Italian and one Dutchman, but the Italian had been living here for a while. And they had an extensive network across Europe, and they were serial entrepreneurs. So they seemed to be the right people who could take on this job, and we came to Amsterdam. But thinking about that question a bit further: I mean it actually is sort of a natural location. I think for B Lab Europe, which is responsible for overseeing the B Corp movement development across Europe. Amsterdam is a vibrant city. It's an entrepreneurial city. You've got the location in the centre of Europe where you can access all the different countries quite easily. But I think something about sort of the history of this city is really iconic because it's always been about trade and business. And now we're bringing a new concept for business to Amsterdam. And from here we'll take it across Europe.

Simon: You talked about the people approaching you for being part of that movement. Especially the beginning where this was probably not such a known topic, especially in Europe. What was the main motivation behind those companies? Why were they approaching you?

Nathan: I think the biggest reason is that they saw themselves in this community. B Lab was introducing this concept of B Corp certification (a comprehensive evaluation of impact). The types of companies that we were attracting were companies and most of the social entrepreneurs, I'll say, were developing their business all over the world. They'd start to look up this emerging concept of social entrepreneurship. They would look it up online, perhaps, and they see B Corp. They say: "That's my tribe. I want to be part of that. How do I be part of that?" And so I think that was one of the main reasons why companies in countries that we were never really operating in were coming to us and saying like: "How do I do this?" They were the leaders. They were the pioneers, and they saw themselves in this in this group.

Simon: Talking about taking that from the US to the European Union with all these cultural, legislative and linguistic diversity across a small kinda area and different countries. How was that perceived in the beginning? With having like this big US market (and Canada as well) and coming into the market where there are probably a lot of different opinions and views on what this kind of certification is? And maybe a lot of different connections to what this certification can do for business? Was it any different from the US, or do you feel like the people's mindset kind of closed that gap from the beginning?

Nathan: Yeah. I mean, absolutely, we faced some challenges entering the European market, introducing a business certification that looks at sustainability. But I think we have to separate the certification and the standards from the opportunity to build a global movement.
The reason why we came to Europe, put an office here and built a team with the focus to grow the movement in Europe was that we knew there was an opportunity. We knew that there was hunger from companies that wanted to be part of this community. And part of a movement that was really trying to change the system; change the way that business is done. But then obviously the main tool to build that community is our assessment, the B Impact Assessment, which we use to certify companies. And you're right; it did have to some extent an American history and some legacy in terms of the content and some of the questions. We absolutely faced the critique that it was a bit too American. But you know, we have an iterative process, and we evolve our standards every couple of years. We used the learnings in the experience from working with companies in Europe to figure out: "How do we continue to build a robust and comprehensive global assessment that's perhaps less American? And takes into account what companies over here are doing? We've now gone through at least three iterations of our assessment since B Lab Europe has been set up.

Simon: And is that different from the US one or is that the global iteration over the certification centre?

Nathan: There's a global development cycle, but we do have some modest differentiation in the assessment depending on where you are operating. How big you are in terms of headcount and the industry that you're in or the sector that you're in. There is some difference between the United States and Europe, but also in terms of size and sector. Nonetheless, the core of the assessment is intended to be global. So you can have a comparable evaluation of businesses that are in LA and those that are in Paris.

Simon: You talked about the kind of … you would separate that you have this certification program and then you have this bigger umbrella movement, right? And then you have several other initiatives. The job board, for example. Your B Corp Summit where you come together and celebrate a network within the companies. Is the movement the sum of the initiatives or how could that be seen?

Nathan: I think the movement is far bigger than the initiatives. And I would say the movement is even beyond the work that B Lab is doing and our engagement with the certified community. I mean, there is a global movement underway to use business as a force for good. There are many other organizations. Let's say; it's a movement of movements. Other movements are addressing aspects of systems change, and we're also contributing to that systems change through B corporations. So you have to take the sum of all of that to see that there is a movement underway to use business as a force for good. Our contribution to that is to create credible standards to evaluate companies' performance, to recognize leaders that are actually committing to this, taking action to do this, that are really walking the walk. Those are going to be recognized as certified B Corps, and those are the companies that we want to spotlight so we can inspire and influence others to follow in their footsteps. And in our mission, our objectives as an organization is not to certify more companies. Our objective is really to create more shared and durable prosperity through business. We believe that the private sector can, in fact, make a huge difference and let's say turn back the tide of our negative impact on the world. So we need those leaders. And of course, we will certify more companies and hopefully more and more will follow, and we can, you know, build a bigger community, but that is not the end objective. And so we certify companies. Then we try to create a community with all these leaders and all these employees that are part of this community because we want to create the space for them to share and learn from one another. Whether that be at a summit or you know, even outside the companies, let's create a jobs board for high impact businesses, for B Corps, so you know young people coming out of the universities can go and find jobs at B Corps. Or how do we facilitate more business connection or supply connection between these companies? And so that's sort of the activities that we undertake to strengthen and make more meaningful engagement and participation in the B Corp community. But again, really it's about a systems change at the end of the day, we need everybody to play their part.

