Sometimes it’s better not to know the obstacles that exist when creating something new.
That was certainly true for Andrew Kassoy, who, along with Jay Coen Gilbert and Bart Houlahan, two friends and roommates from Stanford University, wanted to encourage companies to focus on their employees and the environment. In 2006, they left their jobs and created B Lab, which certifies companies that operate for social good, in addition to trying to make money. Think Fair Trade for food or LEED certification for environmentally sustainable buildings.
Certified companies — referred to as B Corps — are businesses with verified social and environmental performances, including factors such as sustainability, income inequality and the impact on local communities. They are, essentially, companies that use business as a force of good, rather than focusing solely on profit maximization. Companies like Patagonia, Eileen Fisher and Danone North America have all been certified; over all, there are more than 3,000 certified B Corps in 71 countries, Mr. Kassoy said.
Mr. Kassoy — who emphasized that B Lab was created by, and is still run by, all three men equally — discussed how the organization continues to work to transform global capital markets.
The following conversation has been edited and condensed.
What would you like people to know about your work?
We started B Lab because we thought there had to be a better way of running the economy. Capitalism, historically, is about enterprise and the capital needed to grow that enterprise. What we’re trying to do is create an economy where capital and enterprise meet not just to benefit a few shareholders, but to benefit society as a whole. Our goal is to have every company create value for all stakeholders — like corporate workers and community members — not just shareholders.
“I assumed the best way make a difference was to run for office.”
Who or what inspired you to go into your field?
A series of relationships and mentors have helped guide me, including my parents and my grandparents. I spent time in college working on the Pine Ridge Reservation in South Dakota and the elder Basil Brave Heart was a spiritual and moral center.
But it was former Congressman David Skaggs who really set me on my path. After I interned in his office, I asked if I could return to work for him after college. He said, “Maybe, but I think not yet.” Instead, he told me to do something out in the world — to see what our economy is all about. Although I had no experience in capital markets at the time, his words set me on that path and away from public policy. And I saw that I could effect change without being a politician.
Where do you find sources of creativity?
This is not a creative field — it’s not tech, art or music, but I do think that it requires a lot of creativity to invent what an economy ought to look like. But I’m not a mad genius imagining things and willing them to be true.
Instead, I find that creativity comes through relationships and community, and through conversation to find the right design.
What obstacles do you need to overcome?
We face an enormous challenge in that the economic system, over the last 400 years, was built on extraction, without limits. People have been treated as just another economic input, rather than as humans.
“What we’re trying to do is create an economy where capital and enterprise meet not just to benefit a few shareholders, but to benefit society as a whole.”
As I rose up in private equity, the financial rewards never felt like success. And in the end that made it hard to stay in the field.
Instead, in my work at B Lab, success is any sign of progress toward an inclusive and regenerative economy that is both meaningful and long-lasting. And 13 years into our work, there are real signs of success: New laws that enable businesses to operate as if people and the planet mattered as much as profit, and moves by groups like the Business Roundtable in August. But we still need to tell corporate leaders that they need to walk the walk for change.
In my personal life, success is defined mostly by whether I have relationships that are bringing me — and other people — joy.
What challenges do you face?
We still need to address shareholder primacy as a mind-set and a legal impediment. And we are asking governments what else they can do and trying to form a broader coalition of organizations to address this. And we are working with multinational companies to encourage more to become B Corps — they have big bullhorns and are really important to our work.
And we are also mindful that while we are trying to build a more inclusive economy, that to do so means we need a more inclusive community in business. It’s a shift that will take some time, but it’s one in which we need to play a role.
“I’m not a mad genius imagining things and willing them to be true.”
Technology is having an enormous impact on business. Whether it’s automation, outsourcing or the growth of the gig economy, or issues like privacy and the ownership of data, technology is dramatically changing the nature of work. And these are issues to think about if business is to have a positive impact on our economy.
At B Lab, we’re dealing with the impact of technology in our standards, which we revise every three years. Recently, we’ve changed our definitions as they related to the people who support a company. We used to call them employees, but now we refer to them as workers because large percentages aren’t actually employed by the company. By just asking about employees, we’re missing a large percentage of the work force, including contractors and those working in the supply chain. We need to make sure to ask about those who may be on the margins — the vulnerable workers in the economy.