The Tipping Point for Corporate Social Responsibility (CSR) and B Corporations
On April 16th, Etsy a Certified B Corporation, launched their IPO on Wall Street. They are only the second B Corporation to go public; Rally Software was the first. Some Wall Street insiders were skeptical that a company known for putting people and values before profits could attract the attention of investors, but it did. The initial stock price offering was US$16 per share. After one day of trading, it nearly doubled in value, raising approximately US$2.5 billion. The Wall Street Journal quoted Chad Dickerson, the Etsy CEO saying, “The success of our business model is based on the success of our sellers. That means we don’t have to make a choice between people and profit.”
Finding the Right Investors
In fact, the Etsy management team sought out investors who want to support the company’s commitment to social responsibility. On the company blog, Chad Dickerson explains, “The investors we met… understand that the key to Etsy’s long-term success is building on and extending what has made Etsy successful to date: an inspired community of creative entrepreneurs, buyers who want to buy unique merchandise that they can’t find anywhere else, and a values-led community-based business that focuses on the long term.”
Etsy also wanted to be sure members of their online community could participate in the IPO. Often small investors are locked out of IPO participation. However, the company made sure that these investors, like many of their sellers, could take advantage of the IPO through retail brokers.
Public B Corporations – The Next Big Thing?
This critical step, going from a privately held B Corporation to a publicly traded company, announces in a profound way to the investment community that companies can and should have other benchmarks against which their performance is measured. Things like community engagement and environmental stewardship are becoming a part of the corporate dashboard. In fact, many startups build their companies around their social mission. This was the case with Soapbox. Their mission was to end childhood illness by providing potable water. Once they established their mission, the product and marketing strategy took shape. They would sell great soap and use some of their profits to provide clean water to a people in need. Others like Tom’s and Warby Parker do the same.
In the 1970’s noted economist, Milton Friedman said the role of a company in our society is to increase profits and shareholder value. Today’s B Corporations are focused not just shareholders but on all stakeholders. Stakeholders include our planet and the people that inhabit it.
The B Corporation and CSR (Corporate Social Responsibility)
The B Corporation declaration states, “We envision a new sector of the economy which harnesses the power of private enterprise to create public benefit. This sector is comprised of a new type of corporation — the B Corporation — which is purpose-driven and creates benefit for all stakeholders, not just shareholders.”
The Declaration goes on to say, “We hold these truths to be self-evident:
- That we must be the change we seek in the world.
- That all business ought to be conducted as if people and place mattered.
- That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all.
- To do so, requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future.”
Design is a Key to Success
Like Tom’s and Warby Parker, Etsy is not just any ordinary company in terms of its approach and investment in design. Etsy takes design very seriously, both as a platform for interacting with customers and as a tool for sellers to offer their products. We know how hard it is to build great design into all of your work — and Etsy succeeds. From the user interface to its admin tools for sellers and even its email newsletters — thoughtful, helpful design and content lay at the core of why Etsy engages visitors, and evidently, investors.
At Manoverboard, we strive to put people and our planet first. Mostly, we work with clients who seek to make a difference in the world through their work, their services and their investments. We also do our part to help others learn about the opportunities and challenges in becoming a responsible business. For instance, Manoverboard commissioned a study to determine which website hosting companies have the best environmental track record. Huge data centers use a great deal of energy, and we wanted to help our clients determine which suppliers fit their CSR strategy. You can read about the report and download a copy here.
How We Can Help
Manoverboard is a purpose-driven design firm that provides digital tools and strategy to principled businesses and organizations. We create attention-getting websites, corporate brand identities and content strategies for businesses and organizations. Our mission is to help build a better world through better design. If you are interested in becoming a B Corporation as well, please visit their website.