Silja: How close would you see the connection between B Lab and the companies that are B Corps?

Nathan: Yeah, B Lab plays an important role. We not only administer the certification and do all the standards development, but we also play that role of a community facilitator. We really try to connect the companies to one another. We organize those events. You know, we're more meant to be behind the scenes. The protagonists of this movement are the B Corps themselves, and we really are here to ensure that they can be successful and try to support them any which way.

Simon: Back to the topic of "What is the main motivation for business leaders (for companies) who want to join that movement? What's behind their biggest motivation? Because as you said, one thing is certainly pretty straightforward to have that kind of certification which is an outward sign that you are part of something which probably explains some of your different approaches to doing business, right? Because in that business world where you only optimize for profits and where shareholder value is your biggest concern, it could be a good point to differentiate yourself and put a mark on that as well. Beyond this certification, what is the biggest benefit for the companies joining that movement?

Nathan: Yeah, I so I would say that the sum of the leading benefits to being part of this is around the differentiation and the opportunity to be recognized as a leader. And obviously, the journey itself is also really important. The amount of learnings that the companies have as they go through the evaluation process is extensive.

Silja: How long does it usually take? Is there an average time?

Nathan: It depends on the size of the company and the complexity of the company, but if you're sort of a small single entity business you obviously have to go through the self-assessment on your own. You can save it, leave it and take three months to do it or you can take an afternoon to do it. But then the actual evaluation process can range anywhere from three to six months. And again, depending on how proactive the company is. Of course, as you get larger, and are much more complex with entities in multiple markets or around the world, it can take a bit longer. But it's that process of going through an evaluation, completing an evaluation of your impact and then having an analyst actually review that with you is really eye-opening. A lot of companies, you know, especially the entrepreneurs that are approaching B Corp, they always sort of have this mindset that they're on their a-game, and they've got all sorts of things that they're doing. When you actually investigate it a bit further, you question it and actually ask "How supported and institutionalized are they within the business?" You find that there's a lot more that we could be doing. So once you get to that bar, you can differentiate yourself and say you're a B Corp, but really it's about that road map that never ends.

Silja: It's never-ending.

Nathan: It's a never-ending journey to want to improve your business constantly. And of course, yeah being recognized as a leader is quite important, but then the community aspect is really beneficial for a lot of companies. They learn from one another they do business with one another so. You know, I think there's a lot of great benefits for companies as they certify that are both internal and external. The internal being, you know, the improvement opportunities and also the team engagement. I think a lot of companies really do this more for engaging internally with their employees and having the employees really understand that values are important in that company.
And I think that's also a big magnet, too, for businesses that are attracting new talent. You know, more and more millenials want to work for companies that share their values. So if you're a certified B Corp, you can be that magnet.

Simon: If we zoom out a little bit and look at the history and trying to adjust our position on the scale from being, you know, just profit-optimization-driven to being let's call it triple bottom line or whatever you might call it in that sense. I think this week was when this letter from …

Nathan: The Business Roundtable in the United States.

Simon: Yeah, the Business Roundtable, where 181 CEOs of leading US companies signed that letter of being not just primarily shareholder driven, but foremost stakeholder-driven. So differentiating between educating their employees and committing to being more sustainable with their suppliers, for example, and just having a bigger variety in their goals, I think. Do you think that this has some impact? Or this is a sign of you maybe having an impact? Is this is a good sign for the movement or is this just, you know, publicity wants it, and we have to kind of fulfil that need and move on?

