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Whether it’s at the country, corporate or individual level, this blog considers how to gauge and measure impact.

Wednesday, August 15, 2012

In Just a Few Months, Sistema B (AKA: B Corp) Finds Fertile Ground for Social Enterprises in Latin America

By Manuel Antonio Camacho

Sustainable business consulting firm Emprendia, was among the first certified B Corporations in Argentina this year. (Image credit: Sistema B)

 

Redefining success in business and in our society, B Corporations use the power of the market to resolve social and environmental problems. The global community of B Corporations first began in the United States and beginning this year it has expanded throughout South America starting with Argentina, Brazil, Chile and Colombia through Sistema B (as B Corp is known in Latin America). In just a few months there are already 16 certified B Corporations (Empresas B as they’re known in Spanish)

in the region and more than 90 businesses committed to being part of this new paradigm. 

The B Corporation is a relatively new enterprise model with the binding mission of creating value for all of its interest groups, and operating with the highest social, environmental and transparency standards. They are innovative organizations that are creating dynamic chains and offering clients the possibility for their ethical values to be reflected in the market, and where financial returns are not their main reason for being, rather an indispensable tool to achieve their social and environmental goals. In this way, the B Corporation differentiates itself in the market more easily from consumers, suppliers, investors and human talent. 

In the middle of a global financial, social and environmental crisis, businesses are starting to think about what their role is to improve the state of the planet. Beyond corporate social responsibility, B Corporations fully reconsider their business models to propose new and innovative systems of production and consumption.  For those readers who might not have the background, the movement began in the United States in 2007 led by an organization called B Lab, which was created with the explicit purpose of giving visibility to and energizing this new generation of businesses that have broadened their meaning of success in order to be agents of change.  To date, there are more than 500 B Corporations constructing new paradigms in 60 industries and generating overall revenues of $3 billion.  For example, Patagonia, a multinational company known for the quality of its mountaineering and athletic apparel, has as its mission to “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis,” and the result is more than 50 stores around the world, $414 million in sales in 2011 and average sales growth of 6 percent over the last decade.  Patagonia and its founder Yvon Couinard have been pioneers in taking corporate responsibility to the next level, setting standards for Walmart and Levi Strauss, amoung others that followed suit.  They emphasize the use of recycling as a source of innovation in the development of clothing materials and one of the leading programs in supply chain transparency called The Footprint Chronicles, where they openly publish their global manufacturing practices and where their clients can support them in constant product innovation to reduce adverse effects on the environment and community.  Since 1985, Patagonia designates 1 percent of sales to environmental organizations and causes.   

The community of B Corporations has already started to unfold throughout South America with 16 certified B Corporations currently in Argentina, Brazil and Chile. 

These businesses and the additional 90 that are currently in the process of certification, are a diverse group of businesses, belonging to various sectors, such as construction, agribusiness, recycling and health, among others.  The hallmark of these businesses is the capacity to innovate and identify opportunities using the power of the market to give solve the main social and environmental urgencies. 

The first business to convert to B Corporation in Latin America is called TriCiclos, a Chilean venture. Through its “clean points” TriCiclos confronts the challenge of waste and encourages citizens, schools and companies to adopt sustainable habits. In its first year of operations, TriCiclos managed to recycle 780 tons of materials (equivalent to a 2.3 ton reduction in carbon emissions) and works with more than 7,000 people each month in five clean points in the city of Santiago.  In 2012, managers project to open 30 clean points around Chile and at least one in the cities of Bogota, Buenos Aires and Sao Paulo.  In 2011 they had sales of $635,000 and they hope to reach $1.2 million in 2012. 

South America has huge potential to create B Corporations, due to its natural and cultural wealth and the existing entrepreneurial prowess. Additionally, it is distinguished by the growing number of players interested in the dynamics of 'impact business' in the region. The impact investing industry is one of these players and seeks to invest in businesses that make sense for society and the planet.  In light of these trends, there is a major opportunity to contribute with scalable solutions toward the reduction of poverty and inequality, the regeneration of ecosystem services, and other goals that contribute to materializing the green and inclusive economy in our region.  To take advantage of it, we need to facilitate a business environment that encourages competition and innovation among all the players committed to this development paradigm. 

Just thinking of the potential to reactivate the rural sector with B chains would be a quantum leap for South America and an opportunity to transform our invaluable natural capital into the kinds of human capital that the 21st century global market demands. 

For more information about B Corporations or to join Sistema B, go to http://www.sistemab.org.

 

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