NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, April 24, 2012

Last fall, a small group of social entrepreneurs from South America met to discuss how to foster more social enterprise in the region and create more bang for the buck at existing enterprise. The result was Sistema B, the first effort to adapt the American system of B Corporations—which ease operations for companies that combine profit and social good—to a foreign setting.

“We want to build a global movement,” says Juan Pablo Larenas, co-founder of Sistema B. “We already started in Argentina, Chile and Colombia. We also have a plan to start this year in Brazil… we see huge momentum.”

The 521 certified B Corporations in the United States are for-profit companies that agree to blend social, environmental, and community impact into their business models, and to consider those factors along with earnings in company strategy decisions. The idea came out of the B Lab in 2006, and the group slowly built membership and tested evaluation methods. Last year, the concept attracted national attention when states including California and New York legally recognized a new corporate structure, the benefit corporation, based on the B Corp model.

“We were researching different experiences related social enterprise all over world, and we found out about the experience of B Corporations in the U.S.,” Larenas says, “so we took a plane and decided to go meet the co-founders of B Lab.”

Early as it might seem for a young idea to be expanding, there is demand for export. Larenas hopes to certify 500 Latin American B Corporations—or as they’re called in Spanish, Empresas B—in three years. “[Latin American] society is a little bit tired of the role companies play, which is all about growth and products,” he says. Many Empresas B already operate in South America; according to Larenas, they just don’t know they meet the standard. They need a framework, an umbrella to leverage their existing social and environmental work, and a trusted certification to separate the real thing from greenwashing.

Sistema B, which launched in February, eventually will cover Chile, Argentina, Colombia, and Brazil—one of the world’s most important growing economies. So far, there are just two certified Empresas B:Triciclos, a Chilean recycling consultant, and Ouro Verde, which makes food products from an Amazonian nut. Larenas’ own company, Late!—which sells bottled water and uses 100 percent of the profits to fund programs for kids in poverty—is undergoing certification.