Nathan: Yeah. I absolutely I think times are changing. B Lab and B Corps for the last 12 years have been advocating for a comprehensive measurement of impact as well as changing your legal DNA to create more stakeholder governance. And the reason why B Lab and the B Corp movement got started is to address the system failure that we have; to address the fact that businesses were in business to create shareholder value exclusively. We need to reject this version of shareholder primacy and focus more on long-term value creation. Not just for shareholders, also for stakeholders. So B Lab and B Corps have been doing this for the last ten years. And so absolutely I'd like to think that we're now having some influence on some of these big companies that were also part of this Business Roundtable. But look, I mean there have been really important milestones and signals from the market, this being one of them. You could also cite Larry Fink, the CEO of BlackRock, for the last two years in a row in their open letter to all the companies that they work with talking more about purpose-driven business. You could also look at the trends in investing, seeing more and more institutional investors getting involved with impact investing. So these are all necessary and right signals from the market to suggest that things are changing. And those that really hold a bit more power because they have a lot of assets under management or they run a big multinational to get them to start to think about these types of concepts whether it's stakeholder governance or more impact is fantastic. I think where we need to be cautious is that a lot of these signals have really been in words and not in action. And so I applaud the CEO's that have signed that letter this week from The Business Roundtable, but what we would expect to see is action. And I would encourage you to read an op-ed by the three co-founders of B Lab who put a letter out in Fast Company, I think just yesterday, responding to that action taken by the Business Roundtable to say that this is fantastic, and please take credible action both in impact measurement as well as you can now legally embed stakeholder governance into the DNA of the business. And so, you know B Corps have been doing that. Look to B Corps as an option.

Simon: When I read this letter (and I read this article yesterday) from the three founders of B Lab is that it always comes to my mind that the things they are stating in the letter are pretty much common sense. When you talk to people on the street, they would say yeah, that's pretty much common sense to treat people right and to educate people. Where do you think this went wrong?

Nathan: This went wrong in terms of why haven't we been thinking about this all along or …?

Simon: I think more historically put: Where do you think this has originated from? I mean, there's not a single point in time where you can nail it and say: "Okay, this is the point where it went South." It's probably the development of hundreds of years and our capitalistic system and how it all came together, but I'm continually wondering "Where did the sense of common sense get lost on the way?"

Nathan: Yeah. I mean definitely over the last hundred years, the interpretation of fiduciary duty has been increasingly skewed toward shareholder value maximization. I mean corporations weren't designed in the beginning to just create shareholder value to the exclusion of everything else. It's just been sort of slowly moving in that direction, and there's a whole host of things that you could probably point to that cause that whether it's Milton Friedman saying the business of business is business and you have to maximize shareholder value. Or likely increasingly there's been a separation of investors from the company. And so when investors now increasingly expect a return they have far less involvement in the actual activities of the business. So it's far easier to start to externalize aspects of the business that can be other people's problems. And there are many other things that you could probably point to in the history of capitalism or the history of corporations in the last hundred years. To some extent, you know, the B Corp movement and the principles of B Corp is going back to the roots of a corporation going back to common sense. You know, we can debate all dong what the purpose of the corporation is and what fiduciary duty actually is saying, but at the end of the day, we need to embed legal accountability to one another in our business, otherwise, without putting in that legal accountability and considering all interests, we will certainly start to exclude important stakeholders into a business, and that can have a negative impact. Seeing all of the negative externalities that have been building up over decades, we need to think about our own impacts. And how do we minimize our negative impact? In order to do that you have to measure the impact. You can't manage what you don't measure and so how do we evaluate our performance comprehensively and learn from that?

Silja: I think that's a good point because counting numbers is quite easy compared to measuring impact or purpose or sustainability. All these words that sound so nice. But yeah, how do you measure those in the whole assessment?

