By Natascha Elbech
Today’s consumers buy the change they wish to see in the world. As 87% of millennials are more willing to pay a premium for sustainable brands, businesses must respond to market pressures and conform to socially responsible and ethical practices. As more businesses are “doing well by doing good”, commitments to social and environmental responsibility transcend beyond competitive advantage to deliberate corporate strategy. In this new age of conscious consumerism, B-corps play a significant role in maximizing both profitability and social returns.
The hype around B-corp certifications begs the question – do businesses today need to become certified in order to remain values driven (and relevant)? This may have been the case for Whole Foods, now a subsidiary of e-commerce giant Amazon.
John Mackey, founder and CEO of Whole Foods, has been committed to doing business grounded in ethical consciousness since he founded the organic supermarket almost 40 years ago. As the co-founder of Conscious Capitalism, Mackey advocates for the potential of business to drive economic growth while elevating humanity – what he calls “free enterprise capitalism”. Through this philosophy, Whole Foods – which operates 500 stories in the US and Canada – drives its “mission for quality” through a variety of stakeholders, namely consumers, its shareholders, local communities, and the environment.
However, when Amazon purchased Whole Foods for $13.7bn in 2017, Mackey was put under fire for selling out to the corporate behemoth. Prior to the acquisition, Whole Foods was plagued by its reputation as an overpriced organic grocer and saw a decline in sales for six consecutive quarters and a loss of 14 million customers in just a year and a half. After wholesale retailers like Walmart and Target began offering organic produce, Whole Foods was being rapidly priced out of the market. In response, activist investors purchased a large stake (8.3%) of the company and forced Whole Foods into a sale. Today, Amazon Prime members enjoy lower prices and exclusive discounts – and Whole Foods can potentially regain its competitive edge.
Now almost two years after the merger, consumers continue to criticize Whole Foods and question the brand’s integrity amidst new price increases and less than satisfactory Prime member deals. Whole Foods’ situation is not unique – Unilever, Procter & Gamble, and Nestle have also fallen under pressure from activist shareholders and unfavorable acquisition offers. So – could all of this have been avoided if Whole Foods had become a B-corp? In an interview with Jay Coen Gilbert, co-founder of B-Labs, Mackey reportedly said that he would have “loved to have tested the idea of shareholder activists versus the legal form of a Benefit Corporation”.
Certified B-corps are legally required to account for all of its stakeholders – not just maximize returns for investors. While B-corps exhibit the highest standards of social and environmental performance and legal accountability, this may not be enough to evade activist shareholders and the ultimate drive to increase profits – take Warby Parker or Etsy for example. In the words of John Mackey, “businesses that are more conscious of making a positive difference in the world make the world a better place from just being there” – as the idea of socially conscious business becomes more mainstream, it is increasingly difficult to navigate the fine line between maximizing revenues and driving meaningful impact.