Nathan: Yeah, I mean impact measurement is not a perfect science. It's quite difficult. And in our view, you can't let perfect be the enemy of the good, and as I said earlier, this has been an iterative process. The first version of the B Impact Assessment is probably far different than what we have now. The benefit of working with hundreds and thousands of companies that use the tool is that we get to learn from them. We get to learn about their industry characteristics. We get to learn from companies that operate in different parts of the world to reassess how we want to ask the questions that we ask. But the idea with our assessment is that we first and foremost need to have a comprehensive evaluation. We do not want to look at just one particular area of the business or have something that only looks at, let's say, product attributes. The intent is to really evaluate how a company is impacting a variety of different stakeholders. The other important factor is that we know we cannot be the end-all evaluator and sort of assess on all things on impact. We're not the only player in the game. There are many other great organizations and standard setters that have developed either certifications that help companies look more granular at whether that be the product attributes like, you know, Fairtrade or Organic certification or Green Building standards such as the LEED (Leadership in Energy and Environmental Design) certification. So we're not going to reinvent the wheel. We're actually going to try to leverage all of these great standards and try to build it into our assessment. So we're not going to go to the same depth that they would on organic we'll just ask: "Is your product organic certified?" And if so, show us the certification. And then the last thing is this is meant to be a positive base. So everything that you are doing we want to reward you for it. And if you're not doing something we do not penalize the company for not meeting a certain standard. Our threshold for certification, you can reach by doing a variety of different things. And so no company is the same. We can't expect all B Corps to be the exact same model of, you know one another and so, therefore, we try to create an opportunity for all companies to reach that 80 point bar, which is the threshold for certification by really being highlighted and valued in the things that they are doing whether it be a great employee practices or environmental management or poverty alleviation in their supply chain. But the expectation is that you have to do a little bit of everything and maybe excel in one or two areas to certify. You can't just do bare-bones in all these different categories and be able to certify.

Simon: If you let me play the devil's advocate once more: Greenwashing or purpose-watching was in the media, you know, a lot of times. Do you think you can prevent something of that through your holistic evaluation? Or what is the tool to prevent corporations who are definitely not in a deeper sense sustainability-driven or purpose-driven? How do you exclude them in a sense? Because they want to have the label may be as well, right?

Nathan: Yeah! Great question. And I think there are a few things to share. One is I'd like to say that our evaluation process is quite robust, and it's an evaluation of the company's impact in that it's, I would say, unlikely that a company would certify by not actually meeting the standards that we're assessing against — unless they actually falsify information, which maybe could happen. But actually go to the extension of falsifying information, I don't know … Another important aspect of our review is it's not just on the performance. We run a risk review, and you can be certified with flying colours on impact, but you've got some negative aspects of the business that aren't necessarily covered in the assessment. And so we have a disclosure questionnaire that looks at sensitive aspects of the business in terms of industries that they're operating in or other aspects whether it's sanctions, fines and so forth and we run a review on the company's risk. And we also do a background check. As things emerge in that process, we either require further transparency and remediation from the company or in some instances eligibilities actually declined, and these decisions are not made by us at B Lab, but rather an independent standards advisory council that oversees the standards and oversees these decisions. And so I think the combination of all of those things, makes it a quite a difficult certification to get and I think quite challenging for companies to get through if they shouldn't. We have had companies lose their certification as things emerge new practices or things that were not previously disclosed, and we have a robust process also for reviewing those cases and decertifying companies.

Simon: If we flip the picture and turn it upside down, what would you think is the ideal future from a perspective of B Lab and B Corp movement?

Nathan: I think an ideal picture is that we no longer need a certification and that all companies operate as if people and place matter. I think we're still a long ways away from that. It's not just about the companies operating this way, but I think one of the things that we really need to tackle is the public awareness and the public preference for this way of doing business. I said earlier that in order to have systems change, everybody needs to play their part. So obviously we need the companies to change the way that they operate, change their practices, you know, maybe B Corp certification is as a milestone for them. But we also need consumers to think about where they're spending their money. We need investors to think about where they're placing their money — even consumers in terms of where they bank. All of these things matter. And in order to really transform the way that business is done, and maybe it's a bit of a push from the public side, we need to get more and more people on board and that requires education, that requires engagement and so an ideal scenario is that not only companies are operating this way, but really there's the demand and push from everyone to expect that this is how business is done.

Simon: Thank you so much for listening. If you enjoyed this episode and would like to know more head over to www.theidealists.co. As always, there's one more thing we ask our guests which is: "Who should we talk to next?"

Nathan: If I were to call out any specific company, and I'm sure they're on your radar, and of course, I'll go with the B Corp, I would say Patagonia. Patagonia is a really iconic company. They are one of our higher scoring certified companies, and I mean they've had a long history of being pioneers, being impacts-driven and being activists. And their participation, their engagement within the movement is absolutely essential. They even keep us on our toes. They really are an iconic company and a true inspiration for all businesses.

"I think an ideal picture is that we no longer need a certification and that all companies operate as if people and place matter."

— Nathan Gilbert [00:26:50]

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